Materiality — What Brands Decide to Care About (and Why That Matters)
Most sustainability reports don’t tell the whole story. They tell you what a brand has decided is worth disclosing. That decision—what makes the cut and what doesn’t—hinges on a single, often overlooked concept: materiality. Materiality is the invisible architecture of every sustainability report. It decides which issues are worth the ink, and which get left in the margins. It’s not just a technicality. It’s power.
What is materiality, really?
In the most basic sense, materiality is a filter. It defines what information is significant enough to include in a report because it could influence the decisions of stakeholders. But this is where things get complicated: which stakeholders? And whose decisions? Different definitions of materiality give very different answers. Right now, two major versions are shaping the sustainability landscape:
Financial Materiality
This is the classic, investor-facing version of materiality. The key question is: Could this sustainability issue affect the company’s financial performance or enterprise value? If the answer is yes, it’s considered material. If not, it’s left out. This version is used by frameworks like SASB, ISSB, and the U.S. SEC. It’s narrowly focused on risk to the company.
Double Materiality
Double materiality broadens the lens. It asks not only how environmental and social issues affect the company, but also how the company affects society and the planet. This version is embedded in the EU’s CSRD legislation and central to the GRI framework. In this view, a company’s emissions, labor practices, or biodiversity impact matter even if they don’t pose a financial threat—because the impact on the world is significant.
But materiality isn’t fixed
What counts as material changes. And quickly. This is called dynamic materiality — the idea that what seems irrelevant today can become absolutely critical tomorrow. Before COVID, pandemic preparedness was a fringe concern. After 2020, it became one of the most material risks a company could face. We see this in fashion, too. Topics like microplastic pollution, circular textile systems, and digital supply chain tracking have all moved from the edges into the spotlight.
How companies decide what’s material
This is where the process gets strategic. Brands don’t just guess. They run a materiality assessment that might include stakeholder interviews, employee surveys, peer benchmarking, and internal workshops. They map out risks and opportunities and then chart the results in what’s known as a Materiality Matrix. A typical matrix plots issues along two axes: one for stakeholder interest, and one for business impact. Topics that land in the top-right corner (high impact, high interest) are deemed material and get reported. Topics in the bottom-left usually disappear from the narrative. But here’s the thing: there are no hard rules for how transparent this process has to be. Brands can define who counts as a stakeholder, decide what counts as interest, and selectively publish the results. That means materiality becomes a tool of storytelling as much as it is a tool of risk assessment.
This is where greenwashing hides
Because there is no universal list of what counts as material, companies can leave out controversial or inconvenient issues simply by stating they’re “not material.”
In fashion, this might mean:
Not disclosing microfiber shedding from synthetic fabrics
Skipping over labor violations in outsourced production
Minimizing end-of-life waste or incineration rates
Omitting data on product volume or overproduction
By labeling these topics immaterial, a brand avoids having to talk about them—and most consumers won’t know what they’re missing. This isn’t always malicious. Sometimes the data isn’t there. Sometimes the teams are under-resourced. But the end result is the same: a sanitized version of sustainability that leaves out the most difficult truths.
Where materiality lives in reporting frameworks
Every major reporting framework defines materiality a little differently. Here’s a snapshot:
SASB: Financial materiality, sector-specific risks
GRI: Double materiality, focused on societal and environmental impact
ISSB: Currently financial materiality, but evolving
TCFD: Financial risk with a focus on climate
EU ESRS/CSRD: Double materiality, legally enforced with documentation
If you’re reading a report and trying to make sense of what is (and isn’t) there, knowing which framework the company is using will tell you a lot about their approach.
Why this matters for fashion
Fashion brands love to talk about sustainability. But they don’t always talk about the parts that matter most. Materiality is often the reason why. A brand like H&M might disclose detailed climate data but say little about product overproduction. Lululemon might report on labor practices but sidestep microplastic pollution. These aren’t oversights—they’re materiality decisions. Understanding how those decisions are made gives you a sharper lens for reading reports, analyzing risk, and seeing past the surface.
The future of materiality
With regulation evolving, materiality is becoming harder to manipulate. The EU’s CSRD demands transparency in how materiality is assessed and requires brands to report on both financial and societal impacts. This shift could redefine what companies are obligated to disclose—and close the gap between what matters to business and what matters to people. Materiality might sound like a footnote. But it shapes the entire structure of sustainability reporting. It determines what gets seen, what gets measured, and what gets left behind. And if you want to understand what a company truly values, start by asking what it considers material.