The double-materiality conceptApplication and issues

This paper considers the appropriateness of the EU’s double-materiality concept and how it can be used with the GRI approach to materiality. It draws on academic research that investigates how double-materiality and materiality in sustainability reporting are implemented and the benefits and challenges of doing so. Key findings in the paper include: - The identification of financially materiality issues are incomplete if companies do not first assess their impacts on sustainable development - Reporting material sustainable development issues can enhance financial performance, improve stakeholder engagement and enable more robust disclosure - Focusing on the impacts of organizations on people and planet, rather than financial materiality, increases engagement with the Sustainable Development Goals. Double-materiality is central to the European Commission’s proposed Corporate Sustainability Reporting Directive (CSRD), while it also closely aligns with the materiality approach in the GRI Standards. This paper seeks to inform the debate around how this concept drives sustainability and supports better decision-making by investors and other stakeholders.