About double materiality analysis
CSRD-compliant Double Materiality Assessment is a comprehensive assessment process that helps companies understand two perspectives. On the one hand, it examines how sustainability issues affect the company, and on the other, how the company interacts with its environment.
The approach considers two key dimensions:
- Financial materiality (i.e. how environmental and social changes can affect a company’s financial performance)
- Impact materiality (i.e., how the company’s activities affect the environment).
Properly conducted, double materiality analysis helps to better manage risks related to a company’s environmental and social impact and to adapt more effectively to the challenges of regulation and market changes. As a result, companies can minimize the negative impacts of their operations and identify new opportunities that lead to building market advantages.
The key elements of a properly conducted double materiality analysis are:
- Stakeholder dialogue – Stakeholder dialogue is a key component of double materiality analysis, as it enables companies to fully understand the perspectives and expectations of the various groups that influence and are influenced by the organization’s operations.
- ESG data gap analysis – The gap analysis is based on the findings of a previously conducted double materiality analysis and stakeholder dialogue. This process allows companies to accurately identify gaps between current sustainability efforts and regulatory requirements, industry best practices and stakeholder expectations.
