Sustainability now: Materiality matters

Apr 3, 2025

Diana Stoltzfus, a Partner at PwC’s National Office and former Deputy Chief Accountant at the SEC, dives into the critical role of materiality in sustainability reporting. She unpacks double materiality, emphasizing the need for companies to assess both their sustainability impacts and financial risks. The discussion highlights differences between European and international standards, the importance of stakeholder engagement, and the practical steps for conducting materiality assessments. Stoltzfus illustrates how businesses can align sustainability with long-term success.

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INSIGHT

Double Materiality

Double materiality in ESRS assesses impact materiality and financial materiality.
Impact materiality analyzes a company's impact on people and the environment, while financial materiality assesses the financial effect of sustainability-related activities on the company.

ANECDOTE

Resource Dependency Example

Companies dependent on specialized resources, like a specific type of cotton, face sustainability challenges.
Comparing projected sales with resource availability reveals potential limitations and the need for change.

ANECDOTE

Oil Spill Example

An oil spill negatively impacts the environment and people, illustrating impact materiality.
Cleanup costs, repairs, and potential lawsuits exemplify financial materiality arising from the same event.

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A video of this podcast is available on YouTube, Spotify, or PwC’s website at viewpoint.pwc.com.

We're excited to continue our video podcast series on the foundations of sustainability reporting. Now watch along with our sustainability specialists as they discuss the latest on sustainability.

Despite the ever-changing landscape, materiality remains the cornerstone of sustainability reporting – and it’s here to stay. In this episode, we discuss how materiality is defined and applied under both the European Sustainability Reporting Standards (ESRS) and International Sustainability Standards Board’s (ISSB) standards, highlighting key similarities and differences.

In this episode, we discuss:

2:13 – Understanding double materiality and impacts, risks, and opportunities (IROs) in the ESRS framework
19:15 – Considering long-term horizons, cumulative effects, and uncertainty under ESRS
26:39 – Disclosure of relevant IROs under ESRS, including the importance of stakeholders
34:21 – The concept of materiality under ISSB standards
40:23 – ISSB risks and opportunities

Identifying impacts, risks, and opportunities as well as performing a double materiality assessment are fundamental areas of reporting in accordance with ESRS that are not expected to be impacted by the European Commission’s “Omnibus” proposals at this time. For information on how the “Omnibus” proposals could impact reporting, check out PwC’s publication.

About our guest
Diana Stoltzfus is a partner in the National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings, and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the Professional Practices Group within the OCA.

About our host
Heather Horn is the PwC National Office Sustainability and Thought Leader, responsible for developing our communications strategy and conveying firm positions on accounting, financial reporting, and sustainability matters. In addition, she is part of PwC’s global sustainability leadership team, developing interpretive guidance and consulting with companies as they transition from voluntary to mandatory sustainability reporting. She is also the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.