A double materiality analysis is a process in which a company assesses both the impacts of its operations on the environment and society, and the impacts of environmental and social factors on the company itself. It is a requirement under the CSRD directive for corporate sustainability reporting and provides the foundation for sustainability work and its development in companies of all sizes—regardless of whether the company is subject to the directive's reporting obligations.
In practice, this means that the company identifies and prioritizes sustainability topics that are significant both from the perspective of stakeholders and the business itself. A double materiality analysis helps the company recognize and select the key focus areas and sustainability themes that are most relevant to its operations and sustainability efforts.
A double materiality analysis is a strategic business development tool that provides a comprehensive view of the company’s impacts on people and the environment, as well as the effects of external factors on the company’s financial performance. It also helps identify business risks and opportunities from the perspective of the company’s sustainability work and related sustainability issues.
A company can use the results of the double materiality analysis in all its strategic and sustainability efforts, as well as in corporate sustainability reporting.
A simplified double materiality analysis for an SME includes an assessment of the current state of sustainability work, preliminary identification of sustainability topics, stakeholder consultation, selection of sustainability themes relevant to the company’s business, and full documentation of the entire process.
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