Double materiality is a core concept of CSRD that requires companies to assess how their activities affect people and the environment (impact materiality), and how sustainability issues affect business performance, risks, or opportunities (financial materiality). A topic is material if it meets either threshold.
This dual perspective distinguishes CSRD from other sustainability reporting frameworks that focus primarily on financial risk. Under double materiality, a company may need to report on a topic because of its significant environmental or social impact, even if it does not pose a direct financial risk. Conversely, a topic with limited external impact may still be reportable if it affects the company's financial position. The double materiality assessment is the starting point for all ESRS reporting and must be conducted with stakeholder engagement and documented methodology.
Explore how to conduct a double materiality assessment for CSRD and read our guide on the European Sustainability Reporting Standards to understand the complete assessment framework. Compare top CSRD software tools for streamlined double materiality analysis.
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