ESRS 1 · CSRD

Double Materiality
Assessment

ESRS 1-compliant double materiality assessment. Select sustainability topics, score impacts, risks and opportunities, and determine which topics are material. Interactive heatmaps with adjustable thresholds.

ESRS 1 Chapter 3 requires companies to assess sustainability topics from two perspectives: impact materiality (effects on people and environment) and financial materiality (effects on the company's financial position). A topic is material if it meets either threshold. The assessment must cover all ESRS topics (E1–E5, S1–S4, G1) and document the rationale for both inclusions and exclusions.

0 topics in scope · 0 scored

Select sustainability topics

Review each ESRS topic and mark it as in-scope or out-of-scope for your organisation. Topics marked out-of-scope should have documented rationale.

Environment
Social
Governance

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Double materiality assessment: ESRS methodology

The double materiality assessment is the gateway to CSRD reporting. It determines which ESRS topical standards a company must report on. Unlike single materiality (used in financial reporting), double materiality considers both the company's impact on society and the environment, and how sustainability issues affect the company financially.

The three-stage process

Stage 1: Topic identification — Review the full list of ESRS sustainability topics and determine which are potentially relevant to the company's activities, business relationships, and value chain.

Stage 2: IRO assessment — For each relevant topic, identify specific impacts, risks, and opportunities (IROs). Score each IRO on impact materiality (scale, scope, irremediable character) and financial materiality (likelihood × magnitude).

Stage 3: Materiality determination — Apply thresholds to determine which topics are material. A topic is material if any of its IROs exceeds the threshold on either the impact or financial materiality dimension.

Documentation requirements

ESRS 1 requires documentation of the process, criteria, and thresholds used. Both material and non-material topics must be documented — the rationale for excluding a topic is just as important as the rationale for including it. The double materiality assessment is subject to limited assurance under the CSRD and will transition to reasonable assurance over time.

Key terms

Double Materiality Impact Materiality Financial Materiality IRO Assessment ESRS Stakeholder Engagement

Further reading

Frequently asked questions

What is double materiality under CSRD?
Double materiality means assessing sustainability topics from two perspectives: impact materiality (how the company affects people and the environment) and financial materiality (how sustainability matters affect the company's financial position, performance, and cash flows). A topic is material if it is material from either perspective. This is defined in ESRS 1 Chapter 3.
What is an IRO assessment?
IRO stands for Impacts, Risks, and Opportunities. ESRS 1 requires companies to identify and assess IROs for each sustainability topic. Impacts relate to impact materiality (positive or negative effects on people/environment). Risks and opportunities relate to financial materiality (potential financial effects on the company). The IRO assessment is the foundation of the double materiality analysis.
How do you score impact materiality?
ESRS 1 AR16 suggests scoring impacts on three dimensions: scale (severity of the impact), scope (how widespread it is), and irremediable character (how difficult it is to undo negative impacts). For potential impacts, likelihood replaces irremediable character. Each dimension is scored 1–5 and the highest score determines the impact materiality rating for that topic.
How do you score financial materiality?
Financial materiality is assessed based on likelihood (how probable is it that the sustainability matter will affect the entity financially) and magnitude (the potential size of the financial effect on revenue, costs, assets, liabilities, or cost of capital). The financial materiality score is typically calculated as likelihood × magnitude.
What threshold should I use?
ESRS 1 does not prescribe a specific numerical threshold — it requires entities to apply judgment. The default in this tool is 9/25 for financial materiality (corresponding to a medium-medium combination of likelihood and magnitude). You should calibrate the threshold to your entity's specific circumstances, industry, and stakeholder expectations. Document and justify whatever threshold you choose.

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