Materiality of Digital Technology

Context

The Corporate Sustainability Reporting Directive (CSRD), which came into force on January 1, 2024, has contributed, among other things, to the standardization of reporting on the environmental, social, and governance (ESG) issues of organizations. In particular, the CSRD enshrined the dual materiality analysis approach through the concept of IROs – an acronym for Impacts, Risks, and Opportunities – which has become the cornerstone of discussions on how organizations interact with their physical, human, and societal environment.

As a reminder, the dual materiality analysis aims to identify and prioritize the ESG issues relevant to the organization in order to enable it to prioritize its sustainability actions. The CSRD made dual materiality analysis an essential prerequisite for publishing regulatory information on sustainability, but the exercise is relevant even for organizations not subject to the CSRD because it forms the basis for building a coherent and pragmatic ESG strategy. We speak of dual materiality when considering two complementary dimensions:

• Financial materiality focuses on the issues that entail risks and/or opportunities impacting an organization's financial position, performance, operations, cash flow, etc. This dimension represents, in a way, the impact of the external environmental and social environment on the organization.

• Impact materiality focuses on the issues related to the organization's environmental and social impacts, both positive and negative. This dimension represents the organization's impact on the external environmental and social environment. Reducing a negative impact within the scope of the entity in question cannot be considered a positive impact; however, if the negative impact was generated by another actor, reducing it by the entity in question can be recognized as a positive impact on the environment or society.

A thorough understanding by organizations of their impacts (positive and negative), risks, and opportunities (IROs) is therefore essential for implementing a relevant sustainability approach and preparing their CSR reporting. However, the perception of IROs related to the digital sector has historically been incomplete for several reasons: the tangible nature of digital technology, and the resulting environmental and social impacts, is not yet fully grasped by many stakeholders; the complexity of the sector's value chains sometimes makes it difficult to understand the risks affecting certain links within them; and the perception of digital tools as mere aids not part of the organization's core activities often obscures the fact that digital technology has become absolutely indispensable for the continuity of many operations. For all these reasons, we propose to shed light on the impacts, risks, and opportunities associated with digital technology.

Objectives of this deliverable

The objective of this database is to list the impacts, risks, and opportunities (IROs) related to digital technology that should be considered most frequently when conducting a dual materiality analysis. This tool is designed to be suitable for both organizations for which digital technology is part of their core business and those that use it to support other activities. The listed IROs are intended, of course, to inform dual materiality analyses prior to CSRD reporting, but as mentioned above, they can—and should—also contribute to a broader reflection on the organization's sustainability approach and the robustness of its information system.

The database's entry point is the category of activities carried out by the organization: the relevant IROs to consider will depend on this category. The activities considered are intended to cover the entire digital value chain as comprehensively as possible:

• Mining and metallurgy activities

• Hardware component manufacturing

• Data center construction

• Data center management

• Data center use (IaaS/PaaS/colocation)

• Equipment manufacturing

• Software development

• Software management

• Software use

• Equipment use

• Equipment management

If your organization engages in several of the activities listed, we encourage you to consult the IROs related to all of the activities performed. For example, if your organization manages its own data center and develops software in-house while also using third-party software and equipment, the relevant IROs to consult are those related to the activities "Data center management," "Software development," "Software use," and "Equipment use."

Disclaimer

Choose one of your activities

• Mining and metallurgy activities
• Hardware component manufacturing
• Data center construction
• Data center management
• Data center use (IaaS/PaaS/colocation)
• Equipment manufacturing
• Software development
• Software management
• Software use
• Equipment use
• Equipment management

Complete database

You can click on the lines (near the numbering) to open the corresponding record to view its full content.

You can filter the content by clicking on "Filter" + "Add filter"

Then by selecting one of the properties, as in the example "Topic" and finally the type of filter (here we are looking for all IROs whose Topic is E1 (that is, on climate change).

You can retrieve all the IROs that apply to your organization. To do this, click on a cell and then drag to the last row (as in Excel). A simple Ctrl+C/V will work, or right-click -> "Copy cells".

It's up to you!

Data dictionary

• Activities: category of activities carried out by the organization

• IRO EN/FR: an IRO is defined as either a positive or negative impact due to the organization's activities that affects the environment or society; either a financial risk or opportunity affecting the organization itself due to a change in the environment or society

• Type: Type of IRO: Positive/Negative Impact, Risk, or Opportunity

• Theme: Environmental, social, or societal impact tracked with this indicator

• Topic: Theme code associated with the ESRS

• E1: Climate Change

• E2: Pollution

• E3: Water and Marine Resources

• E4: Biodiversity and Ecosystems

• E5: Resource Use and Circular Economy

• S1: Company Personnel

• S2: Value Chain Workers

• S3: Affected Communities

• S4: Consumers and End Users

• G1: Business Conduct

• Subtopic: Sub-theme associated with each ESRS

• Value Chain: Positioning on the value chain (Upstream, Own Operations, Downstream)

• Actions: Actions identified to address negative impacts or risks, or contribute to positive impacts

Would you like to participate?

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