Diverse group of businesspeople discussing double materiality

Double materiality assessment

Double materiality assessment steers sustainability actions and reports in the right direction

Double materiality assessment guides companies to focus on impact and financial materiality. This includes the impacts their operations have on the surrounding environment and society and the impacts the changing world has on the company’s operations, also known as risks and opportunities.

All operations have impacts, positive and negative. The EU’s new Corporate Sustainability Reporting Directive (CSRD) highlights that organisations conducting business in the EU should truly understand their impacts on the surrounding society as well as the impacts the transition has on their operations 1 . In addition, the directive demands that these organisations look from the outside to understand the risks and possibilities of the transition.

The CSRD plays a vital role in steering organisational transformation and strategic growth to advance the sustainability transition across a network of over 50,000 companies over time. It aims to synchronise sustainability data with financial data by achieving a balance between harmonisation and standardisation.

Double materiality assessment (DMA) is a mandatory key activity for companies affected by the CSRD. This standardised process helps them assess the impact on people and the planet in addition to the financial implications of these impacts on themselves, i.e. which sustainability issues are material and should be included in their reporting. The process and requirements are clearly defined and aim to avoid selective reporting of topics that conveniently align with the companies' interests.

When conducted for the first time, the required outcome of the DMA includes:

  1. Identifying and describing the most essential impacts,
  2. Identifying and describing the most essential risks and opportunities, and
  3. Providing clear information on which sustainability issues the company should start working and reporting on strategically.

The process is to be repeated annually as part of the CSRD requirements, becoming easier over time as the majority of the work is completed during the initial implementation. Further DMAs also consider year-to-year changes and the resilience of the company's strategy or business model.

Union of two materialities

There are two types of materiality that companies need to consider when carrying out their DMA according to the CSRD:

  • Impact materiality – how the company impacts people and the planet, also known as the “inside-out” perspective.

  • Financial materiality – how different sustainability topics, their changes, and associated risks and opportunities impact the company. This perspective, also known as the “outside-in” perspective, is important for understanding the broader effects on the business.

By combining these two factors, companies can understand which sustainability matters are material for the company specifically and should be included in their reporting. ESRS 1 General Requirements contains detailed guidelines on how a DMA should be conducted, including a step-by-step guide.

Financial materiality and environmental and social materiality

AFRY can support companies in multiple ways to prepare a DMA according to the CSRD

Identification Arrow pointing right

AFRY can support the identification of stakeholder groups and sustainability topics/sub-topics that might be material to the organisation, both from the impact and financial perspective.

Evaluation Arrow pointing right

AFRY can assist in stakeholder engagement and evaluate the impact materiality parameters and the risks and opportunities that are financially material with expert insights.

Prioritisation Arrow pointing right

AFRY can prioritise and score the identified topics according to the evaluations done in the earlier step to define the materiality of different impacts, risks, opportunities and sustainability matters.

Consolidation Arrow pointing right

AFRY can consolidate the impact and financial materiality assessment results to define overall materiality.

Reporting Arrow pointing right

When finished, DMA creates the base for reporting and stakeholder communication while providing input for strategic decision-making.

For those new to materiality analysis, we can provide a comprehensive educational package. If you're initiating the reporting for 2025, we will consider the transition period. When it's time to report 2024 data, we offer thorough support and can also conduct a CSRD gap analysis after DMA finalisation. We assist in planning the reporting and data collection processes with precision.

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Sustainability Management Consulting

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Our team leverages the engineering, consulting, and industry expertise of AFRY's 19,000-strong network of professionals worldwide, helping provide world-class sustainability solutions.

For more information please contact

Tiina Pajula - Senior Principal, AFRY Management Consulting

Tiina Pajula

Senior Principal, AFRY Management Consulting

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Johan Fridh

Principal, AFRY Management Consulting

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Daniel Weiss

Principal, AFRY Management Consulting

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Frequently asked questions

Why is double materiality assessment necessary for my business? What outcomes does it have? Arrow pointing right

The Corporate Sustainability Reporting Directive, mandatory for companies conducting business in the EU, includes double materiality assessment as a key reporting activity and the first step to comply with the regulation. It will support producing more transparent and consistent ESG reports as requested by investors and other stakeholders 2 .

Identification of financial sustainability risks and opportunities can strengthen these companies’ preparations for the future and lead to financially material business decisions. The CSRD provides the companies an opportunity to lead the transition to a more sustainable and socially responsible economy

What sustainability-related topics are considered material for reporting? Arrow pointing right

Sustainability topics are considered material if they are material from the impact and/or financial perspective. These topics have tended to go unreported in traditional financial reporting, which can ultimately lead to financial risks and opportunities in the short, medium and long term.


  • 1. https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043 a↩
  • 2. https://ec.europa.eu/newsroom/fisma/items/754701/en a↩