Three sub-requirements in the B Lab Standards explicitly converge on the same foundational activity: assessing impacts across a company's operations and value chain to determine the company’s most material impacts that should be addressed as a priority. While PSG2.3 (materiality assessment), HR2.1 (salient human rights issues), and ESC1.7 (nature and animal welfare impact assessment) are distinct requirements, companies may conduct one integrated assessment that satisfies all three – provided the assessment meets each sub-requirement's specific compliance criteria. In fact, if the company carries out separate assessments, the material topics it identified under PSG2.3 must cover those identified under ESC1.7 and HR2.1 (even if at a high level). This article explains how to conduct an integrated materiality assessment, what the common architecture looks like, and where the requirements diverge.
Common architecture across the three assessments
The following elements are shared across PSG2.3, HR2.1, and ESC1.7:
Scope: Operations and value chain
Prioritisation method: Severity and likelihood scoring; severity should outweigh likelihood so that high-severity/low-probability impacts are not systematically excluded
Recency: Assessment carried out within the last 36 months (with interim reviews for PSG2.3)
Where the requirements diverge
Element | PSG2.3 | HR2.1 | ESC1.7 |
Scope of topics | All material topics (also topics not covered by the B Lab Standards) | Human rights issues only | Nature and animal welfare only |
Governing body oversight | Oversight of assessment process, reviewing results (and targets under PSG2.4: The company identifies material topics not addressed in the B Lab Standard, sets targets, and reports progress annually) | Not required | Not required |
Methodology | Stakeholder engagement: 6 specific stakeholder groups (for the environment the use of data or expert advice constitutes as engagement) Other types of input not mandated
| Desk research + stakeholder engagement (flexibility on number and type of stakeholder groups) | Desk research + stakeholder engagement (flexibility on number and type of stakeholder groups) Contribution to the five drivers of nature change Adjusted first 2 steps of TNFD LEAP approach |
Continuous improvement | Inherent with the assessment every 36 months and interim reviews in between | Inherent with the assessment every 36 months | Inherent with the assessment every 36 months Phased approach specifically called out as allowed: using a high-level screening and investigating a small number of highly material issues deeply & improving the assessment over time |
Public disclosure | Yes (from Y0) | Only in Y3 | Only in Y3 |
Impact orientation | Following double or impact materiality (actual & potential positive & negative impacts) | Actual and potential negative impacts (positive impacts not mandated) | Actual and potential negative impacts (positive impacts not mandated) |
FR3.1 (Risk tool) consideration | Not required | Considering potential impacts from the Risk Tool | Considering potential impacts from the Risk Tool |
Level of detail | Higher-level identification allowed (e.g. forced labor) | Specific issues, specific locations in value chain (e.g. forced labor in Latin America) | Specific issues, specific locations in value chain |
Output format | Materiality matrix or list + methodology summary | List of salient issues + methodology | List of material issues + methodology, prioritised value chain activities, high risk commodities |
Non-materiality documentation | Not specified | Not specified | Written explanation with scientific evidence if water, biodiversity, or waste not deemed material (ESC1.7.4) |
If the three assessments are conducted jointly, supplementary materials may be required as evidence. For instance, performance data, impact metrics and tools used to identify the company's interface with nature to support ESC1.7.
Illustrative Example: Integrated Assessment Output (Agriculture/Food Sector)
The following illustrates how a company might document its integrated assessment. Severity is scored 1–5 (5 = most severe); likelihood 1–5 (5 = most likely). Materiality threshold: An issue is considered material if the severity score is 4 or higher (regardless of likelihood), or if the combined score of severity and likelihood is 6 or higher and severity is at least 3.
Material Topic | Sub-topic / Specific Issue | Value Chain Location | Actual / Potential | Severity (1–5) | Likelihood (1–5) | Material? |
Forced labour | Forced labour on fruit farms | Tier 1–2 suppliers in South America | Both | 5 | 3 | Yes |
Child labour | Child labour in cocoa harvesting | Tier 2–3 suppliers in West Africa | Potential | 5 | 3 | Yes |
Land & water use | Deforestation linked to soy sourcing | Tier 2 suppliers, Brazil | Actual | 4 | 4 | Yes |
Biodiversity loss | Impact on pollinators from pesticide use | Own operations + Tier 1 suppliers | Both | 4 | 3 | Yes |
Living wages | Below-living-wage pay at packing facilities | Tier 1 suppliers in Southeast Asia | Actual | 3 | 4 | Yes |
Waste | Packaging waste at end-of-life | Product use/end-of-life | Potential | 2 | 2 | No (score 6, severity < 3) |
Freedom of association | Restrictions on worker organising | Own operations, specific geographies | Potential | 3 | 2 | No (score 5) |
Threshold methodology note: Severity is scored using the UNGP/GRI 3 framework: scale (how grave), scope (how many affected), remediability (how reversible). Likelihood combines probability of occurrence and frequency. Topics falling below the threshold are documented and monitored; any topic in the non-material category for ESC1.7 (specifically water, biodiversity, waste) requires a written explanation supported by scientific evidence.