ESRS S1 Materiality Assessment
Before collecting any ESRS S1 data, you must complete a double materiality assessment determining which workforce topics are material. The assessment determines which of the many S1 datapoints are mandatory for your company — and which can be omitted. Getting materiality right saves significant data collection effort and produces a more focused, credible report.
Before collecting any ESRS S1 data, you must complete a double materiality assessment determining which workforce topics are material. ESRS S1 is organised into three broad topic areas, each with multiple sub-topics that must be individually assessed for materiality:.
The ESRS S1 topic and sub-topic structure
ESRS S1 is organised into three broad topic areas, each with multiple sub-topics that must be individually assessed for materiality:
Working conditions: Secure employment (stability, precarious work); working time (hours, overtime, rest periods); adequate wages; social protection; health and safety; work-life balance.
Equal treatment and opportunities for all: Gender equality and equal pay; training and skills development; employment and inclusion of persons with disabilities; measures against violence and harassment; diversity.
Other work-related rights: Child labour; forced labour; adequate housing (where provided by employer); privacy; freedom of association, collective bargaining.
For each sub-topic, assess: impact materiality (does the company have significant actual or potential impacts on workers related to this sub-topic?); and financial materiality (does this sub-topic create significant financial risks or opportunities for the company?).
Each material sub-topic triggers specific ESRS S1 datapoints. A sub-topic assessed as not material can be omitted from the report — but the omission must be documented in the double materiality assessment and briefly disclosed in the report (noting the topic and the rationale for non-materiality).
Near-universal material topics for ESRS S1
While all sub-topics require individual assessment, experience from Wave 1 CSRD reporters shows that several S1 sub-topics are material for virtually all large companies:
Health and safety (S1-14): Material for any company with a physical workforce — manufacturing, logistics, construction, retail, healthcare. Even for predominantly office-based companies, H&S has sufficient financial materiality (employer liability, insurance, regulatory compliance) to be material.
Headcount and workforce characteristics (S1-6): Foundational to all other S1 disclosures — material as a basis for calculating rates and ratios. Non-materiality is difficult to justify for any company with employees.
Gender equity (S1-12, S1-13 by gender): Material for virtually all large companies — both from impact materiality (significant negative impacts on female employees where gender pay gaps and limited advancement exist) and financial materiality (human capital risk from failure to attract and retain diverse talent, regulatory risk from EU Pay Transparency Directive).
Adequate wages (S1-10): Material for companies with significant workforces in low-wage countries or minimum-wage-reliant domestic workforces. Less material for high-wage professional service companies where all employees significantly exceed any adequate wage benchmark.
Worker voice and grievance (S1-2, S1-4): Material for most large companies — regulatory requirements (EU Whistleblower Directive, Works Council obligations) create financial materiality regardless of impact assessment.
Sector-specific S1 materiality patterns
S1 materiality patterns vary significantly between sectors — understanding your sector's typical profile reduces assessment effort and prevents obvious omissions.
Manufacturing: Health and safety (very high — physical risk); working time (high — shift work, overtime); adequate wages (medium to high — production workers on or near minimum wage); collective bargaining (high — unionised workforce common). Less material: privacy (standard), child labour (low risk in EU/US operations).
Professional services (consulting, legal, financial services): Gender equality and equal pay (high — significant gender pay gap in many firms); training and skills (high — human capital is the primary asset); work-life balance (high — long hours culture); health and safety (low to medium — office-based). Less material: adequate housing, forced labour.
Retail and hospitality: Adequate wages (high — significant minimum wage workforce); working time (high — part-time, zero-hours, variable hours common); gender equality (medium — female-dominated frontline workforce); health and safety (medium — slips, trips, manual handling). High relevance: parental leave (young female workforce demographic).
Technology: Training and skills development (very high — rapid skill obsolescence); diversity and inclusion (high — sector-wide underrepresentation of women and minorities); work-life balance (high — always-on culture); privacy (high — employee data processing). Lower materiality: adequate wages (high salary levels), H&S (office-based).
Healthcare: Health and safety (very high — patient handling, infection risk, chemical exposure); working time (very high — shift work, mandatory overtime, rest period compliance); work-related stress and burnout (very high — sector-wide crisis); adequate wages (medium — significant variation across roles).
Frequently asked questions
Can we rely on a sector benchmarking approach rather than conducting our own S1 materiality assessment?
Sector benchmarking is a useful input but cannot substitute for company-specific assessment. Your company's specific operations, workforce composition, geographic footprint, and business model create unique impact and financial risk profiles. Use sector benchmarks to calibrate starting hypotheses — then verify with your own data and stakeholder engagement. Assurers will challenge materiality conclusions that appear copied from sector benchmarks without company-specific substantiation.
Do we need to re-run the S1 materiality assessment every year?
A full materiality reassessment is required when material changes occur — significant acquisitions, entry into new geographies, major workforce restructuring, or material changes in the regulatory environment. An annual review of the prior year assessment — checking whether conclusions remain valid — is the minimum. Where no material changes have occurred, document the review and confirm conclusions stand. Full reassessment every 2–3 years is considered good practice even without triggering events.
Freedom of association is a human rights principle we support globally — but we have no operations in countries where it is restricted. Is it material?
For own operations in countries with full freedom of association rights, the topic may have low impact materiality — your operations are not causing adverse impacts. However, check your supply chain — ESRS S2 (value chain workers) may have material freedom of association risk even if S1 (own workforce) does not. For S1 specifically, freedom of association non-materiality in own operations should be clearly documented with the geographic assessment rationale.