Double Materiality in Practice: Lessons from the First Wave of CSRD Reports

The first wave of CSRD reporters has now completed or is close to completing their double materiality assessments. The practical lessons emerging from this process are instructive — and in some cases cautionary — for Wave 2 and Wave 3 companies preparing their own assessments.

Double materiality under ESRS requires companies to assess both impact materiality — the company’s actual and potential impacts on people and the environment — and financial materiality, covering the ESG factors that pose material risks or opportunities for the business. The interaction between these two perspectives defines which topics require disclosure.

The most common failures identified in early reports include treating materiality as a checkbox exercise rather than a genuine strategic assessment; relying on desk-based analysis rather than structured stakeholder engagement; failing to connect material topics to specific ESRS disclosure requirements; and presenting materiality outcomes without adequate methodology explanation that would satisfy an assurance provider.

What distinguished the better early reports: using the ESRS impact, risk, and opportunity (IRO) framework as an organising structure from the outset; engaging both internal and external stakeholders including suppliers, investors, and affected communities; and applying quantitative thresholds for financial materiality rather than purely qualitative judgements.

The regulatory expectation is that a double materiality assessment should be a living document, updated as business models, value chains, and external environments evolve. The quality of the DMA determines the entire scope and structure of the sustainability report that follows.