Double Materiality Assessment

Double Materiality Assessment is a framework that requires companies to evaluate two key dimensions of their activities: (1) the impact of their operations on society and the environment, and (2) the financial implications of sustainability issues on the company itself. This dual perspective helps companies identify material risks and opportunities related to environmental, social, and governance (ESG) factors, ensuring comprehensive sustainability reporting.

Key aspects of Double Materiality Assessment include:

• Impact Materiality: Assessing how a company's activities affect stakeholders, including communities, employees, and the environment.
• Financial Materiality: Evaluating how sustainability issues, such as climate change and regulatory changes, impact a company's financial performance.
• Value Chain Consideration: Examining both direct operations and the broader value chain, including suppliers and customers.

The Double Materiality concept is central to the European Union's Corporate Sustainability Reporting Directive (CSRD), which mandates that companies provide comprehensive disclosures on both financial and impact materiality in their sustainability reports.

Source(s):

• EcoAct. (2024). What is a Double Materiality Assessment and why is it key for CSRD Compliance?
 

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