Month: September 2023

LINCOLN, Neb., September 14, 2023 /3BL/ – The U.S. Department of Agriculture awarded the Arbor Day Foundation $50 million for a program that will invest in tree planting and maintenance in disadvantaged communities across the country. The money was part of the Inflation Reduction Act’s historic $1.5 billion investment in the U.S. Forest Service’s Urban and Community Forestry program.

The Arbor Day Foundation, the world’s largest membership nonprofit dedicated to tree planting, was one of the largest funding recipients.

“Now is the time for trees. In cities and neighborhoods, trees add value and offer countless benefits that everyone deserves to enjoy,” said Dan Lambe, chief executive of the Arbor Day Foundation. “Leveraging more than 50 years of experience, the Arbor Day Foundation is ready to engage our extensive network of planting partners to activate these dollars in a meaningful way. We are honored and excited as the U.S. Forest Service puts trust in our organization to bring this impactful investment to the people and communities that need it most.”

The Inflation Reduction Act was passed in the summer of 2022 and remains the most significant climate legislation in U.S. history. The IRA set aside nearly $6 billion for clean energy initiatives to reduce the country’s output of greenhouse gases. That included $1.5 billion specifically dedicated to increasing equitable access to trees and green spaces in underserved communities.

As a national pass-through partner, the Arbor Day Foundation will deliver funds to community-based organizations and nonprofits across the United States. All projects will focus on a disadvantaged community, as defined by the Climate and Economic Justice Screening Tool. Work will ultimately lead to trees being planted, but may also include capacity-building and community engagement work, too.

The historic investment in urban forestry is emblematic of the high demand for trees in American cities. The Arbor Day Foundation recently reported a 23% annual increase in its urban work over the most recent fiscal year, planting and distributing more than 630,000 community trees worldwide.

About the Arbor Day Foundation

Founded in 1972, the Arbor Day Foundation is the largest nonprofit membership organization dedicated to planting trees. Together with our partners, we have helped plant more than 500 million trees in neighborhoods, communities, cities and forests throughout the world. Our vision is to lead toward a world where trees are used to solve issues critical to survival. Through our members, partners and programs, the Arbor Day Foundation inspires people across the globe to plant, nurture and celebrate trees. More information is available at arborday.org.

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For organizations simply trying to ensure they are meeting the proper filing requirements, the recent introduction of the double materiality principle to financial reporting regulations may seem like an additional layer of complexity in an already comprehensive process.

We’ve put together a high-level primer on double materiality in an attempt to ease concerns and help corporations and stakeholders understand double materiality from a more holistic perspective.

Understanding Materiality 

To understand what double materiality is, we must first define the two primary schools of thought around materiality: financial and impact.

What is financial materiality? 

In financial reporting, the term material is used to qualify reporting requirements. According to the Securities and Exchange Commission (SEC), material is defined as “those matters to which there is a substantial likelihood that a reasonable investor would attach importance in determining whether to purchase the security registered.”

In other words, for something to be material to financial reporting, a reasonable investor would consider it important and relevant to their decision-making process. In this case, the determination is made as to which ESG topics will have the greatest impact on economic value creation.

What is impact materiality? 

According to the Global Reporting Initiative (GRI), impact materiality involves information used to qualify “the reporting company’s impact on the economy, environment and people for the benefit of multiple stakeholders, such as investors, employees, customers, suppliers, and local communities.” Impact Materiality is an analysis of how business operations affect (have impact on) people (workers and society) and the environment. Impacts can be directly or indirectly linked to a business’s operations, as a company’s value chain is considered during analysis, not just the entity itself.

The argument in favor of impact materiality is that non-financial impacts will, over time, become financially material. For example, if a corporation has a plant that is polluting a river used as a downstream source of drinking water, the cost of remediating that pollution and damage done to the brand image is financially material.

Double Materiality: A Holistic Approach to Sustainability Reporting 

As the name suggests, double materiality recognizes the importance of corporate information concerning both a firm’s financial value and its broader impact on the environment and society.

In particular, double materiality acknowledges that a company’s non-financial impact on the world can be material, and therefore worth disclosing, for reasons beyond its financial implications. This includes, for instance, the impact of a firm’s activities on human rights, climate change, and other environmental factors.

By considering both financial and non-financial impacts, the concept of double materiality aims to encourage greater transparency and accountability from corporations and to promote more holistic decision-making that takes into account the broader implications of business activities.

The GRI’s position on double materiality 

The GRI is a leading organization in the field of sustainability reporting, and it plays an important role in shaping materiality reporting requirements for companies. They provide guidelines and standards for sustainability reporting, which include requirements for companies to report on their material environmental, social, and governance (ESG) issues.

The GRI’s materiality principle emphasizes that companies should report on those ESG issues that are most significant to their stakeholders and that have the potential to impact the company’s long-term sustainability.

“Financial materiality and impact materiality together under the umbrella of ‘double materiality’ are the only relevant forms of materiality, with both perspectives needed in a two-pillar structure – for financial and sustainability reporting – with a core set of common disclosures and each pillar on an equal footing.

– From the GRI publication Materiality Madness: Why Definitions Matter 

The global perspective on double materiality 

Various agencies, governments, lobbyists, and corporate organizations across the globe are weighing in on the debate around materiality and ESG reporting standards.

The GRI Standards, which are global standards that focus on impact reporting for a multi-stakeholder audience, are seen as essential in shaping a comprehensive global set of sustainability reporting standards that cover the information needs of investors and other stakeholders. By contrast, the International Financial Reporting Standards (IFRS) Foundation is focused on financial materiality for an investor centric audience.

The European Sustainability Reporting Standards (ESRS), developed by the EU, are grounded in a double materiality approach and aim to inform a multi-stakeholder audience, including investors.

Aligning your organization with the new GRI reporting standards

With the success of environmental, social, and governance (ESG) investing around the world, many organizations are well on their way to meeting the new GRI reporting standards.

Aligning with these standards will require firmly committing to adopting ESG behaviors as part of your corporate strategy. These changes include steps such as committing to a shift from fossil fuels to renewable energy, conducting ESG audits, and recognizing a broader pool of shareholders.

Learn more about how Antea Group can prepare your company to keep pace with changing reporting standards.