Double materiality

Double materiality has two dimensions: impact materiality and financial materiality. A sustainability matter meets the criterion of double materiality if it is material from the impact perspective or the financial perspective or both.

The double materiality is an essential concept of sustainability reporting that requires companies to disclose relevant information from two perspectives: financial materiality and impact materiality. This dual concept was introduced in 2019 in the guidelines of the European Commission for non-financial reporting and has been mandatory for many European companies since the adoption of the Corporate Sustainability Reporting Directive (CSRD) in 2023.

The outside-in perspective considers how environmental, social, and governance (ESG) factors influence a company's financial situation and business development. Here, risks and opportunities are identified that may arise from external developments such as regulatory changes or societal expectations. In contrast, the inside-out perspective evaluates the impact that the company itself exerts on the environment, society, and human rights. This includes, among other things, emissions, resource consumption, and social effects along the value chain.

By applying a materiality matrix that represents both dimensions, companies can systematically analyze which topics are relevant to their financial performance and societal/ecological impacts. This analysis not only promotes a more comprehensive and transparent reporting process but also helps to identify risks early and secure long-term competitiveness. Thus, double materiality becomes a central element for responsible corporate action in the context of sustainability.