Sustainability aspects from two perspectives
Double Materiality
The Corporate Sustainability Reporting Directive (CSRD) obliges companies to disclose detailed non-financial information in their management reports in the areas of environment, social affairs and governance. One of the significant innovations associated with the CSRD is double materiality. Companies should use a materiality analysis to narrow down which sustainability issues are relevant to them. Materiality is always viewed from two perspectives:
- The outside-in perspective (“financial materiality”) considers the opportunities and risks of sustainability issues for a company’s financial situation and the future viability of its business model.
- With the help of the inside-out perspective (“impact materiality”), companies determine the actual and potential positive and negative effects of their business activities on various sustainability issues.
- Blogpost: Double materiality analysis – What are IROs and how do you define them?
- Blogpost: Double materiality analysis: your top 10 to-dos
- Blogpost: Risks and opportunities in the focus of ESRS – More than just double materiality
- CSRD Information & Solutions
- Opportunity and risk analysis
- Case Study: Herrenknecht AG
The double materiality analysis as a basic module of CSRD compliance
The double materiality analysis is a central element of sustainability reporting as part of the CSRD and is mandatory for all companies subject to the CSRD. A core aspect of this analysis is the so-called IROs – Impacts, Risks and Opportunities. These three components form the basis for a comprehensive double materiality analysis in accordance with the European Sustainability Reporting Standards (ESRS). These IROs must be evaluated using the ESRS parameters and the data points to be reported derived from them. Further information on the identification and evaluation of IROs can be found here.
The double materiality analysis is followed by the concrete elaboration of the content for the CSRD report.
The advantages of the double materiality analysis
Many companies are currently focusing on double materiality. However, this analysis not only serves to identify reportable topics, but also forms the basis for companies to deal with financial risks and opportunities arising from sustainability issues. It helps companies to identify the sustainability issues that are material to them by highlighting impacts on people and the environment as well as risks and opportunities for business success in connection with these issues. The results form the basis for taking further steps towards comprehensive ESG management:
By identifying the key sustainability topics, companies fulfil a central requirement of the CSRD and can prioritize their reporting and the data collection required for this by topic. This can reduce the reporting effort.
By gaining clarity about which sustainability issues are important to their stakeholders, companies can better meet their expectations and strengthen stakeholder trust and loyalty. A dual materiality analysis can serve as a prelude or part of a regular stakeholder dialog.
The double materiality analysis enables companies to identify risks and opportunities at an early stage and take measures to respond to them in a targeted manner. This allows risks to be mitigated and potential sustainability-related opportunities to be exploited. The double materiality analysis is the starting point for further comprehensive ESG risk and opportunity analyses within the ESRS. More information on this: Risks and opportunities in the focus of ESRS – More than just dual materiality
The results of the double materiality analysis are the starting point for the development of a holistic ESG strategy. Companies can then target their ESG management and deploy their resources efficiently.
Our Services
Laying the foundation together
Your Advantages
Why DFGE when it comes to double materiality analysis?
- Expertise from a large number of successfully completed ESRS-compliant double materiality analyses with clients from various industries.
- Structured and proven procedure to identify the focus topics for you step-by-step and as efficiently as possible.
- With our knowledge of the complexity of the interrelationships and building on the double materiality analysis, we accompany you on the path to CSRD compliance.
