Double materiality

As companies are increasingly required to report on their financial and non-financial issues, the notion of materiality and, more recently, double materiality has become essential. These concepts are at the heart of corporate social responsibility (CSR) and emerging regulations, notably in Europe with standards such as the Corporate Sustainability Reporting Directive (CSRD) and in Switzerland with the Article 964 a and following of the Obligation Code.

Understanding materiality and double materiality

Traditionally, materiality referred to issues deemed important to a company’s economic performance. The idea is simple: identify the issues, risks and opportunities that have a direct impact on a company’s financial results and long-term viability.

However, with the growing importance of social and environmental expectations, the notion of double materiality has gained ground. This concept, used in particular in the CSRD, broadens the perspective by integrating two dimensions:

Financial materiality: What external impacts (environmental, social) are likely to threaten or reinforce the company’s economic performance?
Impact materiality: What are the direct and indirect consequences of the company’s activities on its environment and society?

Thus, double materiality calls for a more holistic vision in which the company assesses not only how it is affected by extra-financial issues, but also how it itself affects its ecosystem.

Why is double materiality crucial?

Materiality analysis is a fundamental step in the development of a sustainable strategy; it provides a critical view of the company’s risks, opportunities and impacts, enables alignment with stakeholders and helps define strategic priorities:
- Resource prioritization: Define strategic priority issues in alignment with stakeholders.
- Improved resilience: Identifying future risks linked to climate, natural resources or social changes, enables the company to anticipate and adapt.
- Development opportunities: By assessing environmental and social impacts, companies can identify sustainable development opportunities that enhance their competitiveness.
- Regulatory compliance: With the entry into force of directives such as the CSRD, double materiality analysis is becoming a legal requirement for many companies operating in Europe.
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Regulations: a framework for a just transition

The CSRD requires companies to report exhaustively on their practices and impacts on the environment and society, while taking financial risks into account. Other regulations, such as the European Taxonomy, require the sustainability of economic activities to be assessed on the basis of precise criteria. In this context, double materiality analysis becomes essential to guarantee optimum compliance.

How do you conduct a double materiality assessment?

Stakeholder mapping: Identify internal and external stakeholders impacted by the company’s activities (employees, customers, suppliers, investors, local communities, regulators, etc.).
Assess financial and non-financial issues: Analyze risks and opportunities in terms of both economic performance and social/environmental impacts. Refer to the standards of organizations such as ESRS, SASB and GRI.
Prioritize issues: prioritize issues according to their importance for stakeholders and for the company’s performance. Dialogue with stakeholders is essential at this stage to obtain the most objective analysis possible.
Validate results with management: Ensure alignment between analysis results and corporate strategy, define an action plan, performance indicators and governance.
Monitoring and updating: Materiality analysis needs to be an iterative, evolving process, as issues can change in line with global trends and regulatory developments.

Conclusion

Double materiality analysis may seem complex, but it is essential for companies wishing to align their strategy with today’s sustainability requirements. Our support service guides you through each step of the process, taking into account the specificities of your sector and stakeholders. We help you anticipate risks, identify opportunities and comply with regulatory obligations.

Together, we can make your sustainable transition a lever for performance and innovation, while strengthening your resilience in the face of future challenges.