Concept
Double materiality
Also: impact materiality · financial materiality
The reporting principle, central to the CSRD and ESRS, that a sustainability topic is material if it matters from an impact perspective (the company's effect on people and environment) or a financial perspective (its effect on the company), or both.
Double materiality is the lens through which companies reporting under the CSRD decide what to disclose. It combines two perspectives that earlier frameworks treated separately.
Impact materiality
A topic is material from an impact perspective when the company’s own operations or value chain have, or could have, significant positive or negative effects on people or the environment, over the short, medium or long term.
Financial materiality
A topic is material from a financial perspective when it creates risks or opportunities that affect, or could reasonably be expected to affect, the company’s cash flows, development, performance, position, cost of capital or access to finance.
In practice
The double materiality assessment determines which ESRS disclosure requirements apply. It relies on evidence from across the value chain, including product-level environmental data, and it is itself subject to assurance.
Where Verdatir fits
Reliable impact materiality judgments depend on reliable environmental data. Verdatir’s verified product and supplier data gives the assessment a defensible evidence base.
Sources and further reading
In practice
Verdatir turns the rules behind this term into automated checks with a reviewer in the loop.
See the platform →