Swimming against the tide: back to single materiality for sustainability reporting

Purpose This paper aims to critically examine the conceptualisation of the principle of materiality, which is one of the most divisive concepts in current regulatory work on standard setting for sustainability reporting. This paper pays particular attention to the current agenda for standard setting for sustainability reporting and the related discourse, including the International Sustainability Standard Board (ISSB) Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information . A new conceptualisation of materiality is proposed based on the critique. Design/methodology/approach The academic and grey literature relating to current regulatory work on sustainability reporting, responses to the ISSB General Requirement Exposure Draft and sustainability reporting frameworks and standards are reviewed. This review also includes the papers in this journal’s special issue on standard setting for sustainability reporting. This review is used to develop original views on how materiality could be conceptualised and interpreted for sustainability reporting. This paper’s viewpoint is built on the criticisms of various definitions of materiality found in the literature and the author’s original critique of the materiality definitions provided in various reports and standards/frameworks on sustainability reporting. Findings Both financial materiality and double materiality approaches have drawbacks. A single materiality approach underpinned by accountability for financial and non-financial capitals instead of decision usefulness for any stakeholder is proposed. The proposed conceptualisation is also underpinned by the need to recognise dependencies between the environment, society and organisations when creating long-term enterprise value. The proposed approach is expected to trigger real changes in organisational practices to pursue a purpose beyond profit. Practical implications The proposed approach to defining materiality for sustainability reporting bridges the divide between financial materiality and social and environmental materiality concepts underpinning different standards and regulations. Social implications The approach to materiality proposed in this paper is aimed at enabling organisations to pursue United Nations Sustainable Development Goals to make the planet and societies more sustainable. Originality/value This paper proposes a new conceptualisation of and approach to materiality determination for sustainability reporting.