Double materiality analysis: definition, process & best practices

What is the double materiality process?

The double materiality process is the cornerstone methodology in modern sustainability reporting under the Corporate Sustainability Reporting Directive. It enables companies to systematically identify and prioritise relevant sustainability matters through a thorough materiality assessment that examines two interconnected perspectives:

• Financial materiality (Outside-In): How do sustainability issues – including climate change, regulatory environment shifts, social trends – affect the company's financial performance, operational costs and risk management profile? Learn more about financial risks: Climate risk assessment for businesses
• Impact materiality (Inside-Out): What actual and potential impacts does the company's business operations have on the environment, society and external stakeholders (e.g. greenhouse gas emissions across the value chain, biodiversity impacts, labour conditions)?

Significance in the context of corporate sustainability and CSRD

With the European Union's Corporate Sustainability Reporting Directive (CSRD), the double materiality assessment has transitioned from voluntary practice to mandatory compliance for thousands of reporting companies. This assessment forms the foundation for sustainability disclosures according to ESG criteria (Environmental, Social, Governance) whilst ensuring transparency, comparability and credibility of sustainability data. The European Sustainability Reporting Standards (ESRS) explicitly prescribe application of the double materiality approach. Discover more about ESRS requirements for CSRD disclosure.

Following the July 2025 Omnibus amendments, the double materiality process has evolved from a rigid checklist exercise to a strategic, top-down assessment that allows companies to focus resources on genuinely material sustainability matters rather than exhaustive data collection across all potential topics.

Relevance for companies across sectors

The double materiality assessment is essential for identifying financial risks and opportunities early, exploiting pathways for sustainable innovation, and meeting evolving reporting obligations. It facilitates strategic prioritisation of measures whilst enabling credible communication with investors, customers, regulators and other affected stakeholders. The assessment helps reporting companies understand both how external sustainability trends impact their business model strategy and how their business relationships generate material impacts on society and natural resources. See also ESG strategy for startups for practical implementation guidance.

Fundamentals of materiality assessment

Definition of materiality in sustainability reporting

Materiality describes the threshold at which certain sustainability issues and information become sufficiently important to influence decisions of stakeholders and the company's strategic direction. In the context of the Corporate Sustainability Reporting Directive, sustainability matters are considered material when they have significant influence on business operations, financial implications, risk management processes, or when they represent material impacts on people and the environment. The concept has been refined through 2025 implementation experience to emphasise both severity of impacts and strategic relevance to value creation.

Difference between single and double materiality

Single materiality (also called financial materiality assessment in isolation) examines only how sustainability issues affect the company's financial performance, operational costs and risk profile – essentially an outside-in financial perspective focused on financial risks and opportunities.

Double materiality significantly expands this approach by incorporating the impact perspective – assessing what influence the company itself exerts on the environment, society and affected stakeholders through its business operations and value chain. Under current regulation following the European Sustainability Reporting Standards, both perspectives must be systematically evaluated through a comprehensive materiality assessment process. A topic qualifies as material if considered material from either an impact perspective or financial perspective – or frequently both.

Legal background: CSRD, ESRS and timeline updates

The regulatory environment underwent significant evolution in 2025. The double materiality assessment became mandatory particularly through the Corporate Sustainability Reporting Directive (CSRD) and associated European Sustainability Reporting Standards (ESRS). The Global Reporting Initiative (GRI) has advocated this methodology for years, providing complementary guidelines that inform the ESRS framework.

Critical 2025 developments include:

• "Stop-the-Clock" Decision (April 2025): To provide companies additional preparation time, the EU delayed reporting obligations for Wave 2 (large non-listed companies) to 2027 and Wave 3 (listed SMEs) to 2028.
• Omnibus Simplifications (July 2025): The European Commission reduced mandatory data points by approximately 57%, introduced flexibility through "information materiality" filters, and postponed sector-specific standards to focus on cross-cutting sustainability matters.
• VSME Standard Adoption (July 2025): The voluntary standard for small and medium-sized enterprises was officially endorsed, serving dual purposes: guiding SMEs in voluntary sustainability reporting and acting as a "value chain cap" to limit data demands from larger clients.

In-depth analysis: EU Omnibus package simplifying CSRD reporting.

Focus comparison: CSRD versus VSME materiality requirements

The materiality assessment process differs substantially between large reporting companies under CSRD and smaller entities adopting the voluntary VSME framework:

Strategic insight: CSRD-obligated companies must conduct a rigorous double materiality assessment covering both financial risks and opportunities alongside environmental and social impacts – with full documentation for audit purposes. SMEs can utilise a streamlined approach focused on potentially relevant sustainability matters most critical to their sector whilst avoiding disproportionate reporting burdens. More on SME approaches: VSME standard for SME sustainability reporting.

The double materiality approach in detail

Financial materiality: The outside-in financial perspective

Understanding financial materiality in 2025 context

Financial materiality examines how external sustainability matters – including climate change, evolving regulatory environment, shifting stakeholder expectations, resource scarcity – can influence a company's financial performance, risk management posture and long-term viability. The assessment identifies financial risks and opportunities with medium to long-term implications for revenues, operational costs, capital allocation and access to finance.

The 2025 Omnibus amendments refined the financial materiality assessment to emphasise strategic opportunities alongside risk management. Reporting companies now assess financial implications more qualitatively in initial years, with quantification of anticipated financial effects deferred to 2030 for most sustainability matters – significantly reducing immediate burden whilst maintaining strategic value.

Examples and practical applications

• Regulatory risks: Carbon pricing mechanisms under EU ETS expansion, compliance costs from new ESG legislation – see EU ETS 2 implications
• Market opportunities: Revenue growth through sustainable products meeting customer demand; access to green financing instruments at preferential rates
• Reputational risks: Brand damage from negative environmental impact or social impacts – mitigate through avoiding greenwashing
• Supply chain disruptions: Business relationships compromised by extreme weather events, geopolitical instability or resource constraints in the value chain
• Transition risks: Asset stranding, technology obsolescence, changing consumer preferences affecting business model strategy

Impact materiality: The inside-out impact perspective

Assessing material impacts in business operations

The impact materiality assessment evaluates the extent to which a company's business operations, products and value chain generate actual and potential impacts on environment, society and governance – encompassing both positive impacts and negative impacts. This impact perspective assesses severity of effects on people, ecosystems and affected stakeholders, considering scale, scope and irremediability of material impacts.

The 2025 implementation experience emphasised site-specific granularity. Reporting companies must now identify not just that they "use water" but specifically whether water consumption occurs in high-stress basins using tools like WRI Aqueduct. The assessment must align with due diligence requirements under the Corporate Sustainability Due Diligence Directive (CSDDD), harmonised with CSRD reporting in late 2025.

Examples spanning environmental and social resources

• Climate impacts: Scope 1, 2 and 3 greenhouse gas emissions across the value chain; contribution to climate change mitigation or adaptation
• Labour practices: Working conditions, human rights in business relationships, diversity and inclusion; wage levels and social protection
• Environmental impact: Biodiversity loss, habitat destruction, pollution of air/water/soil; waste management practices and circular economy integration – see integrating biodiversity into ESG strategies
• Community effects: Impacts on local communities, indigenous peoples; land rights and access to social resources
• Governance matters: Business ethics, anti-corruption, tax transparency; political influence and lobbying activities

Interplay of financial and impact perspectives

The double materiality assessment ensures companies systematically evaluate both financial materiality (outside-in: how sustainability trends create financial risks and opportunities) and impact materiality (inside-out: how business operations generate material impacts). Under ESRS requirements, a sustainability matter qualifies as material and triggers reporting obligations if considered material from either perspective – or frequently both.

Many sustainability issues exhibit "dynamic materiality" where impacts and financial implications reinforce each other. Climate change exemplifies this: a company's greenhouse gas emissions (impact materiality) simultaneously expose it to carbon pricing, physical risks and transition risks (financial materiality). Similarly, poor labour conditions in the value chain (impact) create reputational and regulatory risks affecting the company's financial performance (financial).

This interconnection underscores why determining materiality requires holistic assessment rather than siloed financial analysis or impact evaluation. Companies conducting a thorough materiality assessment identify synergies where addressing negative impacts simultaneously mitigates financial risks whilst generating positive impacts that unlock market opportunities.

Steps of the double materiality assessment

Step 1: Strategic context and stakeholder identification

The initial phase establishes the foundation for a robust materiality assessment process by mapping the company's sustainability context and identifying relevant stakeholders systematically. This involves:

Understanding the strategic landscape: Analysis begins with senior management workshops to identify the company's business model strategy, key business relationships, geographic footprint, and sector-specific sustainability trends. This top-down approach – emphasised in 2025 best practice – ensures the assessment aligns with strategic priorities rather than becoming a box-ticking exercise.

Stakeholder mapping: Companies identify and prioritise affected stakeholders including employees, customers, suppliers, investors, regulatory authorities, local communities, NGOs and industry associations. The mapping considers both stakeholders who influence the business and those impacted by business operations. Unlike pre-2025 practices involving mass surveys, the refined approach recommends targeted engagement with genuinely material stakeholder groups.

Value chain scoping: Defining boundaries for upstream (supply chain) and downstream (product use, end-of-life) sustainability matters establishes the scope for identifying potentially relevant sustainability matters across the entire value chain.

Step 2: Identification of potentially relevant sustainability matters

This phase generates a comprehensive long-list of sustainability issues for subsequent evaluation:

ESRS topic screening: Companies review the topical standards (ESRS E1-E5 environmental, S1-S4 social, G1 governance) to identify which sustainability matters could potentially be material given their sector, geography and business model.

Stakeholder input collection: Through targeted interviews, workshops and surveys with key stakeholder groups, companies gather perspectives on which sustainability issues matter most from external viewpoints. This stakeholder engagement provides crucial insights into stakeholder expectations and stakeholder concerns.

Regulatory environment scan: Analysis of relevant regulations, industry standards, emerging policy trends and investor requirements identifies compliance-driven material topics alongside strategic sustainability issues.

Peer benchmarking: Reviewing how comparable reporting companies approached their materiality assessment provides context whilst avoiding groupthink – material topics must reflect entity-specific sustainability matters, not just sector norms.

Step 3: Assessment of financial and impact materiality

The core evaluation phase applies rigorous criteria to assess materiality from both perspectives:

Financial materiality assessment criteria

For each potentially relevant sustainability matter, companies evaluate:

• Magnitude: Potential scale of financial implications on revenues, operational costs, capital expenditure, asset values, cost of capital
• Likelihood: Probability the financial risks or opportunities will materialise within relevant time horizons
• Time horizon: Whether effects are short-term (0-3 years), medium-term (3-10 years) or long-term (10+ years)
• Connection to strategy: How sustainability matters intersect with the company's business model strategy and value creation mechanisms

The 2025 simplifications allow qualitative assessment in initial reporting cycles, with quantification of anticipated financial effects deferred until 2030 for most topics.

Impact materiality assessment criteria

For the impact perspective, companies evaluate actual and potential impacts using:

• Scale: Severity or intensity of the impact – how significant is the effect on affected stakeholders or environment?
• Scope: How widespread is the impact? How many people or how much of the environment is affected?
• Irremediability: How difficult would it be to restore affected stakeholders or ecosystems to their prior state?
• Likelihood: For potential impacts, what is the probability of occurrence?

This impact materiality assessment must align with due diligence methodologies under CSDDD, ensuring consistency between sustainability reporting and broader corporate responsibility frameworks. Companies assess both positive impacts (contributions to sustainable development) and negative impacts (harm caused or contributed to).

The "information materiality" filter

Once a topic qualifies as material under financial or impact criteria, companies apply a secondary filter: within that material topic, which specific data points merit reporting? This "information materiality" concept – introduced in the July 2025 Omnibus amendments – allows omission of granular metrics that don't meaningfully inform stakeholders about that sustainability matter's implications. This filter enabled first-wave reporters to reduce final report length by approximately 30% whilst maintaining substantive disclosure on material topics.

Step 4: Prioritisation and validation

Following initial scoring, companies engage in:

Cross-functional validation workshops: Risk management, finance, operations and sustainability teams jointly review assessments to ensure consistency with enterprise risk management frameworks and financial reporting. This integration addresses a major weakness identified in first-wave reports where siloed sustainability teams produced materiality matrices contradicting financial filings.

Senior management review: Executive leadership validates that identified material topics align with strategic priorities and risk appetite. Best practice assigns Board-level responsibility for approving the final materiality assessment.

Stakeholder feedback loop: Sharing draft findings with key stakeholder groups validates that the assessment accurately reflects stakeholder concerns and stakeholder expectations, building credibility for final reporting.

Step 5: Visualisation and documentation

The final phase translates analytical findings into reportable outputs:

Materiality matrix or list: Results are visualised either through traditional materiality matrices (plotting financial materiality on one axis, impact materiality on the other) or simplified "lists of material topics" linking each topic to strategic KPIs. Auditors in 2025 found the list format easier to verify than complex matrices.

Methodological documentation: Companies document the materiality assessment process comprehensively including: scope and boundaries, stakeholder groups engaged, data sources used, assessment criteria and thresholds, key judgements made. This documentation is essential for external assurance and demonstrating compliance with ESRS requirements.

Integration into sustainability disclosures: Material topics directly determine which ESRS standards and data points require disclosure. The assessment results structure the entire sustainability reporting approach, making this arguably the most consequential element of CSRD compliance.

Action planning: Beyond compliance, the assessment informs strategic planning by identifying where to focus ESG investments, which risks require mitigation, and where opportunities warrant resource allocation. Learn more: Developing effective ESG strategy.

Lessons from the first wave of CSRD reporting (2025)

Key challenges encountered by reporting companies

The inaugural year of CSRD reporting revealed systematic challenges across the double materiality process:

The data gap shock: Most reporting companies possessed reasonable Scope 1 and 2 emissions data but discovered massive gaps in Scope 3 value chain data. Initial reports relied heavily on generic emission factors and spend-based calculations rather than supplier-specific information. Auditors consistently flagged this as undermining the credibility of both impact and financial materiality assessments. The VSME standard was subsequently accelerated to address this systemic supply chain data challenge.

Stakeholder engagement superficiality: Many companies treated stakeholder engagement as a compliance formality, distributing lengthy surveys that yielded low response rates and limited actionable stakeholder input. Auditors scrutinised whether stakeholder concerns were genuinely incorporated into determining materiality or merely documented for appearance. Best performers conducted structured interviews with representative stakeholder groups and documented how input shaped final assessments.

Audit rigour exceeded expectations: Limited assurance proved substantially more demanding than anticipated. Auditors required comprehensive evidence trails demonstrating not just why topics were deemed material, but crucially, why topics were excluded as immaterial. Companies lacking robust documentation of assessment methodology faced qualified opinions or demands for extensive rework.

Governance gaps: Sustainability teams frequently conducted materiality assessments in isolation from risk management, finance and operational functions. This produced materiality matrices disconnected from enterprise risk registers and sometimes contradicting risk factors disclosed in financial statements – a critical red flag for auditors and investors questioning whether sustainability risks were genuinely integrated into corporate governance.

Quantification challenges: Early guidance suggested companies should quantify anticipated financial effects of material sustainability matters. However, the methodological complexity and uncertainty involved proved prohibitive, leading to the July 2025 decision to defer quantification requirements whilst maintaining qualitative financial analysis.

Best practices emerging from successful implementations

Companies navigating the first reporting cycle most effectively shared common approaches:

Board-level ownership: Assigning explicit Board member responsibility for overseeing the materiality assessment process before commencing analysis ensured strategic alignment and cross-functional integration. This governance structure elevated sustainability reporting from a compliance task to a strategic imperative informing business model strategy.

Integrated cross-functional teams: Establishing working groups combining sustainability experts, risk managers, financial controllers, operations leads and legal counsel produced more robust assessments reflecting diverse perspectives. Regular workshops ensured consistency between the materiality assessment and enterprise risk management frameworks.

Strategic top-down scoping: Rather than attempting bottom-up assessment of all potentially relevant sustainability matters, successful companies began with executive workshops identifying 10-15 strategic priorities, then validated these through stakeholder engagement and detailed analysis. This approach focused resources on genuinely material topics rather than spreading effort across exhaustive topic lists.

Early digitisation: Companies relying on spreadsheets for data collection and documentation struggled with version control, audit trails and stakeholder coordination. Those deploying dedicated ESG data management platforms (e.g. Greenomy, Plan A, SAP Sustainability Control Tower) from project inception demonstrated superior data quality and audit readiness. Digital tools proved essential for managing the complexity of value chain data across diverse business relationships.

VSME proactive deployment: Forward-thinking large companies adopted the VSME standard framework when requesting data from SME suppliers, aligning their information requests with the VSME core module. This standardisation dramatically improved response rates and data quality compared to companies issuing bespoke questionnaires. SME suppliers appreciated receiving consistent data requests across multiple clients rather than dozens of unique formats.

Pre-assurance reviews: Companies engaging external advisors to conduct "dry run" audits 6-9 months before formal assurance identified documentation gaps and methodological weaknesses whilst time remained for remediation. This pre-assurance approach significantly reduced audit qualifications and rework demands during formal limited assurance engagements.

Implications for Wave 2 and Wave 3 reporters

Companies approaching their first CSRD reporting cycles in 2027-2028 benefit from accumulated learning:

Start governance structures early: Don't wait until data collection begins. Establish Board oversight, cross-functional working groups and clear accountability for the materiality assessment process at least 18 months before first reporting deadline.

Invest in systems infrastructure: Budget for dedicated ESG data management technology recognising that spreadsheet approaches don't scale. Digital platforms are essential for managing value chain data complexity and maintaining audit trails across the materiality assessment process.

Leverage simplifications strategically: The July 2025 Omnibus amendments provide flexibility – use it wisely. Apply the information materiality filter to focus reporting on data points that meaningfully inform stakeholders about material topics rather than pursuing comprehensiveness for its own sake.

Engage supply chains early: Begin supply chain data collection immediately using VSME-aligned requests. The primary bottleneck for Wave 2 and 3 reporters will be gathering reliable value chain data from business relationships lacking established sustainability reporting processes.

Document, document, document: Auditors will scrutinise methodology, data sources, key judgements and stakeholder input. Maintain contemporaneous documentation throughout the assessment process rather than reconstructing justifications retrospectively when auditors arrive.

Challenges and best practices in materiality assessment

Common stumbling blocks in practice

• Insufficient stakeholder engagement: Incomplete identification of affected stakeholders or tokenistic consultation processes yield materiality assessments disconnected from genuine stakeholder concerns and stakeholder expectations. This undermines both credibility and compliance with ESRS requirements for meaningful stakeholder input.
• Data availability and quality gaps: Obtaining complete, reliable ESG data particularly for Scope 3 emissions, value chain social impacts and biodiversity metrics remains profoundly challenging. Companies frequently resort to proxy data and assumptions that auditors question during limited assurance engagements. More detail: Scope 3 emissions accounting for SMEs.
• Prioritisation paralysis: Without clear assessment criteria and thresholds for determining materiality, companies struggle to distinguish genuinely material topics from less significant sustainability issues. This produces either overly inclusive materiality assessments (everything is material) or arbitrary exclusions lacking defensible rationale.
• Methodological opacity: Failing to document the materiality assessment process transparently – including data sources, stakeholder groups consulted, scoring methodologies, key judgements – creates audit challenges and undermines stakeholder trust in reported outcomes.
• Disconnect from strategy: Materiality assessments conducted as standalone compliance exercises rather than integrated strategic processes fail to inform business model strategy, capital allocation or risk management – wasting the exercise's potential value.
• Static rather than dynamic: Treating the double materiality assessment as a one-time exercise rather than iterative process responsive to changing sustainability trends, regulatory environment shifts and evolving business operations.

Recommendations for robust implementation

• Strategic stakeholder analysis: Map stakeholders systematically considering both influence and impact relationships. Prioritise engagement with those most significantly affected by business operations and those whose concerns most influence business success. Employ diverse engagement methods appropriate to different stakeholder groups rather than one-size-fits-all surveys.
• Clear, documented methodology: Establish transparent assessment criteria for both financial materiality and impact materiality, defining thresholds, time horizons and scoring approaches explicitly. Document the methodology before beginning evaluation and apply it consistently across all sustainability matters under review.
• Cross-functional integration: Embed sustainability considerations within existing risk management, strategy development and financial planning processes rather than maintaining parallel structures. Ensure the materiality assessment informs and aligns with enterprise risk registers and strategic planning cycles.
• Regular updates and reviews: Refresh the materiality assessment annually at minimum, or when significant changes occur (regulatory environment shifts, business model strategy changes, material incidents, major acquisitions). Sustainability trends and financial risks evolve continuously – static assessments rapidly become outdated.
• Transparent communication: Report the methodology, results and actions arising from the materiality assessment openly in sustainability disclosures. Explain not just what is material but why – the reasoning behind inclusion and exclusion decisions. This transparency builds stakeholder trust whilst satisfying auditor requirements.
• Digital enablement: Deploy fit-for-purpose technology platforms supporting data collection from the value chain, stakeholder engagement management, assessment workflow and audit trail maintenance. Digital infrastructure is not optional for managing CSRD-scale reporting complexity.
• External validation: Consider third-party review of materiality assessment methodology and outcomes, either through formal pre-assurance or advisory engagements, to identify weaknesses before formal audit and enhance credibility with stakeholders.

Tools and methodologies supporting the process

Digital tools and standardised methodologies facilitate data collection, evaluation and visualisation throughout the double materiality process:

ESG data management and reporting platforms: Comprehensive software solutions supporting the end-to-end materiality assessment process including stakeholder engagement modules, assessment workflow management, materiality matrix visualisation and audit trail documentation. Examples include SAP Sustainability Control Tower, Plan A, Greenomy, Sweep, and Sphera.

Stakeholder engagement tools: Platforms facilitating structured consultation through surveys, interviews and workshops with both internal and external stakeholders. Solutions like Qualtrics, Typeform and SurveyMonkey support data collection whilst specialist sustainability platforms often incorporate engagement functionality alongside broader ESG management capabilities.

Value chain data collection: Supplier engagement platforms enabling systematic collection of sustainability data from business relationships across the value chain. Tools like EcoVadis, Supplyshift and Carbon Chain support supply chain transparency essential for assessing material impacts and financial risks originating upstream.

Impact assessment methodologies: Frameworks like the Impact Management Project (IMP), UNEP FI's Impact Radar and sector-specific guidance from SASB help companies structure evaluation of actual and potential impacts on affected stakeholders and environment.

Scenario analysis tools: For assessing financial implications of climate change and other sustainability trends under different scenarios, specialised platforms like Climanomics, Carbon Delta and S&P's Climate Credit Analytics support forward-looking financial analysis informing financial materiality assessment.

Visualisation and communication: Business intelligence tools like Tableau, Power BI and Qlik enable dynamic visualisation of materiality assessment results whilst collaborative platforms like Miro support workshop-based assessment processes.

The role of advisory in double materiality assessment

Why external consulting delivers value in 2025

Despite regulatory simplifications through the Omnibus package, the double materiality assessment remains methodologically complex whilst carrying heightened legal significance. The outcome directly determines reporting obligations and establishes the scope for sustainability disclosures that investors, regulators and stakeholders will scrutinise intensively. External advisory support provides essential value through:

Methodological expertise: Consultants bring accumulated knowledge from conducting materiality assessments across diverse sectors, company sizes and regulatory jurisdictions. This experience translates into robust, audit-ready methodologies that companies undertaking their first assessment typically lack. Understanding ESRS requirements, EFRAG implementation guidance and evolving regulatory environment demands specialist knowledge that most companies don't maintain in-house.

Independent perspective: Internal teams often struggle with objectivity when assessing their company's impacts and risks. External advisors provide unbiased evaluation less subject to corporate blind spots or political sensitivities that can distort internal assessments. This independence proves particularly valuable when determining which sustainability matters are genuinely material versus which reflect management preferences or assumptions.

Stakeholder credibility: Involving recognised advisory firms in the materiality assessment process enhances credibility with external stakeholders who may question purely internal assessments. This third-party involvement signals commitment to rigorous, objective evaluation – particularly important for investor confidence and regulatory relationships.

Accelerated learning: Rather than learning through costly trial and error, companies benefit from consultants' accumulated knowledge of common pitfalls, best practices and efficient approaches. This dramatically compresses the learning curve whilst reducing risk of audit qualifications or regulatory challenges arising from methodological weaknesses.

Resource efficiency: For companies approaching first CSRD reporting cycles, deploying scarce internal sustainability resources to core strategic work whilst leveraging external support for process design, stakeholder engagement facilitation and technical compliance often proves more efficient than purely internal approaches.

Advisory service offerings across the process

• Methodology development and training: Designing the overall materiality assessment process including governance structures, assessment criteria, stakeholder identification protocols and documentation frameworks. Training internal teams on ESRS requirements and materiality concepts ensures knowledge transfer alongside implementation support.
• Stakeholder mapping and engagement: Identifying affected stakeholders systematically, designing engagement approaches appropriate to different groups, facilitating workshops and interviews, synthesising stakeholder input into actionable insights informing the assessment.
• Data strategy and collection: Architecting approaches for gathering sustainability data across the value chain, designing supplier engagement protocols aligned with VSME standards, implementing digital data collection tools, validating data quality and completeness.
• Assessment workshops and facilitation: Conducting structured workshops with cross-functional teams to evaluate sustainability matters against financial materiality and impact materiality criteria, facilitating discussion of key judgements, building consensus on outcomes whilst maintaining methodological rigour.
• Benchmarking and peer analysis: Providing context on how comparable companies approached their materiality assessments, identifying emerging sustainability trends in relevant sectors, highlighting sustainability issues gaining prominence that may warrant attention.
• Pre-assurance readiness: Conducting "dry run" reviews mimicking formal audit procedures to identify documentation gaps, methodological weaknesses or inconsistencies before external assurance begins – the advisory equivalent of fire drills ensuring audit readiness.
• Documentation and reporting support: Structuring comprehensive documentation of the materiality assessment process, translating technical assessment outcomes into clear sustainability disclosures, ensuring consistency between materiality results and broader CSRD reporting narrative.
• Technology selection and implementation: Advising on appropriate ESG data management platforms given company size, complexity and requirements; supporting system implementation and integration with existing enterprise systems.

When to engage advisory support

External consulting delivers maximum value when engaged:

• First-time CSRD reporters: Companies approaching their inaugural reporting cycle benefit enormously from experienced guidance through unfamiliar processes, reducing risk whilst accelerating capability building.
• Complex value chains: Organisations with extensive, globally distributed supply chains face particular challenges in value chain data collection and assessment – precisely where advisory firms' cross-sectoral experience and supplier engagement methodologies prove invaluable.
• Material updates needed: When significant business changes (acquisitions, divestments, strategy shifts) necessitate thorough refresh of existing materiality assessments, external advisors provide objective reassessment unconstrained by legacy assumptions.
• Audit challenges anticipated: Companies with limited sustainability reporting history or previous audit qualifications benefit from advisory support strengthening methodology, documentation and stakeholder engagement to withstand audit scrutiny.
• Resource constraints: Organisations lacking dedicated sustainability teams or facing competing priorities use advisory support to progress materiality assessment without overwhelming limited internal capacity.

Strategic advisory engagement information: Sustainability consulting services.

FAQ – Double materiality process

Related resources

• Understanding double materiality in CSRD
• Creating comprehensive sustainability reports
• ESG as key to long-term business success
• Streamlining ESG reporting with VSME
• CSRD report 2025: Contents and implementation