DataSolmu blog
Make Stakeholder Evidence and Threshold Decisions Reviewable
Connect affected stakeholders, impact evidence and threshold reasoning in a materiality decision that can be reviewed.
A stakeholder survey can reveal concerns, but its ranking does not explain a materiality judgement on its own. A small affected group may describe serious harm that a wider audience has never encountered. The reporting team needs to understand the impact behind the response and explain how the evidence informed its conclusion.
EFRAG's May 2024 materiality assessment guidance connects stakeholder input with evidence about impacts and company-specific threshold judgements. It discusses both qualitative and quantitative approaches, rather than prescribing a universal numerical cut-off. Its discussion of documentation also recognises the practical need for evidence without prescribing a particular documentation format.
This article draws on that non-authoritative guidance for the 2023 ESRS. Teams should confirm the requirements applicable to their reporting period. The decision record and examples below are DataSolmu's practical suggestions.
Understand Who Is Affected
Consider a fictional logistics business reviewing feedback about disturbance near one depot. Most survey respondents identify other topics as more important, while a small neighbouring community reports repeated disruption. The response count cannot tell the reviewer how serious the disruption is for those people.
Start by describing the activity, the affected group and the reported consequences. Record the evidence that supports or challenges the account: operational observations, the timing and location of complaints, relevant measurements and the limits of the information available. Preserve differences between locations or groups instead of losing them in an average score.
Where direct engagement is unsafe or impractical, the guidance discusses alternatives such as credible experts and representatives. It also recognises scientific information as a way to understand environmental interests that cannot speak for themselves. Our recommendation is to record why a proxy is relevant and what it cannot establish.
Explain What The Threshold Means
For negative impacts, the guidance distinguishes severity from likelihood: actual impacts are assessed on severity, while potential impacts also involve likelihood. Severity considers the seriousness, extent and difficulty of remedying the harm. A numerical score is useful only if a reviewer understands what it represents in the situation being assessed.
In the depot example, write down why the available evidence supports the assessment of each relevant characteristic. If the conclusion sits close to the team's threshold, identify which uncertain observation could change it. Ask for the evidence needed to resolve that uncertainty, or explain why the available qualitative evidence supports a conclusion.
Avoid assigning a convenient cut-off merely because a spreadsheet needs one. A threshold decision should be explainable in ordinary language, including how the chosen approach fits the affected people, place and activity.
Keep Financial Reasoning Explicit
The financial assessment asks a different question about effects on the business. The guidance considers the magnitude and likelihood of financial effects across time horizons; qualitative factors can matter when an amount cannot be measured reliably.
Our recommendation is to record that reasoning separately from the impact assessment. In the fictional case, a low near-term cost estimate would not answer the question about harm to the neighbouring community. If a financial assumption changes, the reviewer should be able to identify which conclusion needs reconsideration.
Preserve Disagreement And The Review Outcome
A useful internal record links the evidence, threshold rationale, unresolved questions, decision owner and review date. Where stakeholders and operational teams disagree, capture the substance of the disagreement and the reason for the eventual judgement. Do not erase an unresolved concern simply because a reporting deadline has arrived.
For DataSolmu, the aim is a decision that another person can follow and challenge. A Varmennappi workflow should connect evidence requests and reviewer comments to the judgement they inform. That helps teams prepare for review without turning a score or a completed checklist into a claim of assurance.
Varmennappi supports reporting-data management, evidence traceability, validation workflows, and XBRL-related output review. It does not provide legal advice, auditor assurance, regulator acceptance, or a guarantee of CSRD, ESRS, VSME, ESEF, or XBRL filing compliance. Customers remain responsible for final reporting judgments, source-data quality, filing decisions, and professional review.
Source
EFRAG IG 1: Materiality Assessment Implementation Guidance — May 2024