Sustainable Investor interview - AI: All Aboard the Runaway Train?

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Materiality was again in the spotlight recently with launch of IFRS sustainability disclosure standards S1 & S2. Whilst the standards were generally welcomed as a significant step in creating a global baseline for corporate sustainability disclosures grounded in the best practices of accounting standards it was seen as controversial in some quarters. In a large part this was due to its approach to dealing with materiality and more specifically ‘double materiality’ — something largely avoided in the standards according to critics. Proponents highlight the mantra that “what can be measured can be managed” when suggesting that focusing on single materiality / materiality should be the priority for disclosing organisations and is thus the focus of these standards. Double materiality encompasses not just sustainability risks which impact a company’s financial performance but the degree to which that company’s products and activities impact the wider world — a philosophy more adopted in European standards such as in the work of EFRAG.

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