Materiality in sustainability assurance: Insights from assurance standards and certification

Materiality isn’t just a buzzword—it’s the backbone of credible sustainability reporting and assurance. It answers the big question: What really matters? For organisations, it’s about identifying and prioritising the issues that shape strategy and stakeholder trust. For assurance providers, it means spotting misstatements that could mislead decision makers.

Two key frameworks—the AA1000 Assurance Standard (AA1000AS) and the International Standard on Sustainability Assurance (ISSA 5000)—provide guidance on applying materiality in sustainability contexts. This article explores materiality from both the reporting organisation’s and assurance provider’s perspectives, explains how thresholds are defined, and examines quantitative versus qualitative considerations, as well as parallels with certification audits.

Materiality for reporting organisations

For reporting entities, think of materiality as your filter. Out of all possible sustainability topics, which ones truly impact your business and stakeholders? Under AA1000, material issues are those that “substantively influence the assessments, decisions, actions and performance of an organisation and/or its stakeholders in the short, medium and long term”1. This process of determining materiality often involves stakeholder engagement, impact assessment, and prioritization of issues based on relevance and significance.

Increasingly, organisations apply a double materiality lens:

Financial materiality: how sustainability issues affect your financial performance.
Impact materiality: how your operations affect people, the environment, and society.

Materiality for assurance providers

From the perspective of assurance providers, materiality shifts toward material misstatement – the errors or omissions in sustainability information that could mislead report users and other stakeholders. The question to ask is “could the error or omission change what users think or do?” Under ISSA 5000, this requires professional judgment, considering both the magnitude and nature of the misstatement. Assurance practitioners must balance precision with practicality, focusing on areas where inaccuracies could undermine trust in sustainability disclosures.

Defining the materiality threshold in sustainability assurance

ISSA 5000 requires practitioners to consider materiality for qualitative disclosures and determine materiality for quantitative disclosures. A sustainability assurance engagement may apply multiple materialities for different ESG metrics, according to the information needs of the intended users.

The materiality threshold represents the level at which misstatement becomes significant enough to affect stakeholder decisions. Although ISSA 5000 doesn’t give a magic number to establish the materiality threshold, its guidance suggests practitioners should determine materiality by applying a percentage to a reported metric. They must also consider information sensitivity to stakeholders, regulatory limits, industry context, reputation impact, financial implications, and variations from prior reporting periods or targets.

The materiality threshold is not purely numerical. Quantitative factors—such as greenhouse gas emissions or water consumption—allow for a measurable threshold. However, qualitative factors, such as governance failures or ethical breaches, can be equally material despite lacking precise metrics.

For example, if your goal is 50% recycled packaging, the material misstatement may hinge on whether the goal is met, not just the percentage change. Similarly, a single fatality is material regardless of percentage benchmarks.

When double materiality applies, ISSA 5000 requires practitioners to weigh both dimensions and often apply the more conservative threshold.

Parallels between assurance and certification audit materiality

Materiality in assurance shares similarities with non-conformance findings in certification audits. Both concepts identify issues that significantly compromise compliance or stakeholder confidence. A major non-conformance, such as failure to meet a critical standard requirement, parallels a material misstatement because both require corrective action and can affect certification or assurance conclusions. This alignment underscores the importance of robust governance and accurate reporting in sustainability frameworks.

ISSA 5000 introduces the concept of aggregation risk for quantitative disclosures. Even if individual misstatements are not material on their own, their cumulative effect can result in a materially misstated disclosure. In certification audits, several repeated minor non-conformances across multiple functions can indicate a systematic failure and become a major one. This similarity underscores the importance of a holistic approach in both assurance and certification audits—where the sum of smaller issues can be as impactful as a single major error.

Conclusion

Materiality bridges organisational accountability and stakeholder trust. While AA1000AS focuses on identifying material topics for reporting, ISSA 5000 guides assurance providers in evaluating misstatements and setting thresholds. By integrating qualitative and quantitative considerations—and applying a double materiality lens—assurance practitioners ensure sustainability disclosures remain credible, relevant, and decision-useful. Ultimately, materiality is not just a technical requirement; it is a principle that underpins transparency and integrity in sustainability reporting.

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