Table 1. Example of thematic coding and... | Emerald Publishing

Table 1.

Example of thematic coding and sub-coding: enterprise value

Main coding: support enterprise value (i.e. single materiality)		Main coding: oppose enterprise value (i.e. double materiality)
Sub-coding components	Illustrative excerpts	Sub-coding components	Illustrative excerpts
Financial materiality is investors’ main concern	We support the approach that entities will be required to disclose information that is material and gives insight into an entity’s sustainability-related risks and opportunities that affect enterprise value. (Australia Super)	Need to conform with existing “best practice” frameworks (e.g. GRI and EFRAG)	The focus on “enterprise value” materiality runs counter to the EU’s Corporate Sustainability Reporting Directive (CSRD) proposal for double-materiality. (abrdn)
	The focus on enterprise value and the users of general-purpose financial statements seems sensible. (Aviva)		Clearer definition on scope and/or explicit acknowledgement in these paragraphs [IFRS S1paras 1–7] would be welcomed along with a clear incorporation of the double materiality (“impact”) described in Paragraph 17 […]. EFRAG’s concept of double materiality includes both financial and impact materiality. Clearer alignment from the ISSB would be helpful. (Schroders)
	It is important when assessing materiality that there is clarity over the expectations from assessing a firm’s enterprise value. (Legal and General)		We believe that the ISSB framework should also consider and embrace the “double materiality” concept promoted by the EU Commission and reflected by EFRAG proposed standards. (Candriam)
Adequacy of existing standards (i.e. IAS 1)	We consider that the proposed objective is clear but broad in requiring information that will inform the investment decision-making of existing and potential investors, lenders and other creditors as the primary users of standardised sustainability reporting. The definition of materiality is clear and follows the International Accounting Standards Boards (IASB) conceptual framework for financial reporting. (Federated Hermes)		We recommend that the ISSB focus on double materiality reporting of sustainability from the onset and should work with EFRAG to devise a workable double materiality concept (or, at a minimum, ensure compatibility). In practice, this would mean a set of sustainability reporting standards which are science based, incorporate double materiality and capture a broad range of sustainability issues such as inequality, human rights, water risks, biodiversity loss and climate. (DWS)
	We are therefore supportive of the approach adopted by the ISSB which focuses on financial materiality […]. ISSB standards provide the necessary bandwidth for some jurisdictions, such as the European Union, to go beyond financial materiality. (Neuberger Berman)		Building on this dialogue and in line with EFRAG proposed ESRS, we are convinced that companies should disclose information on both financial and impact materiality. Indeed, we believe that impact of companies on the people, planet and economy is relevant for investors to assess the entity’s enterprise value over the short-, medium- and long-term. Then, we believe that the ISSB framework should also consider and embrace the “double materiality” concept to respond to the EU regulation CSRD. (Groupama Asset Management)
	[support a] more flexible approach that would enable companies to apply the same materiality standard as they do for financial reporting today, or to remove the reference to “enterprise value” and instead utilize the definition provided by IAS 1. (T Rowe Price)	Inadequacy of narrow financial materiality approach to meet investors’ needs	Universal owners need a double materiality lens to inform critical, long-term decision-making. Many investors, including ourselves, adopt a “Universal Owner” mind-set. Universal owners can broadly be characterised as investors with highly diversified and long-term portfolios that represent a slice of the global economy. Corporate practices that maximise enterprise value at the individual entity level can contribute to additional costs, or externalities, which can negatively impact the enterprise value of other firms in the portfolio. Universal owners seek more than just entity-level enterprise value to understand the value and risks faced by their total portfolio, including adopting a double materiality lens. (HSBC Bank Pension Trust)
Lack of clarity in assessing non-financial materiality	While the application of materiality to general purpose financial reporting is generally well understood (albeit potentially subject to judgement), there is significantly less clarity and established practice in applying materiality judgements to sustainability-related financial disclosures. (AIA Group)		Our overarching constructive feedback on both S1 and S2 is that restricting the scope of sustainability-related disclosures to enterprise value would not sufficiently meet the current and evolving needs of primary users of general purpose financial reporting, including universal owners or diversified asset managers such as BMO GAM. (BMO Global Asset Management)
Fiduciary argument	The Exposure Drafts also focus on issues which may impact an issuer’s enterprise value which we support. As fiduciaries to our beneficiaries, we are required to focus our investment analysis on those issues that may impact investment results. (CalSTRS)		This approach is not in line with the double materiality principle we support. Investors such as asset managers and their clients will want to be able to consider material “impacts” of an entity on the people and the planet “as such” and over time, in addition to the impact on the enterprise value. (Amundi)
	As fiduciaries on behalf of our end investors, we are required to focus our investment analysis on issues which may impact investment results. The Exposure Drafts’ focus on issues which may impact an issuer’s enterprise value supports our ability to carry out this responsibility. (Capital Group)		The focus on enterprise value is understandable and is appropriate for financial reporting. However, we believe this is too narrow a focus for climate related reporting. We would prefer that the standard explicitly acknowledge the concept of double materiality, or reporting on both the impact of climate change on the enterprise’s value and the impact of the enterprise’s own operations on climate change. (Impax Asset Management)
	Within the parameters set forth by the PERA Board of Trustees (PERA Board) to achieve our investment objectives, PERA considers financially material factors when making investment decisions in our public and private market portfolios. (Colorado Public Employees’ Retirement Association)		Double materiality approach would deliver investors a much clearer picture of an issuer including risks, opportunities and impacts (PGIM)
Costs of double materiality reporting outweigh benefits	Advocates for double materiality often cite demand from diversified investors for information about how their investments contribute to systemic risks that, while not material at the company level, may be material at the portfolio level, particularly over the long term. However, in our view, the costs of such an approach outweigh the benefits. (Dimensional Fund Advisers)		We note that in our December 2020 submission on the IFRS Foundation’s Consultation Paper on Sustainability Reporting 10, we endorsed the concept of “double materiality” and a broader approach to defining sustainability issues…. We continue to support the concept of “double materiality” as we believe that stakeholders, including investors, are looking for information on how companies are impacted by sustainability-related issues and how they themselves impact stakeholders in relation to those sustainability-related issues. (NEI Investments)
Definitional difficulties	We fear that defining a standard of what would constitute significant impacts on the external environment (“double materiality”) would be very difficult. (J. Safra Sarasin)		We would therefore recommend that the ISSB broaden the scope of reporting beyond a simple focus on implications for enterprise value, as such data have broader meaning for both companies and their investors. A broader more holistic reporting framework, embracing the double materiality concept, will ensure that investors are provided with more of the information they require. (USS)

Gradualist approach needed	We believe that a gradualist approach is appropriate to encourage broad adoption, but that over time the ISSB should consider how its approach should evolve to the principle of double materiality. (Fidelity International)	Alternative approaches	Dynamic materiality: We deem it as absolutely essential that the ISSB’s materiality concept is defined in a way to cover investors’ information demands in their entirety, namely, by fully embracing the concept of dynamic materiality and taking into account that investors are, already today, interested in a significant number of inside-out impacts, either due to sustainability preferences or due to expected second-tier effects on enterprise value in the (potentially long-term) future. (Allianz)
			Nested materiality: In particular, we suggest that the ISSB should explicitly reference the concept of nested materiality used in its outreach materials (see below) to elaborate the significant overlap, as well as any differences between an enterprise value-focused materiality lens (purple box, below) and a multi-stakeholder impact lens. (Generation Investment Management)
		Mixed views	Thought will therefore need to be given as to how the ISSB standards can be used as building blocks that can sit within different legal regimes [Interoperability], particularly given varying legal definitions of materiality, for example in the USA with a narrow focus on financial materiality compared with the ISSB definition of enterprise value or the EU which also includes sustainability impact. (Invesco)

Main coding: support enterprise value (i.e. single materiality)		Main coding: oppose enterprise value (i.e. double materiality)
Sub-coding components	Illustrative excerpts	Sub-coding components	Illustrative excerpts
Financial materiality is investors’ main concern	We support the approach that entities will be required to disclose information that is material and gives insight into an entity’s sustainability-related risks and opportunities that affect enterprise value. (Australia Super)	Need to conform with existing “best practice” frameworks (e.g. GRI and EFRAG)	The focus on “enterprise value” materiality runs counter to the EU’s Corporate Sustainability Reporting Directive (CSRD) proposal for double-materiality. (abrdn)
	The focus on enterprise value and the users of general-purpose financial statements seems sensible. (Aviva)		Clearer definition on scope and/or explicit acknowledgement in these paragraphs [IFRS S1paras 1–7] would be welcomed along with a clear incorporation of the double materiality (“impact”) described in Paragraph 17 […]. EFRAG’s concept of double materiality includes both financial and impact materiality. Clearer alignment from the ISSB would be helpful. (Schroders)
	It is important when assessing materiality that there is clarity over the expectations from assessing a firm’s enterprise value. (Legal and General)		We believe that the ISSB framework should also consider and embrace the “double materiality” concept promoted by the EU Commission and reflected by EFRAG proposed standards. (Candriam)
Adequacy of existing standards (i.e. IAS 1)	We consider that the proposed objective is clear but broad in requiring information that will inform the investment decision-making of existing and potential investors, lenders and other creditors as the primary users of standardised sustainability reporting. The definition of materiality is clear and follows the International Accounting Standards Boards (IASB) conceptual framework for financial reporting. (Federated Hermes)		We recommend that the ISSB focus on double materiality reporting of sustainability from the onset and should work with EFRAG to devise a workable double materiality concept (or, at a minimum, ensure compatibility). In practice, this would mean a set of sustainability reporting standards which are science based, incorporate double materiality and capture a broad range of sustainability issues such as inequality, human rights, water risks, biodiversity loss and climate. (DWS)
	We are therefore supportive of the approach adopted by the ISSB which focuses on financial materiality […]. ISSB standards provide the necessary bandwidth for some jurisdictions, such as the European Union, to go beyond financial materiality. (Neuberger Berman)		Building on this dialogue and in line with EFRAG proposed ESRS, we are convinced that companies should disclose information on both financial and impact materiality. Indeed, we believe that impact of companies on the people, planet and economy is relevant for investors to assess the entity’s enterprise value over the short-, medium- and long-term. Then, we believe that the ISSB framework should also consider and embrace the “double materiality” concept to respond to the EU regulation CSRD. (Groupama Asset Management)
	[support a] more flexible approach that would enable companies to apply the same materiality standard as they do for financial reporting today, or to remove the reference to “enterprise value” and instead utilize the definition provided by IAS 1. (T Rowe Price)	Inadequacy of narrow financial materiality approach to meet investors’ needs	Universal owners need a double materiality lens to inform critical, long-term decision-making. Many investors, including ourselves, adopt a “Universal Owner” mind-set. Universal owners can broadly be characterised as investors with highly diversified and long-term portfolios that represent a slice of the global economy. Corporate practices that maximise enterprise value at the individual entity level can contribute to additional costs, or externalities, which can negatively impact the enterprise value of other firms in the portfolio. Universal owners seek more than just entity-level enterprise value to understand the value and risks faced by their total portfolio, including adopting a double materiality lens. (HSBC Bank Pension Trust)
Lack of clarity in assessing non-financial materiality	While the application of materiality to general purpose financial reporting is generally well understood (albeit potentially subject to judgement), there is significantly less clarity and established practice in applying materiality judgements to sustainability-related financial disclosures. (AIA Group)		Our overarching constructive feedback on both S1 and S2 is that restricting the scope of sustainability-related disclosures to enterprise value would not sufficiently meet the current and evolving needs of primary users of general purpose financial reporting, including universal owners or diversified asset managers such as BMO GAM. (BMO Global Asset Management)
Fiduciary argument	The Exposure Drafts also focus on issues which may impact an issuer’s enterprise value which we support. As fiduciaries to our beneficiaries, we are required to focus our investment analysis on those issues that may impact investment results. (CalSTRS)		This approach is not in line with the double materiality principle we support. Investors such as asset managers and their clients will want to be able to consider material “impacts” of an entity on the people and the planet “as such” and over time, in addition to the impact on the enterprise value. (Amundi)
	As fiduciaries on behalf of our end investors, we are required to focus our investment analysis on issues which may impact investment results. The Exposure Drafts’ focus on issues which may impact an issuer’s enterprise value supports our ability to carry out this responsibility. (Capital Group)		The focus on enterprise value is understandable and is appropriate for financial reporting. However, we believe this is too narrow a focus for climate related reporting. We would prefer that the standard explicitly acknowledge the concept of double materiality, or reporting on both the impact of climate change on the enterprise’s value and the impact of the enterprise’s own operations on climate change. (Impax Asset Management)
	Within the parameters set forth by the PERA Board of Trustees (PERA Board) to achieve our investment objectives, PERA considers financially material factors when making investment decisions in our public and private market portfolios. (Colorado Public Employees’ Retirement Association)		Double materiality approach would deliver investors a much clearer picture of an issuer including risks, opportunities and impacts (PGIM)
Costs of double materiality reporting outweigh benefits	Advocates for double materiality often cite demand from diversified investors for information about how their investments contribute to systemic risks that, while not material at the company level, may be material at the portfolio level, particularly over the long term. However, in our view, the costs of such an approach outweigh the benefits. (Dimensional Fund Advisers)		We note that in our December 2020 submission on the IFRS Foundation’s Consultation Paper on Sustainability Reporting 10, we endorsed the concept of “double materiality” and a broader approach to defining sustainability issues…. We continue to support the concept of “double materiality” as we believe that stakeholders, including investors, are looking for information on how companies are impacted by sustainability-related issues and how they themselves impact stakeholders in relation to those sustainability-related issues. (NEI Investments)
Definitional difficulties	We fear that defining a standard of what would constitute significant impacts on the external environment (“double materiality”) would be very difficult. (J. Safra Sarasin)		We would therefore recommend that the ISSB broaden the scope of reporting beyond a simple focus on implications for enterprise value, as such data have broader meaning for both companies and their investors. A broader more holistic reporting framework, embracing the double materiality concept, will ensure that investors are provided with more of the information they require. (USS)

Gradualist approach needed	We believe that a gradualist approach is appropriate to encourage broad adoption, but that over time the ISSB should consider how its approach should evolve to the principle of double materiality. (Fidelity International)	Alternative approaches	Dynamic materiality: We deem it as absolutely essential that the ISSB’s materiality concept is defined in a way to cover investors’ information demands in their entirety, namely, by fully embracing the concept of dynamic materiality and taking into account that investors are, already today, interested in a significant number of inside-out impacts, either due to sustainability preferences or due to expected second-tier effects on enterprise value in the (potentially long-term) future. (Allianz)
			Nested materiality: In particular, we suggest that the ISSB should explicitly reference the concept of nested materiality used in its outreach materials (see below) to elaborate the significant overlap, as well as any differences between an enterprise value-focused materiality lens (purple box, below) and a multi-stakeholder impact lens. (Generation Investment Management)
		Mixed views	Thought will therefore need to be given as to how the ISSB standards can be used as building blocks that can sit within different legal regimes [Interoperability], particularly given varying legal definitions of materiality, for example in the USA with a narrow focus on financial materiality compared with the ISSB definition of enterprise value or the EU which also includes sustainability impact. (Invesco)

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