Double materiality under the CSRD: understand, assess, act

Since the Corporate Sustainability Reporting Directive (CSRD) came into force, double materiality has become a central component of sustainability reporting. It requires companies to consider both how ESG (environmental, social, governance) issues affect their financial performance and how their own activities affect the world around them.

 

This article breaks down what double materiality means, how to apply it in practice, and why expert support can make the process faster and clearer.

 

What is double materiality?

 

Double materiality combines two perspectives:

• Financial materiality: how ESG factors may affect the company’s financial performance (risks, opportunities, value)

• Impact materiality: how the company’s operations affect society, the environment and human rights

 

The aim is to bring together internal and external expectations to focus on what truly matters.

 

Single vs double materiality

 

A traditional materiality assessment focuses solely on internal financial risks. Double materiality adds the external dimension.

 

Example: a textile company evaluates both the risk climate change poses to its supply chain (financial materiality) and the environmental impact of its manufacturing practices (impact materiality).

 

Double materiality in ESG ratings

 

Double materiality is now a real differentiator for ESG ratings. Agencies no longer assess only the risks faced by the business. They also examine how well the company incorporates material issues—arising from the overlap between environmental, social and financial dimensions—into its strategy. This increases transparency and strengthens credibility with investors, clients and partners.

 

How to assess impact materiality

 

According to EFRAG (European Financial Reporting Advisory Group) and the ESRS (European Sustainability Reporting Standards), impact materiality should be assessed against four criteria:

 

• Scale: how many stakeholders or systems are affected?

• Severity: how serious are the effects?

• Remediability: can the company reduce or prevent this impact?

• Likelihood: how likely is the impact to occur?

 

These criteria help prioritise issues based on their real-world importance, not just financial implications.

 

Which companies are affected?

 

The CSRD has applied since 2024, with eligibility based on headcount and revenue.

 

A simplification proposal (Omnibus) issued in February 2025 delayed the timeline for some companies, pushing back reporting obligations by two years.

 

For now, only those subject to the CSRD from 2025 (reporting on 2024) are required to publish their first reports.

 

A revised version of the directive is in preparation and expected in 2025. It will likely adjust both eligibility criteria and reporting standards.

 

Companies that fall outside the CSRD scope will still be able to use the VSME (Voluntary Sustainability Reporting Standard for Non-Listed SMEs): a lighter, voluntary reporting framework tailored to smaller firms.

 

How to carry out a double materiality assessment

 

Key steps include:

1. Identify stakeholders: employees, shareholders, clients, NGOs, local authorities, suppliers. Their input helps clarify expectations and broaden ESG understanding.

2. List ESG topics: relevant to the business and its value chain, based on ESRS.

3. Assess each topic along two axes:

   • its effect on people and the environment (impact materiality)

   • its financial relevance for the business (short, medium, or long-term risks/opportunities)

4. Run internal workshops: to align stakeholder feedback with leadership perspectives. The goal is to build a shared and strategic view.

5. Build a double materiality matrix: to visualise and rank topics across both axes. This forms the basis for your sustainability report.

 

What tools can support the assessment?

 

You can draw on:

• Targeted surveys and online questionnaires

• Qualitative interviews

• Collaborative workshops (e.g. design thinking)

• Sector-specific ESG tools

• Assessment frameworks aligned with ESRS and GRI

 

Working with a skilled advisory firm often saves time and ensures your approach is structured, compliant and well documented.

 

Why seek external support?

 

The CSRD is complex, technical and constantly evolving. It requires cross-disciplinary knowledge: finance, ESG, legal, communication.

 

Expert guidance helps to:

• Clarify what is expected

• Structure your data collection and analysis

• Draft a coherent, credible report

• Involve the right people internally

 

It also bridges compliance with strategic direction.

 

A well-supported materiality assessment brings added value:

• Better anticipation of risks

• Stronger recognition of positive actions

• Greater trust from investors and employees

 

With the right support, the exercise becomes a strategic lever for coherence and credibility.

 

To sum up

 

Double materiality is not just a compliance exercise. It’s a concrete way to reassess your business, its priorities and its responsibilities.

 

It requires rigour, clarity and commitment. With the right partners, it turns a reporting obligation into a strategic opportunity.

 

Laurence Beck, Project Manager – Responsible design and sustainability strategy