Double Materiality
At Yara we apply the concept of "double materiality" to assess our impacts, risks and opportunities.
The concept of double materiality means that we must consider the relevance of a sustainability matter from two perspectives, impact materiality and financial materiality. Impact materiality captures how the company impacts the planet and society. Financial materiality capture how the company is impacted by the planet and society.
The Corporate Sustainability Reporting Directive (CSRD) and its accompanying European Sustainability Reporting Standards (ESRS) also use a double materiality assessment as the basis for sustainability disclosures.
In 2023, we applied the principles of the ESRS to conduct the double materiality assessment. We used the same four-step approach that we applied in 2022 but made significant adjustments to implement the ESRS approach along with lessons learned in previous years.
Four-step approach
- Start with the potential topics from the ESRS
- Collate information from internal and external sources
- Identify relevant impacts
- Group impacts into coherent topics
- Involving our expert functions, stakeholders and other sources to assess through the ESRS criteria:
- Significance of negative and positive impact (scale, scope and irremediability)
- Likelihood of potential impacts
- Where in the value chain the impact occurs
- When the impact is expected to occur
- Calibration of assessment results against internal and external sources
- Corporate strategy and risk universe
- Stakeholders
- Validation by the Group Executive Board (GEB)
- Approval by Board Audit and Sustainability Committee (BASC)
- Approval by the Board of Directors
- Disclose our impacts on the planet and society, and how we're impacted
- Use the materiality assessment results to manage our performance
- Confirm existing KPIs and initiate target-setting for material topics
- Define and implement targets in performance measurement system
Material topics and sustainability priorities
The changes in our materiality assessment methodology means a new outcome with a full restructuring of our material topics. Our new list of material topics captures the full range of impacts addressed in previous years, but also go further and consider more impacts, risks and opportunities.
Our prioritization is guided by our three strategic pillars of Climate Neutrality, Regenerative agriculture and Prosperity. While we consider all material topics to be priorities, the three pillars, and most notably climate neutrality, will be at the center of our attention and resource allocation in the next few years.
At the same time we consider many of our material environmental and social topics to be key enablers of our strategy, ensuring that we buld the culture and skills we need for the future and retain our license to operate. Other topics are carefully monitored and managed through our sustainability due diligence to minimize adverse impacts and identify improvement projects.
Material topics
Setting our priorities
In 2021, we renewed our approach to materiality. We widened our mapping of impacts, linked the materiality assessment to our stakeholder, strategy, and risk processes, and strengthened the connection between our material topics and performance management.
At Yara, we want to direct our attention and efforts to the topics that truly matter to our value creation and to our stakeholders. We are conscious of the fact that risks and opportunities can be material from both a financial and non-financial perspective, recognizing the concept of double materiality.
We therefore define material topics as matters that have the potential to affect our value creation, along with topics that represent actual and potential negative or positive environmental and social impacts related to our activities and business relationships.
We are transforming our business with the ambition of offering nature-positive solutions, which entails both new challenges and new opportunities.
Criteria used to prioritize topics
Importance to Yara
Scale: Significance of negative or positive financial impact
Likelihood: Chance of the negative or positive impact materializing
Importance to stakeholders
Importance of topic to stakeholders’ assessments and decisions about Yara
Thresholds
We applied thresholds for tier 1 and tier 2 topics. This tiered approach clarifies our prioritization of issues
Read more in Yara's 2022 Sustainability Report
