Chapter 03 · Reporting & strategyReporting, Disclosure & Frameworks
Dynamic materiality
Definition
Dynamic materiality is the recognition that which sustainability topics are material to a company evolves over time — with changes in scientific evidence, regulation, stakeholder expectations, markets and events such as pandemics or mergers. Under the ESRS/EFRAG regime, materiality assessment is an iterative process reperformed when circumstances change; issues once considered only impact-material can become financially material as risks crystallise.
References
Supports definition and framing.
Overview
What it means
Materiality is a moving frontier: today's reputational issue can be tomorrow's balance-sheet risk.
How it is used
Companies refresh double-materiality assessments each reporting cycle or on trigger events; the concept explains migration of issues (e. g. plastics, climate litigation) into financial filings.
Why it matters
Dynamic materiality disciplines sustainability reporting to stay current, and underpins the logic connecting impact materiality to financial materiality.