Double Materiality
Double materiality is an assessment approach that considers both how a company's activities impact society and the environment (impact materiality) AND how sustainability matters affect the company's financial position (financial materiality).
The Two Perspectives
Impact Materiality
"Inside-out" — How does the company affect people and planet?
Example: A factory's emissions contribute to climate change
Financial Materiality
"Outside-in" — How do sustainability issues affect the company?
Example: Carbon pricing increases operational costs
Company
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World
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Where It's Required
- CSRD/ESRS: Mandatory double materiality assessment
- GRI: Impact-focused but encourages financial perspective
- ISSB: Primarily financial materiality (investor-focused)