• Sustainability

The principle of 'double materiality' is the starting point of the sustainability report. What does that mean?

Double materiality entails looking at the undertaking from two perspectives:

  • the impact on the undertaking (financial materiality); and
  • the impact of the undertaking (impact together).

This is the starting point of the sustainability report.

Double materiality

By means of sustainability reporting, the undertaking provides, on the one hand, insight into how the undertaking is affected by the developments in the field of sustainability, for example the influence of climate change on the business model. This is called financial materiality.

On the other hand, the undertaking reports on what kind of influence it has on its environment. Consider, for example, the effect of emissions from production processes on the air quality of local residents. This is called impact materiality.

These two perspectives (the impact on and the impact of the undertaking) together are called 'double materiality'. The sustainability report covers all material information, meaning the information on the topics that is or are material from one or both perspectives.

With a materiality analysis, you determine which information is relevant to share with those interested in the undertaking. Information is material if its omission - or misrepresentation - could influence the judgement of the user of the sustainability information. Which information is material to an undertaking therefore varies from undertaking to undertaking.

When assessing materiality, undertakings should consider actual and potential impacts, risks and opportunities as well as negative and positive impacts, risks and opportunities. This should be considered over the short-, medium- and long-term.

All undertakings must report on certain reporting requirements and data points. These are the requirements and data points from ESRS 2 and the thematic ESRS (on the description of processes to identify and analyse material pollution impacts, risks and opportunities). This information is always mandatory, as it is considered material information.

For more information, reference is made to EFRAG's implementation guideline on double materiality and the report ’Ten waypoints for CSRD – Double Materiality’ of the Dutch Authority for Financial Markets (AFM).

More information:

Questions CSRD & ESRS

Do you have questions about the CSRD, ESRS or are you missing a question in this list? Send us an e-mail and we will contact you as soon as possible. For technical questions, EFRAG has set up an ESRS Q&A platform (latest release of technical explanations: December 2024). Here you can submit a question, and also find answers to previously asked questions.

Questions regarding individual facts or circumstances will not be answered through these channels. For such questions, we recommend that you contact an advisor such as your company accountant.

Disclaimer

The SER and the DASB have put this questions and answers document together based on publicly available information at the time of publication. Although these questions have been answered with the utmost care, users of this document cannot be given any guarantees relating to the accuracy, topicality and completeness of the information displayed. The SER, the DASB and other parties related to this document cannot be held liable for the consequences of the use of the information from this document. This document does not represent the view of (EFRAG) or the European Commission, nor the SER or DASB.

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Sustainability