Set the Scene
The first phase of a Double Materiality Assessment involves defining the context of your organization. This includes your commercial and internal business activities, value chain relationships, and supporting documentation. The information you provide here drives the AI-powered IRO generation in later phases.
Commercial activities
Commercial activities represent the products and services your organization offers. These are the revenue-generating activities that define your business in the market.
How many to define
- Large companies — Define up to 8 commercial activities that best represent your business.
- SMEs — Define up to 2 commercial activities.
Focus on the activities that are most significant to your organization. You do not need to list every product or service, just the ones that best characterize what your organization does.
How to identify commercial activities
Commercial activities can be identified through two dimensions:
Internal dimension
- Financial metrics such as revenue contribution, cost structure, and growth trends.
- Competitive benchmarking against industry peers.
- Strategic importance to the organization's business model.
External dimension
- Significant ESG impacts associated with the activity.
- Exposure to sustainability-related risks or regulatory pressure.
- Stakeholder expectations and public interest.
What to provide for each activity
For each commercial activity, you need to supply:
| Field | Description |
|---|---|
| Description | A clear description of the product or service, including what it involves and who it serves. |
| Size | A relative size indicator from 1 to 10, reflecting the activity's significance to your organization (e.g., based on revenue share or strategic importance). |
| Upstream value chain | (Optional) Describe the key upstream activities — suppliers, raw materials, logistics — that feed into this commercial activity. |
| Downstream value chain | (Optional) Describe the key downstream activities — distribution, customer use, end-of-life — associated with this commercial activity. |
The descriptions you write for each activity are used by the AI to generate Impacts, Risks, and Opportunities (IROs) in the analysis phase. Be specific and detailed to get the most relevant IROs.
Internal activities
Internal activities represent the operational functions that support your commercial activities. Karomia provides 6 preconfigured internal activities:
- Marketing / Sales
- Finance / Accounting
- Human Resources (HR)
- Information Technology (IT)
- Customer Service
- Research & Development (R&D)
Each internal activity can optionally be linked to one or more commercial activities to indicate which business operations it supports. This linkage helps the AI understand the relationships within your organization when generating IROs.
Document uploads
Supporting documents provide the AI with additional context about your organization. Upload relevant internal and external documents to improve the quality and specificity of the generated IROs.
Internal documents
| Category | Examples |
|---|---|
| Environmental | Environmental policy, carbon footprint reports, energy audits, waste management plans, biodiversity assessments. |
| Social | Employee handbook, diversity and inclusion reports, health and safety policies, community engagement reports, human rights due diligence. |
| Governance | Code of conduct, anti-corruption policy, board composition reports, risk management framework, data privacy policies. |
External documents
| Category | Examples |
|---|---|
| Environmental | Industry sustainability benchmarks, regulatory environmental requirements, sector-specific environmental guidelines. |
| Social | Industry labor standards, supply chain audit reports, customer satisfaction surveys, sector workforce studies. |
| Governance | Regulatory compliance requirements, industry governance standards, peer company governance disclosures. |
The AI extracts facts and context from uploaded documents and combines them with your business activity descriptions to generate over 1,000 potential IROs. The more relevant documentation you provide, the more accurate and comprehensive the analysis will be.
Tips for setting the scene
- Involve colleagues from different departments to get a complete picture of your organization's activities.
- Consider both direct and indirect stakeholder relationships when thinking about your value chain.
- Review your value chain from raw materials to end-of-life.
- Upload documents that cover all three ESG dimensions for the best AI analysis results.
Next steps
- Data collection — Start gathering stakeholder input.