When assessing the identified impacts, it is crucial to recognize that positive effects on the environment and people cannot be netted against negative impacts. Therefore, we do not calculate an average score for each sub-topic. Instead, we consider the highest score to ensure that we fully capture the significance of the impact.
For this assessment of impacts, risks, and opportunities, we utilize a scoring system ranging from 1 to 5. Scores will be displayed using this scale, where 5 indicates high materiality and should definitely be considered as such, while a score of 1 is deemed not material. Although the ESRS does not set specific thresholds for materiality, we recommend considering sub-topics as material if they score above 2.5-3 on financial or impact materiality.
Impact scores
In assessing impact scores, we differentiate between negative and positive impacts. For negative impacts, the degree of irremediability significantly influences the score; the more challenging an impact is to remedy, the higher its score, increasing its likelihood of being material.
Additionally, we distinguish between actual and potential impacts. Actual impacts, which are currently occurring, hold immediate relevance. In contrast, for potential impacts, we also evaluate their likelihood of occurrence to determine their materiality.
Actual positive impacts = scale + scope / 2
Potential positive impacts = (scale + scope / 2) * likelihood
Actual negative impacts = scale + scope + irremediability / 3
Potential negative impacts = (scale + scope + irremediability / 3) * likelihood
In case of human rights, the severity overweights the likelihood of potential negative impacts:
Potential negative impacts (affecting human rights) = scale + scope + irremediability / 3
Impact materiality score = highest score
Risk & opportunities scores
When assessing financial materiality we distinguish between negative and positive financial effects, in the context of risks and opportunities. Risk-, and opportunity-scores are calculated by multiplying the magnitude of each risk or opportunity by its likelihood of occurrence. Risks and opportunities are assessed on the short-, medium- and long-term horizons.
Financial risk = magnitude of negative financial effects * likelihood
Financial opportunity = magnitude of positive financial effects * likelihood
Financial materiality score = highest score