Double Materiality Analysis

For many companies, double materiality analysis is associated with a complex process, lack of clear guidelines, high workload, and risk of errors. Common questions include:

• Where to start with double materiality analysis?
• How to gather data and engage stakeholders?
• How to align legal requirements (CSRD, ESRS) with business realities?
• How to draw valuable conclusions from the analysis?

We understand these challenges and help you navigate the entire process efficiently.

We offer comprehensive support - from identifying relevant ESG topics, conducting workshops with key personnel, to delivering ready-to-use recommendations and materials for sustainability reporting. Our approach is structured, transparent, and tailored to your industry.

Find out how we can support you!

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What is Double Materiality Analysis?

Double materiality analysis is a key element of ESG (Environmental, Social, Governance) strategy. It allows organizations to identify and assess how sustainability factors impact their business—and how te business impacts the environment and society.

This analysis is particularly important for stakeholders who expect reliable and transparent information for assessing a company’s material issues and long-term sustainability.

This approach considers two perspectives:

• Financial materiality – how ESG issues affect the financial performance, business model, and operational risks of the organization.
• Impact materiality – how the company’s operations affect the social and environmental context.

Double Materiality and ESG Reporting

The introduction of the CSRD in December 2022 significantly expanded reporting obligations compared to the earlier NFRD directive. The new regulations aim to improve transparency and consistency of sustainability reporting across the EU through unified ESRS standards that define what must be disclosed and how it should be assessed.

Under the CSRD directive and ESRS standards, conducting a double materiality assessment is mandatory for companies required to report non-financial information.

What Does the Double Materiality Process Involve?

Our approach combines expert knowledge with practical tools—making the process understandable and aligned with your organization’s specific needs.

1. Identifying Key ESG Areas

We recognize environmental, social, and governance topics relevant to your company and stakeholders.

2. Inside-Out and Outside-In Impact Analysis

We asses:

• How your company affects the environment and society (inside-out)
• How climate, social, or regulatory changes affect your business (outside-in)

3. Materiality Classification and Mapping

We create an ESG topic map, identifying priorities and financial and strategic impact.

4. Workshops and Consultations

We engage stakeholders and management teams to assess materiality and jointly develop your reporting strategy.

5. ESG Reporting Support

We help prepare a final ESRS-compliant report and implement ESG data collection and analysis systems.

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Key Changes Introduced by CSRD – What You Need to Know

Key CSRD Changes

• Mandatory ESRS standards – Companies must report using unified European standards defining specific ESG disclosure requirements.
• Audit of ESG reports (assurance) – Mandatory third-party verification enhances data reliability. Companies must ensure limited (and later, reasonable) assurance of ESG information.
• Double materiality principle – Organizations must assess both how ESG factors impact them and how they impact society and the environment.
• Digital reporting – ESG data must be published in a digital format compliant with ESEF (European Single Electronic Format), improving comparability.

Double Materiality Assessment – Step-by-Step

The double materiality assessment includes several key steps for a thorough analysis of ESG impacts on the business and its surroundings.

Step A: Environmental Analysis

This step involves collecting information on internal and external factors affecting the organization. It includes identifying challenges and opportunities related to your sector, market, and new ESG reporting regulations. It also covers market and regulatory trends and stakeholder expectations (e.g., investors, clients, employees, NGOs).

Step B: Identifying Key ESG Areas

 The company identifies ESG aspects with the most operational and financial relevance. The goal is to pinpoint risks, growth opportunities, and stakeholder-relevant issues. It’s important to consider industry-specific ESG priorities (e.g., emissions in manufacturing vs. diversity in services).

Step C: Assessing Impact Materiality

 This step evaluates how your company’s operations influence the environment, society, and stakeholders. It is vital for understanding your external impact and fulfilling CSRD and ESRS reporting obligations.

Step D: Reporting

 An ESG report that meets CSRD and ESRS requirements should be detailed, transparent, and standardized. It should communicate ESG findings clearly and credibly to stakeholders.

The report should include:

• Company introduction and context
• ESG strategy and governance
• ESG risk and opportunity assessment
• Double materiality analysis
• ESG goals and metrics
• Actions taken and outcomes
• Supply chain responsibility
• Stakeholder engagement
• Future plans
• Audit and regulatory compliance 

Also read: Omnibus Simplification Package

Benefits of Double Materiality Analysis for Your Business

• Regulatory compliance – Meet CSRD and ESRS requirements, avoid penalties and legal risk.
• Better risk management – Identify financial and operational risks from ESG factors.
• Competitive advantage – Build a responsible, modern brand attractive to investors and customers.
• Greater transparency – Deliver reliable ESG data that strengthens stakeholder trust.
• Business process optimization – Improve resource use, energy efficiency, and reduce operational costs.
• Easier access to funding – Qualify for sustainable investment criteria, better credit terms, and attract more investors.
• Stronger stakeholder relationships – Align your actions with stakeholder expectations (customers, employees, local communities).
  

Crowe’s Support in Double Materiality Analysis

At Crowe, we support organizations in conducting double materiality assessments by identifying both their external impact (impact materiality) and ESG-related risks to financial performance (financial materiality). Our approach combines expert knowledge with practical solutions, helping companies meet CSRD obligations and build a sustainable business strategy.

Why Choose Crowe?

• Extensive experience in ESG and non-financial reporting
• Expertise in CSRD and ESRS standards
• Practical approach tailored to your industry
• Transparent process and full advisory support

Double Materiality – Frequently Asked Questions