Double Materiality Requirement

Summary:

Used to determine which ESRS requirements are relevant to an organization.

Description:

When it comes to reporting under the ESRS, companies must first perform a double materiality assessment. This assessment helps determine which ESRS requirements are relevant for your organization specifically. There are two types of materiality that companies need to consider: 1. Impact materiality: All about how your company’s actions impact on people and planet in the short, medium, and long term. And remember, it’s not just about your own operation; you also need to assess the impact your entire value chain. 2. Financial impact: Here, the focus shifts to how sustainability issues impact your business financially. This includes factors such as your company’s growth, performance, and cost of capital in the short, medium, and long term. By combining these two factors, you can figure out which risks and opportunities are material and should be included in your reporting.It’s important to establish appropriate thresholds to help you make this decision, such as the likelihood of occurrence and the potential financial effect.This way, you can ensure that you include important information in your reports.