Materiality holds significant importance within sustainability reporting, signifying the prioritization of certain issues by an organization and its stakeholders over others.
Previously, materiality assessments focused solely on the company’s impact on external factors such as the environment. However, the evolving recognition of the interconnectedness between a company’s actions and broader societal challenges has led to a paradigm shift.
This shift is embodied in the concept of Double Materiality, which introduces an additional dimension to materiality assessments. In addition to considering how sustainability issues (like climate change) affect the company’s financial performance (financial materiality), double materiality also examines how the company’s activities impact the environment, society, and governance (impact materiality).
This concept is central to the EU’s CSRD.
