Double Materiality is the key assessment to comply with the Corporate Sustainability Reporting Directive (CSRD). It means companies must look at sustainability from two sides when analyzing which topics are material (relevant) for their report: 

• Impact Materiality: How the company’s actions affect people and the environment (this is called the inside-out view). 
• Financial Materiality: How environmental and social issues affect the company’s finances (this is the outside-in view). 

This two-way perspective ensures that companies report not only how they affect the world around them, but also how external factors affect their own business. 

Why Companies Must Do a Double Materiality Assessment 

If your company is covered by the CSRD, doing a Double Materiality Assessment (DMA) is mandatory. This process is part of the European Sustainability Reporting Standards (ESRS): especially ESRS 1 (General Requirements) and ESRS 2 (General Disclosures). 

What the DMA Is Used For 

The Double Materiality Assessment helps companies figure out what sustainability topics really matter to report on. It’s used to: 

• Set the foundation for reporting. 
• Define the scope of the report: what is included and why. 
• Improve transparency and strategy by focusing on key issues. 

How to conduct a Double Materiality Assessment 

To carry out a DMA, companies need to identify their Impacts, Risks, and Opportunities (IROs) for each of the ESRS categories. Here’s what that process usually involves: 

1. Understand your business activities and value chain. 
2. Talk to stakeholders (like customers, investors, and employees) to learn what they care about. 
3. Assess actual and potential IROs, including how serious they are and how long they might last. 
4. Identify relevant datapoints for reporting based on the material ESRS categories. 

The goal is to create a sustainability report that reflects the topics that are relevant for your company and with that the actions you take in those fields, and the targets you set. 

Quick Overview: Double Materiality in CSRD 

Aspect	What It Means
Regulatory Basis	Required for all companies covered by the CSRD
Two Perspectives	Inside-out (impact materiality) and outside-in (financial materiality)
Purpose	Filter the ESRS categories to identify the material (relevant) topics for your company to report on
Reporting Role	Sets the scope and content of your sustainability disclosures
Key Steps	Assess IROs, define what’s material