Sustainable AI – Solving the “Double Materiality” Challenge

From 2025, companies will not only have to demonstrate that they are well prepared for "material" risks with a large financial impact, but also that they are preparing to mitigate the negative impacts their actions may have on the environment and society at large. While reporting for such "Double Materiality" challenges could be seen as part of a growing regulatory overreach, they also represent an opportunity for companies that want to prepare their operations and business models for a more sustainable future.

In our Whitepaper “Sustainable AI for Enterprise Transformation, Innovation and Growth”, we show how the development and implementation of Sustainable AI platforms can become a driving force for enterprise transformation and fostering sustainable growth. It shows how AI, especially generative AI, can integrate with existing management systems to improve prediction, optimization, and planning across multiple business functions. It enables data-driven decision-making and streamlines complex sustainability initiatives across departments and value chains. This integration is critical to solving the "Double Materiality" challenges of financial and environmental reporting and implementing effective environmental, social, and governance (ESG) strategies.

The result is a "Double Materiality," which requires companies to fundamentally change their reporting and strategic thinking beyond financial performance and economic risks. They must now also identify and prioritize solutions for the second materiality of social and environmental risks that an organization faces and causes by its own actions. This fundamentally changes what operational data a company needs to collect, how it is analyzed, and how operational decisions become aligned with sustainability goals.

The Two Sides of “Double Materiality” Management

Source: Double materiality: its importance and how we apply it at Telefónica - Telefónica

On this basis, the company has formulated new goals and actions that are published in Telefonica’s Responsible Business Plan, affecting a growing range of operations. How Double Materiality planning can be implemented in detail, Fujitsu explains in its approach to materiality assessment.