To comply with Environmental, Social and Governance (ESG) standards, Royal A-ware assessed its impact using a double materiality assessment. The results of this analysis served as the foundation for the identification and establishment of our strategic pillars.
In 2023/2024, we conducted the double materiality assessment (DMA), looking at the importance of different sustainability themes from two perspectives. Firstly, the 'inside-out' perspective, which deals with the impact of Royal A-ware's activities on people and the environment. Secondly, the 'outside-in' perspective, where we evaluate the impact and opportunities of sustainability developments on the organisation.
The Double Materiality Assessment and due diligence are on-going practices that responds to and may trigger changes in the company’s strategy, business model, activities, business relationships, operating, sourcing and selling contexts. The sustainability statement may not include every impact, risk and opportunity or additional entity-specific disclosure that each individual stakeholder (group) may consider important in its own particular assessment.
Stakeholders
The primary objective of our double materiality assessment was to gain insight into how our key stakeholders perceive the sustainability impacts, risks, and opportunities associated with our organisation. We identified and engaged with stakeholders who are directly affected by our business activities or who rely on information from our annual report.
These stakeholders include employees, dairy farmers, customers, suppliers, non-governmental organisations (NGOs), and governments, among others. Additionally, input from the Sustainability Steering Group was incorporated into the assessment. Dairy farmers were represented through a focus group in the Netherlands, while employees were represented by the established works councils.
Sustainability topics
Our objective is to address relevant sustainability topics across our value chain. Sustainability issues are assessed in terms of their impacts, risks, and opportunities, which may be positive or negative, actual or potential, and often interconnected. These effects can manifest in the short, medium, or long term and can influence various activities within the value chain. Identifying relevant sustainability issues and their associated impacts, risks, and opportunities also requires analysing where they occur within the value chain.
Based on an environmental analysis, including an inventory of trends and developments, Royal A-ware has compiled a comprehensive list of relevant sustainability matters—our material topics. In this process, qualitative materiality thresholds were applied to assess whether a specific European Sustainability Reporting Standard (ESRS) topic, sub-topic, or sub-sub-topic is relevant to Royal A-ware or its value chain. If a topic was deemed non-relevant, it was classified as below the materiality threshold.
The ESG team, in collaboration with the Sustainability Steering Group, further refined this list into a prioritised shortlist.
Shortlist
The refined shortlist was then distributed to our stakeholders via a digital questionnaire, requesting them to prioritise the material issues. To assess whether the impact of each issue is positive or negative, we posed the following question: "If Royal A-ware does not alter its operations, what will be the long-term impact on people and the environment?"
In addition to stakeholder input, further insights were obtained through discussions with the Ministry of Agriculture, Fisheries, Food Security, and Nature, as well as desk research on sustainability topics derived from sector-specific international standards, peer benchmarks, and expert analysis from the ESG team. Sustainability themes outlined in the Corporate Sustainability Reporting Directive (CSRD) were also incorporated.
Stakeholders identified 'greenhouse gases' and 'employee health and safety' as top priorities for Royal A-ware. Additionally, within dairy operations, 'more sustainable packaging' was highlighted as an important focus area.
The stakeholder consultations confirmed that the identified material topics align with Royal A-ware’s strategic direction, eliminating the need for modifications to our business model. An updated double materiality assessment is scheduled for 2025.
We calculated an average impact score for each material topic based on the following factors:
Scope: how widespread is the impact of this issue?
Scale: how serious/favourable is Royal A-ware's impact on people and/or the environment if nothing changes in the operation?
Irremediability: can Royal A-ware recover the impact?
Likelihood: is the impact potential or actual?
Financial opportunities and risks
The stakeholder dialogue and environmental analysis provided a comprehensive understanding of how our activities affect people and the environment. The identified opportunities and risks directly correlate with these impacts.
The qualitative thresholds used to assess risks and opportunities are not necessarily identical to those applied in our overall risk assessment. Each risk and opportunity was evaluated based on its likelihood of occurrence and its potential financial impact on our organisation. Only financial effects that were not already reflected in the financial statements were considered.
The financial impact assessment consisted of the following elements:
Likelihood: how likely is it that the opportunity or risk will occur?
Magnitude: the severity of the (potential) impact on Royal A-ware.
Double materiality assessment results
The figure below shows the priority given to each material theme. Based on the materiality analysis, the Sustainability Steering Group identified the pillars of the sustainability strategy: Greenhouse gases, Product, Raw materials, Dairy farming, Employees and Respectful collaboration. Our sustainability strategy is based on these pillars. This strategy, including material topics and targets, was discussed with the Sustainability Steering Group, which also includes the CFO and COO, and was subsequently adopted by the Management Board.
