To identify material impacts and risks, companies need to know the critical dependencies and impacts in the value chain. These are certainly corner stones in how the double materiality assessment should be prepared. In KPMG we believe that the best starting point to identify material value chain information, is to map significant third parties. This regardless of whether it is merely a compliance exercise or is to be used to unlock commercial value.
A double materiality assessment is an exercise with multiple layers. The overall outcome is to identify impacts, risks and opportunities that are both impact and financially material. To reach this outcome both actual and potential, as well as impacts and risks on the short-, medium-, and long-term must be addressed.
In our view, the exercise of mapping significant third parties, is a very meaningful way to start the double materiality process, regardless of the level of ambition for the ESG reporting.