Double Materiality to Prepare for Building a Comprehensive and Integrated ESG Strategy

A global financial institution with operations spanning investment banking, asset management, and retail banking sought to establish an integrated ESG strategy. With growing pressure from investors, regulators, and clients to incorporate sustainability into business practices, the institution needed a structured approach to identify, assess, and address both internal and external ESG impacts.

Challenge

The primary challenge was understanding and applying the concept of double materiality—assessing the financial impact of sustainability risks on the organization (financial materiality) while also addressing the institution’s impact on environmental and social systems (impact materiality). This dual approach required robust stakeholder engagement, data collection, and integration into decision-making processes. The institution also faced diverse regulatory requirements across the regions it operated in, such as the EU’s Corporate Sustainability Reporting Directive (CSRD).

Our Approach

Double Materiality Assessment Framework:
The GBP team developed a comprehensive framework to assess financial and impact materiality. This included:
Financial Materiality: Analyzing risks and opportunities associated with ESG factors, such as climate risk on investment portfolios, to understand their financial implications.
Impact Materiality: Evaluating the institution’s environmental and social impact, such as its role in financing carbon-intensive industries or promoting social equity through lending practices
Stakeholder Engagement:: Engaged with key stakeholders, including investors, clients, regulators, and internal teams, to gather insights on expectations and material ESG factors.
Conducted workshops with the executive leadership team to prioritize materiality topics based on stakeholder feedback and strategic goals.
Data Integration and Analysis: With support from the client’s ESG team, the GBP team Introduced tools to collect and analyze ESG data across the institution’s operations, investment portfolios, and supply chain.
Mapped the institution’s carbon footprint and social impact to align with global frameworks, including the UN Sustainable Development Goals (SDGs) and the Task Force on Climate-Related Financial Disclosures (TCFD).
Regulatory Compliance Roadmap: The GBP team developed a roadmap to meet compliance with double materiality-related standards, such as the EU CSRD and Global Reporting Initiative (GRI), while preparing for evolving requirements in other jurisdictions.
Integrated ESG Strategy Development: Based on the double materiality findings, the GBP team created an ESG strategy that integrated into the client’s overall corporate strategy. This included measurable targets for emissions reduction, green financing, and social equity programs.

Outcomes

Enhanced Risk Management: The institution identified key financial risks and opportunities linked to ESG factors, leading to improved portfolio resilience and strategic decision-making.
Regulatory Compliance: Successfully prepared for compliance with the EU CSRD and aligned disclosures with international frameworks, enhancing transparency and credibility.
Improved Stakeholder Trust: Proactively addressing impact materiality strengthened relationships with investors and clients, who valued the institution’s commitment to sustainability.
Quantifiable Impact: Achieved measurable outcomes, such as a 20% reduction in financed emissions within the first two years and increased allocation to green and social bonds by 15%.

Impact

The company is now better positioned to build a comprehensive and integrated ESG strategy that addresses key impacts and mitigates associated ESG-related risks.

Next Steps

Learn how we can help your organization align with double materiality standards and integrate ESG into your business strategy.