Double materiality assessment

Double materiality assessment

Double materiality

Most organizations conduct a Double Materiality Assessment as a first step toward CSRD compliance. This means organizations must report on both of the following:

• Impact materiality: The impact their businesses have or are likely to have on sustainability matters (for example, carbon emissions, workforce diversity, respect for human rights). All about how their company’s actions impact people and the planet in the short, medium, and long term. And only about own operation; also need to assess the impact on the entire value chain.

• Financial materiality: The impact that sustainability matters have or are likely to have on the organization’s finances (for example, cash flows, risk, access to funding). Here, the focus shifts to how sustainability and climate impact in the business. This includes factors such as company’s growth, performance, and cost of capital in the short, medium, and long term.

By combining these two factors, you can figure out which sustainability risks and opportunities are material for your company specifically and thus should be included in your reporting.