Getting your materiality assessment right is crucial. As companies face increasing pressure to meet regulatory standards like the Corporate Sustainability Reporting Directive (CSRD), having the right tools to perform a precise and comprehensive CSRD double materiality assessment is more important than ever. But how do you choose the best materiality assessment tools for the job? Many organizations still rely on Excel, a familiar and accessible option, while others are turning to specialized software designed specifically for materiality assessments.
The debate between using Excel or investing in dedicated software is ongoing, with each approach having its own set of advantages and drawbacks. In this article, we’ll break down the key differences between these two tools and help you determine which one might be the better fit for your company’s sustainability reporting needs.
What is a double materiality assessment?
A double materiality assessment is an expanded approach to traditional materiality that considers both the financial and impact of sustainability issues. In a standard materiality assessment, companies focus primarily on identifying environmental, social, and governance (ESG) issues that could financially impact their business. However, a double materiality assessment looks at two perspectives:
- Financial materiality, which evaluates how sustainability issues affect the company’s value, and
- Impact materiality, which assesses how the company’s operations affect the environment and society.
This dual approach is becoming increasingly important under regulations like the CSRD and it’s European Sustainability Reporting Standards (ESRS), which require organizations to report on not only the risks they face but also their broader impact on the world. This holistic view ensures that companies address both their internal risks and their external responsibilities.
What is a materiality assessment tool?
A materiality assessment tool is designed to help businesses conduct double materiality assessments ensuring a compliant CSRD implementation. Ideally, such a tool guides the users through each step of this process. The following process steps are recommended by the EFRAG in its materiality assessment implementation guidance:
- Understanding the context
- Identification of the actual and potential impacts, risks and opportunities (IROs) related to sustainability matters
- Assessment and determination of material IROs related to sustainability matters
- Reporting of materiality assessment results
Materiality assessment tools streamline this process and help companies to systematically gather input from stakeholders, analyze relevant data, and prioritize the issues that are most material to the business. Whether it’s an Excel spreadsheet or a more advanced software platform, these tools aim to enhance the accuracy, consistency, and transparency of sustainability reporting.
While both Excel and dedicated software, such as Materiality Master, can be used for this purpose, the effectiveness of each option varies based on the complexity of the assessment, the size and structure of the company, and the specific reporting requirements. In the following sections, we’ll explore the pros and cons of using Excel versus a specialized materiality assessment tool to help you decide which one is right for you.
Excel vs. Software for Materiality Assessments – The Pros and Cons
Using Excel as materiality assessment tool
Pros of using Excel
- Familiarity and Ease of Access: Excel is widely used in most organizations, meaning that no additional training is required. Employees are comfortable using it, and it is usually included in standard office software packages, making it accessible and cost-effective.
- Customizability: Excel offers unparalleled flexibility, allowing users to create custom templates that match their unique assessment process or adapt existing materiality analysis templates – given that the sheets are not protected. You can design the layout, apply formulas, and adjust criteria based on your company’s specific needs.
- Low Cost: Since most organizations already have Excel as part of their office tools, there is no need to invest in new software. Hence, only the costs of purchasing a template applies. This makes it an appealing choice for companies looking to minimize costs, especially small and medium-sized businesses.
Cons of using Excel:
- Prone to Human Error: Excel relies heavily on manual data entry and formulas. A small mistake in entering data or applying formulas can lead to significant errors in the materiality assessment, undermining its reliability.
- Time-Consuming: With Excel, much of the data management, analysis, and reporting is done manually, which can be time-intensive. As the volume of data grows, maintaining an accurate assessment in Excel becomes more laborious.
- Limited Collaboration Capabilities: While Excel offers some cloud-based sharing features, it lacks the option to limit access rights to specific areas or topics.
- Updates require manual work: The CSRD and ESRS are still quite dynamic and in flux. For example, in 2026 industry-specific topics will follow, which should also be assessed. This will require an update to existing templates. If the template was purchased, the data needs to be manually transferred from the old spreadsheet to the new version.
Using software as materiality assessment tool
Pros of using dedicated software:
- Automation and Accuracy: Specialized materiality assessment software automates many processes, reducing the risk of human error and ensuring more accurate results. AI-supported data entry and analysis help streamline the entire assessment process.
- Advanced Data Analysis and Visualization: These tools often come equipped with built-in features for in-depth data analysis and visualizing the results in a materiality matrix. You can easily export and share insights with stakeholders, enhancing decision-making.
- Collaboration and Centralization: Many software platforms offer robust collaboration tools that allow multiple users to work on the assessment simultaneously and grant specific access rights based on an IRO-level as the Materiality Master. Centralized data management ensures that everyone is working with the most up-to-date information, making teamwork seamless.
- Scalability: Software solutions are designed to handle complex assessments with large datasets. They can easily scale to meet the needs of growing organizations, allowing for more comprehensive analysis without the limitations imposed by Excel.
- Cost: Unlike Excel, specialized software often requires an investment. Subscription fees, licensing costs, and potential add-ons can add up, making it less attractive for smaller businesses or those with limited budgets. The Materiality Master offers unmatched pricing and starts at 1.499€ per year for unlimited users. No additional costs.
- Learning Curve: While powerful, these tools often come with a steeper learning curve than Excel. However, modern software platforms are intuitive and user-friendly. Furthermore, software solutions can add relevant tool tips, show videos, and other guiding features at the right moments for the users.
- Over-reliance on software: While automation is beneficial, there’s a risk of over-relying on software features without fully understanding the underlying assessment process. This can lead to a passive approach, where users don’t critically engage with the data.
While there are hundreds of all-in-one CSRD tools, there are only a few specialized double materiality assessment software solutions.
Materiality assessment tools: Key takeaways
- Excel is a familiar, low-cost option that works well for smaller organizations or those performing basic materiality assessments. However, it comes with significant limitations in terms of scalability, collaboration, and error prevention.
- Software offers advanced functionality, improved accuracy, and scalability, making it ideal for medium-sized and larger organizations or more complex assessments.
Ultimately, the decision between Excel and software depends on your company’s size, the complexity of the materiality assessment, and your budget. For organizations looking to grow and streamline their sustainability efforts, investing in software may provide long-term benefits, while Excel can suffice for those with more modest needs.