Navigating the Horizon : Best Practices for Anticipating 2023 DPEF Reporting and Embracing Double Materiality

As we approach the end of the year, businesses are gearing up for a pivotal moment in their corporate responsibility journey—the 2023 Declaration de Performance Extra-Financier (DPEF) reporting, to be published in 2024. This annual disclosure is a critical snapshot of a company's non-financial performance, focusing on environmental, social, and governance (ESG) aspects. In this article, we'll delve into the best practices for anticipating the 2023 DPEF reporting, shedding light on the concept of single materiality, and providing insights into the emerging paradigm of double materiality analysis. These elements which will become crucial for the impending Corporate Sustainability Reporting Directive (CSRD) set to affect reporting exercises from 2025 onwards.

1st: Anticipating Single Materiality:

In-Depth Materiality Assessment:
Companies must undertake a comprehensive materiality assessment to identify and prioritize ESG issues that are most relevant to their businesses and stakeholders. This will ensure that their reporting is focused on matters that truly impact their company's performance and resonate with their stakeholders.

Transparent Stakeholder Engagement:
In parallel, companies should be engaging with stakeholders transparently to gather insights into their expectations and concerns. Understanding their perspectives helps in determining the materiality of certain issues and fosters a collaborative approach to sustainability.

Data Accuracy and Reliability:
At the same time, companies should establish robust systems for collecting and managing ESG data. Ensuring the accuracy and reliability of data is crucial for creating a foundation of trust with stakeholders and regulatory bodies.

2nd: Embracing Double Materiality for Future Resilience:

The concept of double materiality recognizes that ESG risks and opportunities not only impact the company but are also influenced by external factors such as regulatory changes, societal expectations, and global challenges. In order to ensure the proper integration of double materiality companies must: 

Monitor Regulatory Landscape:
Keep a close eye on evolving regulations, especially with the imminent implementation of the CSRD. Understanding regulatory expectations will be crucial in shaping their approach to double materiality.

Integrate External Factors:
Companies should expand their materiality assessments to include external factors that may impact their business. They should consider global trends, emerging risks, and societal expectations in addition to internal priorities.

Scenario Planning:
Anticipate potential future scenarios that may affect your business and its sustainability. Scenario planning helps in preparing for a range of outcomes, ensuring that the company is agile in responding to evolving challenges.

Enhanced Reporting Frameworks:
Companies should be familiarized with updated reporting frameworks that align with double materiality principles. The CSRD is expected to introduce new requirements for reporting on both the impact of a company on the environment and society and the impact of external factors on the company. These standards are called European Sustainability Reporting Standards (ESRS). 

Strengthen Internal Controls:
Companies required to do these reporting exercises must enhance internal controls to capture both the impact of their operations on the external environment and the influence of external factors on their business. This requires a holistic approach to risk management and sustainability.

As we stand on the cusp of 2023, the anticipation of DPEF reporting extends beyond compliance—it is an opportunity to showcase commitment to sustainable practices. The introduction of double materiality, driven by the impending CSRD, propels us into a new era of corporate responsibility, demanding a broader perspective on the interconnectedness of sustainability. By embracing both single and double materiality, businesses can not only navigate the current reporting landscape but also lay the foundation for resilient and future-ready sustainability practices. For all those companies that want to implement the concept of double materiality, Lienzo can help them with the definition of ESG material issues as well as with the creation of stakeholder engagement questionnaires, and the subsequent data analysis and the double materiality matrix, the basis on which to build the extra-financial reporting of the coming years.