What is a double materiality assessment? A plain-English guide
Double materiality explained in plain English: impact and financial materiality, the steps of an assessment under the ESRS, what to document, and where to find help.
A double materiality assessment (DMA) is how a company decides which sustainability topics it must report on under the European Sustainability Reporting Standards (ESRS). It asks two questions about each topic, which is why it is called double.
The two views
- Impact materiality. Does your company have, or could it have, a significant effect on people or the environment? Think of emissions, working conditions in your supply chain, or pollution.
- Financial materiality. Does the topic create risks or opportunities that could affect your company’s finances, such as regulation, climate damage to sites, or shifts in customer demand?
A topic is material if it passes either test. You then report the ESRS information for that topic.
The steps
- Understand your context. Your activities, business relationships and value chain.
- List topics and sub-topics. The ESRS provide a list covering climate, pollution, water, biodiversity, circular economy, your own workforce, workers in the value chain, communities, consumers and governance.
- Identify impacts, risks and opportunities. Include your own operations and your upstream and downstream chain.
- Gather stakeholder views. Employees, customers, suppliers, investors, communities, or those who speak for them.
- Score. For impacts, severity (scale, scope, how hard to fix) and likelihood. For financial matters, likelihood and size of the effect.
- Set a threshold and decide. Write down where the line is and why.
- Get approval. Management and the board should sign off the outcome.
- Document everything. The outcome, the method and the reasons are subject to assurance.
Common mistakes
- Treating it as a survey of employees only.
- Using impact scores without defining the scales.
- Skipping the value chain.
- Not recording why topics were left out.
- Doing it once and never refreshing it.
When is it needed?
Whenever you report under the CSRD and ESRS. After the 2026 Omnibus changes, that means EU groups with more than 1,000 employees and over €450 million turnover, plus certain non-EU groups. See who has to report, and when. Companies reporting voluntarily often do a lighter version to focus their effort.
Help with a DMA
- Software that structures and records the work: double materiality assessment tools, and our shortlist guide.
- Specialists who run the process: CSRD readiness consultants.
preeco
Ulm-based compliance software suite with a sustainability module for ESG reporting, materiality analysis and supplier risk assessment.
wetando
Leipzig and Berlin consultancy offering materiality analysis, CO2 accounting and sustainability reporting alongside wider business advice.
VERSO
Munich-based sustainability software and advisory firm covering ESG data management, double materiality, VSME reports and supply chain due diligence.
Footprint Intelligence
Munich-based AI sustainability platform for carbon footprints, double materiality analysis and CSRD, VSME and GRI reporting.
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This guide is general information, not legal, tax or investment advice. Rules change; check the official sources and talk to an adviser before you rely on it.
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