Double materiality is the CSRD principle that assesses sustainability topics from two sides: impact materiality and financial materiality. Impact materiality asks how an organisation affects people, the environment and society. Financial materiality asks how sustainability risks and opportunities affect the organisation’s financial position and performance. A topic is material if it is important from at least one of these perspectives. Double materiality therefore broadens reporting from financial performance alone to the interaction between an organisation and its context.
The two perspectives
- Impact materiality, inside-out — positive and negative effects of the organisation on people, the environment and society, including emissions, biodiversity and working conditions.
- Financial materiality, outside-in — the way sustainability issues affect financial position and performance, including resource risks, energy prices and reputation.
Why double materiality is central to the CSRD
The CSRD and the underlying ESRS standards require organisations to determine which topics are material before reporting on them. The double materiality assessment defines the scope of the sustainability report. Only material topics are developed in detail. A careful analysis prevents blind spots and avoids unnecessary reporting burden.
How does a double materiality assessment work?
- Map context and value chain — identify activities, value-chain relationships and stakeholders.
- Identify topics — create a longlist of relevant sustainability matters.
- Assess impact and financial relevance — score each topic from both materiality perspectives.
- Include stakeholder input — weigh insights from the value chain and wider context.
- Set material topics — translate the outcome into the reporting scope.
From analysis to strategy
A double materiality assessment is more than a compliance exercise. Material topics indicate where the largest risks, opportunities and impacts sit. This makes the assessment a logical starting point for a strategy and action plan. Reporting obligations can then become a driver for targeted improvement.
How New Economy approaches double materiality
New Economy substantiates the impact side with quantitative data, including CO2 footprints under the GHG Protocol and life-cycle assessment. This makes the materiality assessment measurable as well as qualitative. See Compliance baseline.
Frequently asked questions about double materiality
Double materiality means assessing sustainability topics from two sides: impact on people and the environment, and financial effects on the organisation.
Impact materiality looks at the organisation’s effects on the outside world. Financial materiality looks at how sustainability issues affect the organisation.
A topic is material when it is important from at least one of the two perspectives. Under the CSRD, that topic belongs in the reporting scope.
Yes. For organisations in scope of the CSRD, the double materiality assessment forms the basis of the sustainability report.
The analysis shows where the largest risks, opportunities and impacts sit, making it a substantiated starting point for strategy and improvement.
For a double materiality assessment, see Compliance baseline or Strategy and action plan, or use the contact page to explore next steps.