Consolidation / Determination of the scope of the assessment

At the beginning of a materiality analysis, each company must determine which group of (subsidiary) companies should be considered within the scope of the analysis. It is important to note that not all companies included in the scope of the materiality analysis necessarily have to be included later in the consolidation scope for the management report. In principle, only those companies for which significant impacts, risks, and opportunities (IROs) at the group level have been identified should be included in the consolidation scope of sustainability reporting.

Companies should therefore include subsidiaries in the scope of the materiality analysis where IROs in operations and/or in upstream or downstream value chains cannot be excluded from the outset.

The following guiding questions can be helpful at this stage:

• How was the consolidation scope of the financial reporting determined?
• Are there subsidiaries that were not previously considered because they were not financially significant?
• Could these subsidiaries have impacts on the environment or the company’s stakeholders?
• To what extent does the company know its upstream and downstream value chains?
• Where must I consider aspects outside my company's boundaries to get a complete picture of the IROs?
• What are the key characteristics of my upstream and downstream value chains? (Who are the stakeholders, and which natural, human, or social resources play a role?)
• Has the company implemented sustainability-related due diligence processes?
• Are there processes within the company to ensure that (potential) negative impacts are identified and prevented or mitigated?

How does it work on Daato?

On Daato, you have various options to incorporate your subsidiaries into the materiality analysis.

On one hand, you can designate the employees of these subsidiaries as stakeholders and include them in the materiality analysis as such. You can read how this works here.

On the other hand, in the evaluation of each IRO, you can specify whether it represents a direct impact of the entire company, actors in the value chain, or one or more subsidiaries. You can document this as follows: