How to Conduct an ESG Materiality Assessment and Choose Between GRI and SASB/ISSB Reporting

An ESG materiality assessment identifies and prioritizes environmental, social, and governance topics most relevant to a business and its stakeholders, serving as the foundation for sustainability disclosure strategies. The choice of reporting framework, such as GRI, SASB, or ISSB, depends on whether the primary audience is investors or a broader stakeholder group.

Isabella Reyes

November 1, 2026 · 4 min read

An ESG materiality assessment is a tool for identifying and prioritizing the environmental, social, and governance topics most relevant to a business's operations and stakeholders, and it is the logical starting point for any company building a sustainability disclosure strategy. The framework choice that follows hinges on one central distinction: whether your primary audience is investors assessing financial risk, or a broader set of stakeholders concerned with your company's impacts on the economy, environment, and people. Investor-focused standards such as SASB and the ISSB standards apply a financial materiality lens, while the GRI standards serve multi-stakeholder impact reporting built on a double materiality perspective.

The Business Case for Materiality: Beyond Compliance

The case for a materiality assessment rests on risk and value, not paperwork. As Sustainalytics, an ESG research firm, explains, poor management of material ESG issues can negatively affect share price, damage brand reputation, and result in legal or regulatory problems. Over recent decades, the interpretation of what counts as "material" has expanded to include ESG-related factors, and many financial market participants have concluded that for most issuers, ESG factors can impact company value and belong in decision-making.

That investor recognition is what turns materiality from a compliance exercise into a strategic one. A structured assessment tells management which issues genuinely affect enterprise value, where stakeholder expectations are concentrated, and which topics warrant disclosure and operational investment. It also disciplines the reporting process itself: voluntary frameworks help determine which issues to disclose and the form that disclosure takes, as Bloomberg Law notes in its comparison of ESG reporting frameworks, and may facilitate verification of the information in a company's report.

The practical payoff is focus. Without an assessment, companies risk either over-reporting immaterial topics or under-reporting the issues that investors, regulators, and communities actually watch. With one, disclosure, risk management, and strategy can be aligned around a defensible, prioritized list of topics.

Step-by-Step Guide: Conducting Your ESG Materiality Assessment

The first stage of an assessment, according to guidance from Materiality Master, a sustainability consultancy, is understanding the sustainability context and stakeholders. Companies begin by mapping their sustainability context, including the business model and key activities such as products, operations, and markets; value chain actors including suppliers, distributors, and downstream impacts; sector-specific risks and expectations; and relevant regulations and societal expectations.

Simultaneously, companies conduct a stakeholder analysis, identifying affected and interested stakeholders—employees, communities, NGOs, and investors among them—along with how they will be engaged in the assessment process and the mechanisms used, such as interviews, surveys, or grievance mechanisms.

From this foundation, the assessment proceeds through a recognizable sequence: brainstorming the full universe of potential ESG issues relevant to the mapped context; gathering data from stakeholders and internal sources to assess the significance of each issue; and then prioritizing and validating the resulting material topics with leadership and stakeholders. The USC Libraries research guide on sustainability standards describes the assessment's purpose in exactly these terms—identifying and prioritizing the ESG topics most relevant to a business's operations and stakeholders—and notes that tools such as the SASB Materiality Finder let companies look up industries and compare them side by side when building an initial issue list.

One caution: this guide covers the process, not legal advice on specific disclosure regulations. Companies subject to mandatory regimes should verify their obligations separately.

Decision Framework: Choosing the Right Reporting Standard for Your Business

The choice between these standards is ultimately a choice of audience and purpose. The matrix below categorizes the major frameworks on those two dimensions and leads to a clear recommendation.

Decision matrix: selecting an ESG reporting standard by audience and materiality focus
Reporting approach	Primary audience	Materiality focus	Key frameworks	Choose this if…
Investor-focused reporting	Investors assessing financially material ESG risks and opportunities	Financial materiality: issues are material if they affect enterprise value (often called single materiality)	SASB Standards; ISSB Standards (which build on SASB and TCFD)	Your primary goal is to communicate financial risks and opportunities to investors and protect enterprise value
Multi-stakeholder reporting	A broad range of stakeholders: employees, communities, NGOs, supply chain partners	Double materiality: both financial impacts and impacts on society and the environment (impact materiality plus financial materiality)	GRI Standards (often used alongside other frameworks)	Your primary goal is to report your broader societal and environmental impacts to a wide range of stakeholders

Decision matrix: selecting an ESG reporting standard by audience and materiality focus

Reporting approach

Primary audience

Materiality focus

Key frameworks

Choose this if…

Investor-focused reporting

Investors assessing financially material ESG risks and opportunities

Financial materiality: issues are material if they affect enterprise value (often called single materiality)

SASB Standards; ISSB Standards (which build on SASB and TCFD)

Your primary goal is to communicate financial risks and opportunities to investors and protect enterprise value

Multi-stakeholder reporting

A broad range of stakeholders: employees, communities, NGOs, supply chain partners

Double materiality: both financial impacts and impacts on society and the environment (impact materiality plus financial materiality)

GRI Standards (often used alongside other frameworks)

Your primary goal is to report your broader societal and environmental impacts to a wide range of stakeholders

The reasoning path is straightforward. If your materiality assessment surfaces issues that matter chiefly because they affect cash flows, cost of capital, or enterprise value, the investor-focused lane—SASB, or ISSB for a global baseline—matches that goal. If your stakeholder analysis reveals that communities, employees, and value chain partners are central to your license to operate, and your material topics include impacts your company has on the world rather than only the world's impacts on your company, GRI's double materiality lens fits better. Many companies with both investor and multi-stakeholder obligations use GRI in conjunction with an investor-focused standard, which the frameworks' design accommodates.

This article does not recommend specific software or consulting services for conducting assessments; the framework choice above is based on each standard's general approach and primary audience.