Baseline Requirements: Understanding the Materiality Assessment for V2.1

Modified on Mon, 11 Aug at 11:31 AM

The guidance below supports understanding the integration of the baseline requirements into the new B Lab Standards (focus on XXL companies). Please see the overview guide on more information.

The V6 Baseline Requirement:

Materiality Assessment: A transparent materiality assessment and stakeholder engagement process, conducted on a regular basis (minimum every other year with mechanisms for intermediate updates as appropriate), and used to identify relevant megatrends and material topics to the company, that includes a transparent grievance / complaint mechanism, and that is overseen by the Board of Directors.

Maps to the following new B Lab Standard Sub-Requirements:

The Materiality Assessment Baseline Requirement has been broken down into three separate sub-requirements:

PSG2.3 The company conducts a regular materiality assessment to assess and identify material topics.
PSG3.3 Focuses on process and stakeholder protection.
PSG3.4 Addresses accountability and transparency.

PSG2.3 The company conducts a regular materiality assessment to assess and identify material topics.

Size

Sector

Industry

Year

Eligible for equity Mechanisms

XX Large

X Large

Large

All

Year 0/Year 3/Year 5

None

Changes in Compliance Criteria:	By Year 0, companies must have conducted a materiality assessment that engages specific key stakeholder groups and applies either a double materiality or impact materiality approach. This means that companies must have conducted the assessment in a three year period prior to Year 0. This assessment may also fulfill the requirements of ESC1.7 (environmental impact assessment) and HR2.1 (human rights impact assessment). The significance of impacts must be evaluated based on severity and likelihood, with greater weight given to severity. This ensures that even low-probability but high-severity impacts are prioritized. The requirement for a full materiality assessment at least every three years remains in place. However, companies must also conduct an interim review between assessments, using tools such as annual stakeholder surveys, social media analysis, and grievance trend reviews to identify changes in material topics.
Application to Independently Certifying Subsidiaries:	They may rely on a corporate-level (out-of-scope) materiality assessment to meet the requirements, provided it can demonstrate: How its specific stakeholders and operational impacts were considered How the outcomes of the assessment are relevant to the subsidiary's context In all cases, the materiality assessment or the company’s contribution to it must be overseen by the highest governing body within the scope of certification.
Related Sub Requirements:	Under PSG 2.1, smaller companies must implement mechanisms to consider or involve stakeholders in decision-making. Under PSG 2.2, larger companies are required to adopt a stakeholder governance policy that outlines how stakeholder interests are identified, prioritized, and integrated into governance and strategy.

PSG3.3 The company has a publicly accessible grievance procedure allowing stakeholders to safely raise grievances and seek resolutions.

Size

Sector

Industry

Year

Eligible for equity Mechanisms

XX Large

X Large

Large

All

Year 0/Year 3/Year 5

None

Changes in Compliance Criteria:	Companies are required to maintain a publicly accessible grievance mechanism, clearly available on the company’s website and translated into relevant languages where needed. This mechanism must: Clearly outline the grievance procedure, including process steps, timelines, and resolution pathways Be tailored where necessary to accommodate multiple procedures (e.g. for large companies), with stakeholders informed of the relevant one Include protections against retaliation for individuals raising concerns Ensure ongoing communication with stakeholders throughout the process Explain how conflicts of interest are avoided in grievance decision-making
Application to Independently Certifying Subsidiaries:	Subsidiaries may use a corporate-level grievance mechanism or establish their own, provided that: It is embedded at the highest level within the certifying entity There is evidence of rollout, enforcement, and accountability The responsible executive or manager is within the scope of certification Any corporate-level reporting includes data that is specific to the certifying company, following the same principles as PSG6.2
Related Sub- Requirements:	PSG3.1 requires smaller companies to maintain a publicly accessible grievance procedure. PSG3.2 requires them to track grievances and assign clear accountability for their resolution.

PSG3.4 The company tracks grievances, assigns accountability for resolving them and reports internally to the highest governing body and publicly to stakeholders.

Size

Sector

Industry

Year

Eligible for equity Mechanisms

XX Large

X Large

Large

All

Year 0/Year 3/Year 5

None

Changes in Compliance Criteria:	Companies must designate a management or executive-level role responsible for overseeing the grievance process. This person is required to: Submit an annual internal report to the highest governing body, analyzing trends in grievances Demonstrate that the grievance mechanism is effective, using indicators aligned with the UNGP Effectiveness Criteria Publicly report on grievance outcomes, ensuring transparency and accountability
Application to Independently Certifying Subsidiaries:	Same as PSG3.3
Related Sub- Requirements:	Same as PSG3.3