CSRD & Double Materiality

Are you ready for Double Materiality? With CSRD’s expanded reporting requirements, businesses must understand and disclose ESG risks from both financial and impact perspectives. Start your Double Materiality assessment today!

1. What is Double Materiality?

• Financial Materiality: Determines which ESG issues affect a company’s financial health, profitability, and long-term value creation.
• Impact Materiality: Focuses on how a company’s operations, products, and supply chain affect the environment, society, and stakeholders.
• Regulatory Requirement: Under CSRD, companies must report on both perspectives, unlike previous ESG frameworks that focused only on financial risks.

2. Why Double Materiality Matters for CSRD Compliance

• Holistic ESG Reporting: Provides a full picture of a company’s sustainability footprint.
• Regulatory Alignment: Ensures compliance with ESRS, EU Taxonomy, and other evolving sustainability regulations.
• Risk & Opportunity Management: Helps businesses identify, mitigate, and capitalize on ESG trends and risks.
• Stakeholder Expectations: Investors, customers, and regulators demand greater transparency on sustainability impacts.

3. How to Conduct a Double Materiality Assessment

• Step 1: Identify Relevant ESG Topics – Use frameworks like ESRS, GRI, and SASB to determine key sustainability issues.
• Step 2: Engage Stakeholders – Conduct surveys, interviews, and workshops with investors, employees, customers, and communities.
• Step 3: Assess Financial & Impact Materiality – Analyse how ESG factors affect business performance and external stakeholders.
• Step 4: Prioritize Key Issues – Develop a Materiality Matrix to highlight high-priority ESG topics.
• Step 5: Integrate into CSRD Reporting – Align materiality findings with sustainability disclosures and strategic decision-making.

Coming Next Week: CSRD & Supply Chain Sustainability – Managing ESG Risks Beyond Your Operations: CSRD requires businesses to report on sustainability risks and impacts across their entire value chain. Next week, we’ll explore how companies can manage ESG risks in their supply chains and drive responsible sourcing practices.