In Materiality Master, thresholds determine when an Impact, Risk, or Opportunity (IRO) is considered material or not material based on its assigned score. Adjusting these thresholds in a materiality assessment allows organizations to customize their DMA according to their specific needs.
1. What Are Thresholds in Materiality Assessment?
Thresholds set the minimum score an IRO must reach to be classified as material. By default, Materiality Master – the AI-enabled double materiality assessment software – uses a 0 to 5 scale. The default threshold is set to 3 – 60% of the maximum value – but users can customize these thresholds for the different types of IROs (eg. setting a different threshold for a negative impact vs. a financial opportunity).
2. How to Adjust Thresholds
- Go to your Materiality Master assessment and click the settings icon (next to the assessment name).
- Navigate to the “Metadata” tab to find the threshold settings.
- Adjust the threshold values for all IROs or set different thresholds for specific types.
- Click “Save” to apply the changes.
3. Impact of Changing Thresholds in Materiality Assessment
If an IRO’s score falls below the threshold, it is no longer considered material and if this (sub-sub-)topic has no other material IRO, it will be removed from the list of material topics and the materiality matrix. When using the Datapoints Mapping Tool, this change might have an impact on the list of ESRS datapoints that have to be included in the CSRD report.
Example: If a positive actual impact has a score of 3, but the threshold is changed to 3.1, it will become not material.
4. Best Practices When Adjusting Thresholds
✔ Ensure a solid reasoning behind threshold changes.
✔ Document adjustments for transparency.
✔ Discuss changes with auditors to align with compliance requirements.
By carefully adjusting thresholds, you can tailor your materiality assessment to reflect your organization’s priorities while maintaining credibility in sustainability reporting. 🚀
