The double materiality analysis in Dcycle follows a structured process based on company data. It identifies relevant sustainability issues according to the company’s economic activities and integrates stakeholders to assess both environmental and social impact as well as financial relevance.
1. Defining the Business Context
1. Defining the Business Context
The first step is identifying the most relevant suppliers and customers. The company provides a list of suppliers and customers along with their sales values. Using the Pareto principle, suppliers accounting for 80% of total expenses and customers generating 80% of total revenue are selected.
Additionally, stakeholders potentially affected by the company’s activities, including employees, investors, and local communities, are identified.
2. Selecting Sustainability Issues
2. Selecting Sustainability Issues
Sustainability issues are determined based on internal documents, such as the Non-Financial Information Statement (EINF) or risk analyses, as well as publicly available references, such as industry-specific materiality matrices.
Stakeholder surveys are conducted to assess the social impact, risks, and financial opportunities associated with each preselected sustainability issue.
3. Evaluating Sustainability Issues
3. Evaluating Sustainability Issues
Each sustainability issue is rated on a scale from 1 to 4, measuring both its positive and negative impact, as well as its financial relevance:
- Positive impact = magnitude × scale.
- Negative impact = magnitude × irreversibility × scale.
- Financial risk and opportunity = magnitude × probability.
The questionnaire results define the magnitude variable. Each stakeholder group carries the following weight in the final evaluation of each sustainability issue:
- Core + Risk Analysis: 0.8
- Workers at company sites + Suppliers + Customers + Investors + Users: 0.2
The values for scale, irreversibility, and probability are adjusted based on industry and economic activity intensity.
4. Determining Double Materiality
4. Determining Double Materiality
The final result of the assessment is a materiality percentage. If a sustainability issue scores above 70% in impact materiality or financial materiality, it is considered material and must be reported.
This process ensures that Dcycle delivers a precise, data-driven analysis, helping companies make informed sustainability decisions and meet compliance requirements.
