Revolutionising ESG Reporting with Open Source Materiality Assessments

The growing importance of corporate sustainability reporting, as well as transparency and accountability, has led to the development of robust frameworks for assessing and disclosing material impacts

.One such framework is Open Source Materiality Assessment (OSMA), which involves using open-source intelligence to quickly assess materiality and adhere to various reporting standards such as CSRD.

What is Materiality?

Materiality is a concept in sustainability and financial reporting that refers to the identification of issues, risks, and opportunities that significantly impact an organisation’s future-proofing and ability to create value over time. It ensures that the most significant and relevant issues are addressed and reported transparently.

Traditionally, materiality focuses on the financial aspects of a corporation. This involves determining which factors of an organisation’s operations have an impact on profit margins and losses and which factors are relevant for investors and stakeholders in making economic decisions.

Within the context of sustainability, materiality extends beyond financial considerations to encompass environmental, social, and governance (ESG) factors. These may include carbon emissions, labour practices, local communities, and supply chain impacts.

What is Double Materiality?

Double materiality recognizes that companies are not just influenced by external factors, but also play a role in shaping them. The concept of double materiality broadens the traditional definition by considering both financial and impact materiality for a more holistic, comprehensive view of sustainability impacts:

Financial Materiality: This looks at the impact of ESG factors on the company’s financial performance, risks, and opportunities.

Impact Materiality: This focuses on the company’s impact on the environment and society.

What Is Open Source Intelligence?

Open Source Intelligence (OSINT) refers to the process of collecting, analysing, and utilising publicly available information from diverse sources such as websites, social media, reports, and government databases to gather granular and comprehensive data.

In the context of materiality assessments, OSINT provides access to extensive data on emerging trends, risks, stakeholder concerns, and sector-specific challenges.

What Is Open Source Materiality Assessment (OSMA)?

An Open Source Materiality Assessment (OSMA) combines the principles of materiality and double materiality with Open Source Intelligence methodologies. This involves leveraging open-source data and intelligence tools to identify material ESG issues for an organisation.

Some of the key features and benefits of using OSMA include:

Compliance: Ensure that ESG reports adhere to current regulatory requirements that include materiality assessments such as the Corporate Sustainability Reporting Directive (CSRD).

Transparency: By using open-source data, OSMA ensures that assessments are based on verifiable, accessible information.

Scalability: OSMA methodologies are adaptable and scalable to organisations of varying sizes and industries.

Insights: Open-source tools continuously update information, allowing organisations to respond to evolving risks, regulatory changes, and stakeholder expectations.

Stakeholders: OSMA incorporates a holistic approach that satisfies regulators, investors, and more - ensuring a comprehensive understanding of material issues across the board.

Why OSMA Matters for CSRD Compliance

The Corporate Sustainability Reporting Directive (CSRD) is a regulatory framework introduced by the European Union (EU) to enhance corporate accountability and transparency in sustainability reporting, and it applies to a broad range of companies from large enterprises to publicly owned SMEs - and with a lot of regulatory requirements from 2025.

Key Requirements of the CSRD:

• Double Materiality: Companies must assess and report on both financial and impact materiality.
• Standardised Reporting: The CSRD requires adherence to the European Sustainability Reporting Standards (ESRS), ensuring consistent, comparable disclosures.
• Auditability: Reports must be verifiable and subject to external assurance.

OSMA supports CSRD compliance in the following ways:

• Double Materiality Assessments:

OSMA’s integration of financial and impact materiality aligns with the CSRD’s double materiality requirements. By leveraging open-source intelligence, companies can identify relevant ESG issues affecting their financial performance and societal impact.

• Enhancing Data:

The CSRD emphasises transparency and accuracy in sustainability reporting. OSMA’s use of publicly available data ensures that assessments are transparent and can be independently verified. This enhances the credibility of reported information, fulfilling CSRD’s auditability requirement.

• Encouraging Stakeholder Engagement:

The CSRD places significant importance on engaging stakeholders in the reporting process. OSMA enables organizations to analyze stakeholder concerns using open-source data from social media, industry reports, and regulatory publications. This ensures that disclosures address real-world expectations and priorities.

• Future-Proofing:

OSMA’s adaptability ensures that organisations remain compliant with evolving regulatory frameworks. The dynamic nature of open-source intelligence allows companies to stay ahead of trends, risks, and legislative updates.

Open Source Materiality Assessment (OSMA) represents a forward-thinking approach to sustainability reporting, blending the principles of materiality and double materiality with the power of open-source intelligence.

neoeco’s partnership with Mettle Capital provides effortless Open Source Materiality Assessment to meet your ESG reporting needs - and allows for materiality assessments to be completed in minutes, rather than months. Our approach revolutionises materiality assessments by integrating Mettle Capital’s OSMAs into neoeco’s sustainability reporting software - allowing, for the first time in the industry, fully compliant end-to-end ESG reporting.

As organisations face increasing pressure to align with frameworks such as the CSRD, OSMA provides a transparent, scalable, and impactful solution for meeting regulatory requirements and driving sustainable value creation.