The Insider/
Materiality Is Not a One-off Exercise

Over the past year, materiality has become one of the most discussed aspects of sustainability and mandatory climate reporting. Yet many organisations still approach it as an exercise to complete at the beginning of the reporting process before moving on to collecting data and drafting disclosures.

That approach misses the point.

A materiality assessment is not simply the first step in preparing a sustainability report or climate disclosures. It is the judgement that underpins every disclosure that follows. If the assessment changes, the report may need to change with it.

Why materiality matters?

Material risks are not static. Commodity prices shift, regulations evolve, projects move through development, and new risks, including physical climate risks, continue to emerge. A materiality assessment completed six months before reporting may no longer reflect the risks facing an organisation at year end.

For boards, this is a familiar challenge.

Modern climate and sustainability reporting standards do not introduce a new concept of materiality. Instead, they expand the range of risks that need to be considered and increase the level of scrutiny applied to those judgements.

Judgement, not data, is often the biggest challenge

One of the common assumptions surrounding mandatory reporting is that data collection, such as greenhouse gas emissions or scenario analysis, is the most difficult part of implementation. In practice, many organisations have found that deciding what is material is often more challenging than collecting the data itself.

The Australian Institute of Company Directors found that boards consistently identified materiality as one of the most difficult aspects of preparing climate disclosures. The challenge was not a lack of information, but one of determining which climate-related risks and opportunities were significant enough to influence decision-making.

Those judgements have consequences beyond compliance. Investors, lenders and regulators increasingly rely on sustainability disclosures when assessing organisational risk. If the materiality process cannot be clearly explained and supported by evidence, confidence in the broader report is likely to be affected.

Materiality should evolve throughout the reporting cycle

Materiality should not be viewed as a workshop completed early in the reporting process and filed away.

As new information becomes available, organisations should revisit their assessment to confirm that previously identified risks and opportunities remain material and to determine whether new risks and/or opportunities have emerged. This is particularly important for organisations operating in sectors such as mining, energy and construction, where project timelines, market conditions and regulatory requirements can change rapidly.

Material topics can shift for a range of reasons: an incident, a merger or acquisition, or a move from one operational phase to another can all change which risks and opportunities are significant to an organisation. As a minimum, the outcomes of the materiality assessment should be reviewed at least once a year, with any changes to material topics, and the reasons behind them, discussed as part of that review.

Recent observations from both PwC and ASIC reinforce this expectation. Organisations are increasingly expected to explain how material judgements have been reached, particularly where uncertainty exists or climate-related financial impacts have not been quantified. Clear documentation of the decision-making process is becoming just as important as the disclosures themselves.

A practical approach for organisations

Materiality does not need to become an overly complex exercise. It does, however, need to be proportionate, evidence-based and embedded throughout the reporting process.

For organisations preparing sustainability disclosures, that means involving the board early, revisiting materiality as circumstances change and documenting the rationale behind key decisions. A well-supported materiality assessment not only strengthens compliance, it also provides a stronger foundation for governance, risk management and stakeholder confidence.

At ReGen, we see materiality as more than a reporting requirement. Done well, it becomes a decision-making tool that helps organisations focus on the risks and opportunities that are genuinely capable of influencing long-term value.