Shaping ESG regulatory standards: how ABN AMRO became a leader with Datamaran

How can technology improve the credibility of materiality assessment outcomes?

Regulators and investors are increasingly asking companies to show clearer links between their ESG risks and opportunities and their business models. According to a recent report by the European Financial Reporting Advisory Group (EFRAG), the body in charge of creating the first set of legally mandatory sustainability reporting standards in the world, “companies find it challenging to report on their business model and value chain.”

The report, Towards Sustainable Businesses: Good Practices in Business Model, Risks and Opportunities Reporting in the EU, features ABN AMRO, a frontrunner in ESG management and reporting, as an example of best practice. It also highlights the importance of technology solutions in defining links between financial and ESG information, recognizing Datamaran’s approach as best practice.

In this article, we share insights into how ABN AMRO integrates ESG into their business model impact assessments.

ABN AMRO: leading by example

As a leading Dutch bank with the purpose “Banking for better, for generations to come,” ABN AMRO puts ESG factors at the center of its strategy and business model. A robust data-driven materiality process is vital in this.

In a Datamaran webinar, Meet EFRAG’s ESG standards: How to apply Datamaran’s technology, Tjeerd Krumpelman, Global Head of Advisory, Reporting and Engagement at ABN AMRO, and Catalina Hammink, Sustainability Specialist at ABN AMRO, talked about the company’s materiality process and how they link ESG to their business model.

Tjeerd Krumpelman: “A data-driven process not only improves the outcomes, it improves the credibility of the process to get to those outcomes.”

Here’s a short highlight video focused on insights from ABN AMRO’s Tjeerd Krumpelman and Catalina Hammink, which cover:

  • Key takeaways from the EFRAG report “Towards Sustainable Businesses”
  • ABN AMRO’s approach to materiality
  • Driving value beyond reporting
  • Double materiality and its relevance to banking
  • Robustness of materiality processes
  • Datamaran and its role in supporting data-driven materiality and risk monitoring processes.

The central role of tech in materiality

Materiality is the concept that defines why and how certain issues are important for a company or a business sector. Technology is a key element of this process. As Marjella Lecourt-Alma, CEO of Datamaran, said in a previous webinar, “Integrate ESG into the heart of an organization. Focus on the foundation first, and then push out externally.”

To make use of all available ESG information, ABN AMRO uses Datamaran to support their data-driven approach to ESG, materiality and risk monitoring. Datamaran is the only software analytics platform in the world that identifies and monitors external risks, including ESG.

ABN AMRO uses Datamaran for robust materiality outcomes

ABN AMRO starts by determining a long list of topics based on external and internal analysis, then determines the completeness of that list by looking at what peers are reporting and what’s happening in regulation. This is where they use Datamaran as an important input.

They cut the long list down to a shortlist by ranking the topics in terms of how often they featured in the various sources, then they consult stakeholders – customers, society, employees and investors – via surveys. After that, the topics are linked to strategy and finally sent to the external board for approval.

They carry out this process every two years, and then use Datamaran in the intervening years to conduct pulse checks. With a continuous process like this, it’s possible to turn materiality into a more strategic decision-making process rather than a reporting exercise.

Catalina Hammink: “As value creation is part of our strategy, it's very important for us to determine our material topics. And since we apply the broader Integrated Reporting Framework to determine our material topics, we've decided to call them value creating topics… The first step is really to identify the most value creating topics. And then we use it as a management tool and track the progress on the topics and drive that back into the organization.”

Making the link to the business model

Collecting the material topics is one thing; how does ABN AMRO use this process to drive more value beyond reporting? According to Tjeerd Krumpelman, the starting point is aligning materiality and ESG risks from a risk perspective and applying materiality to the business model.

Tjeerd Krumpelman: “Looking at the specifics of our bank, you can really use your value creating topics to align it with your business model and to see where you create the most impact. It’s good to be aware that these impacts can be either positive or negative, and have a plan to minimize negative impacts as much as you can, while at the same time improving your positive impacts. That's how we believe materiality can truly feed into value creation, value creation can lead into decision making, and that can lead into making the right decisions and creating a true impact.”

ESG topics are on the table in company board rooms, and senior leaders are increasingly taking an interest in ESG materiality. With the robust materiality process behind the value creating concept, ABN AMRO is able to collate more information to inform communications to and within the board. At board level, ABN AMRO’s discussion around ESG topics is being led by hard data – including the results of stakeholder research – which results in a conversation around impact value creation and business models.

A method that supports double materiality

This also provides more complete input for communications including annual disclosures, standalone ESG reports, financial reports and 10k filings.

In addition to this, there is a growing emphasis on double materiality, especially in Europe. This requires the company to consider both the financial impacts of issues on the company, as well as the impact of the company on the wider stakeholder group.

Tjeerd Krumpelman: “I know this applies to other sectors as well, but I don't think there's a sector where it applies as much as in the financial sector. Our impact is, by and large, created outside our own operations. So it's good that we are aware of that.”

The EFRAG report reflects the importance of this awareness, not just for ABN AMRO but across other businesses too. The report highlights the crucial role of technology in driving good ESG practices; Datamaran’s software and the way that our clients use it to achieve a data-driven materiality and risk monitoring process appear in the EFRAG report as leading practices.

With its data driven approach, Datamaran has made the process more comprehensive. It ensured that both established and emerging issues are weighted in our initial analysis. From day one, Datamaran has helped us to get a better sense of what is going on, what should be on our long list without the hassle.

Tjeerd Krumpelman Global Head of Advisory, Reporting and Engagement at ABN AMRO

Data plays a role in trust and usability

A robust materiality process, driven by data and supported by Datamaran, improves the outcome itself, but also the credibility of the outcome. For ABN AMRO, this credibility is further enhanced, both externally and internally, by reasonable assurance on the process of determining their value creating topics.

ABN AMRO’s 2019 integrated report features in the best practice supplement to the EFRAG report (example 3.3, pages 30-31), as it “shows the linkage between the inputs, core business model activities, output metrics and outcomes.” The report highlights ABN AMRO’s disclosure of the positive and negative impacts of the business, including in relation to the SDGs, as well as the method used to rate those impacts – the materiality assessment.

Tjeerd Krumpelman: “I think it's great that EFRAG is using this report to share those best practices, because it gives other companies, including ABN AMRO, a sense of direction – where should we be going, also in terms of opportunities and risks? I think that's really powerful, that makes a report usable.”

Read the EFRAG report and supplement.
Read ABN AMRO’s reports.

See how Datamaran can help you

Datamaran is the only software analytics platform in the world that identifies and monitors external risks, including ESG. Trusted by blue-chip companies and top tier partners, it brings a data-driven business process for external risk and materiality analysis. In house - at any time. 

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