For decades, materiality assessments have followed the same rhythm: enlist advisory support, run interviews and surveys over several months, compile a report, and revisit it again in a few years. That cadence made sense when the world moved slowly. It does not anymore.
Regulatory change, market shifts, and technologies like AI are all reshaping industries faster than the assessment cycles most companies use to track them. What was material to a business 18 months ago may not be material today, and vice versa. That mismatch is becoming a strategic and reporting risk, regardless of industry.
None of this is new conceptually. Materiality has been foundational to financial reporting for decades, and finance and audit leaders already understand its logic: some information is decision-useful, most is not, and the judgment about where that line falls must be documented and defensible. What has changed is that non-financial reporting teams are now being asked to apply that same discipline to environmental, social and governance (ESG) topics, with the rigor investors and regulators expect from financial disclosures. At the same time, non-financial materiality introduces additional dimensions, including the need to evaluate both financial and impact materiality, and consider the broader value chain.
Historically, performing this exercise continuously was not practical. A full materiality assessment was expensive and time consuming enough that revisiting it every year could be too resource intensive. Two things have shifted that calculus: the outside world is changing faster, increasing the need to revisit materiality more often, and technology has lowered the cost and time of running an assessment, making it far more realistic to do so. Together, those two trends mean continuous materiality management is quickly moving from a luxury to a business necessity.
Why Sustainability Issues Are Business Issues
The reason materiality matters so much is the concept of impacts, risks and opportunities, or IROs, which are the core outputs of a materiality assessment. The “risk” piece is where sustainability and enterprise risk genuinely converge: ESG topics can pose real risk to a business, but until recently, most companies did not have a consistent framework for capturing that relationship.
One way to think about it is like looking at the night sky. With the naked eye, you see a handful of visible stars. Point a more sensitive instrument at that same sky, and an entire universe of activity comes into view, activity that was there all along, just outside what you could see. That is what is happening with materiality: there has always been a web of non-financial factors shaping a business’s performance and its impact on the world, but companies have not had the lens to see it clearly.
Regulation and voluntary standards are now providing that lens, bringing enough structure and comparability for businesses to better understand and measure relationships that were previously difficult to identify, both within their own operations and in comparison with their peers and sector.
Where Static, Disconnected Processes Break Down
The traditional model for double materiality has three recurring problems, and none are minor.
The first is the audit. Many companies that went through their first wave of CSRD reporting were caught off guard by how heavily their materiality determinations were scrutinized, often as a standalone audit rather than a small part of a broader review. Legacy approaches carry a lot of subjective judgment calls that are hard to defend and trace the lineage of after the fact, and that’s exactly what auditors’ probe.
The second is timing. When an assessment takes months to complete, the findings can be outdated before they are finalized. Acting on stale information carries its own cost, and if the next assessment also takes the better part of two years, the business ends up chasing the same problem in an endless loop.
The third, and the most underappreciated, is disconnection. When the data feeding an assessment, the assessment itself, and the reporting built from it live in various places, the chain is fragile, and misalignment can creep in at any link. A large, one-time deliverable, however thorough, also tends not to get revisited. Once the report ships and the reporting cycle close, the findings rarely resurface to shape day-to-day sustainability strategy.
Building a Connected, Auditable Workflow
The fix is not complicated in concept, even if it is harder in practice: keep data, assessment and reporting connected, from the moment information enters the business to the moment it is disclosed and acted on. That data can originate anywhere, whether from a person entering it directly, a bulk import or a system integration, but what matters is an unobstructed path from source through materiality assessment to final report, so that what gets disclosed traces cleanly back to where it came from.
That connectivity also creates something a lot of teams do not currently have: a durable, auditable record not just of the data, but of the decisions and rationale behind it. Knowing why a topic was or was not deemed material, including the data, methodology and perspectives that contributed to each decision, ensures a defensible assessment that is both audit-ready and decision grade. It is worth being direct about what technology should and should not do here.
Good materiality tooling does not replace the role of practitioners in the assessment. It gives them better information, faster, so they can stay informed on the relationship between their business and the ever-evolving world. The direction this category is heading points toward making that data genuinely conversational: fully traceable insights available on demand, whenever they are needed, whether to inform reporting, business and sustainability strategy, or to answer requests from any stakeholder, from auditors to investors.
What This Means for ERP and IT Leaders
For IT leaders, who are used to thinking in terms of risk and exposure, a couple of things about this shift should resonate directly.
The first is that a connected, technology-enabled materiality process is fundamentally different from a traditional advisory engagement. It is not a service that produces a document and disappears; it is a system with defined data governance, controlled access and complete traceability.
The other is security. Materiality assessments increasingly touch highly sensitive business information that companies would rather not have circulating without the right controls in place. A closed, access-controlled environment with clearly defined roles and permissions can help reduce that risk. It is not hypothetical. Novisto regularly hears from customers, including institutions that hold themselves to a high security standard, that strong access controls around their data were a key factor in choosing a technology-based approach over a traditional advisory model.
None of this makes the underlying judgment calls in a materiality assessment any less important. Determining what’s genuinely material for a business still requires human expertise and context. What is changing is the infrastructure around those decisions: how often they can be revisited, how defensible they are after the fact, and how they remain connected to the reporting and processes that follow. For finance, compliance, sustainability and IT leaders alike, that infrastructure is becoming just as important as the assessment itself.
