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What is double materiality?

Materiality in the sustainability context refers to environmental, social, and governance (ESG) topics that are critical to an organization and its stakeholders.

Double materiality has two dimensions: impact materiality and financial materiality.

  • Impact materiality considers topics in terms of the positive and negative impacts of an organization on people and the environment (inside-out view).
  • Financial materiality is concerned with the financial risks and opportunities of topics for the organization and its financial performance (outside-in view).

The double materiality assessment is necessary for you to identify the material impacts, risks and opportunities (IROs) that are to be reported in your sustainability statement. A topic is considered material if it fulfils the criteria for impact materiality or financial materiality or both. A more detailed explanation on when an IRO is material can be found in the IRO section.