Double Materiality Assessment
for Manufacturing

Double materiality assessment for Manufacturing

Manufacturing sits at the centre of the CSRD's scope because the sector's environmental footprint and labour intensity trigger materiality across most ESRS topical standards. A steel fabricator with Scope 1 emissions from furnaces, chromium waste in effluent, water consumption in cooling systems, and a multi-tier supply chain sourcing raw materials from high-risk jurisdictions will find six or seven ESRS topics material before the assessment is halfway done. EFRAG's sector-specific guidance (still under development as of early 2026) will eventually formalise these expectations, but entities reporting under Wave 1 and Wave 2 cannot wait. The sector-agnostic assessment framework in ESRS 1.20-33 applies now.

E1 Climate change is material for virtually all manufacturers. Scope 1 emissions from combustion, process heat, and chemical reactions create direct impact materiality. Scope 2 from purchased electricity is typically significant given energy-intensive operations. Scope 3 category 1 (purchased goods) and category 11 (use of sold products) often dominate the total footprint. E2 Pollution applies wherever production processes release substances to air, water, or soil. The EU Industrial Emissions Directive already regulates many of these, which means the data exists but needs repackaging into ESRS E2 disclosure format. E3 Water and marine resources becomes material for manufacturers with high water consumption or operations in water-stressed regions. E5 Resource use and circular economy applies to any manufacturer generating significant waste streams or using virgin raw materials where recycled alternatives exist. On the social side, S1 Own workforce covers occupational health and safety (a persistent regulatory focus in manufacturing), working time, and adequate wages. S2 Workers in the value chain is where the assessment gets difficult: manufacturers with suppliers in Southeast Asia, sub-Saharan Africa, or other regions with documented labour rights concerns must assess forced labour, child labour, and living wage risks.

The most common assurance finding in manufacturing double materiality assessments is underscoping the value chain. Entities assess their own operations thoroughly but treat Scope 3 and S2 as peripheral. ESRS 1.30 is explicit: the assessment must cover the entity's upstream and downstream value chain. A manufacturer that reports on its own factory emissions but ignores the mining operations supplying its raw materials has an incomplete assessment. Another frequent finding is failing to distinguish between actual and potential impacts (ESRS 1.43). A manufacturer with zero pollution incidents still has potential pollution impacts if its processes use hazardous substances. The assessment must capture both. Assurance providers also flag the absence of quantitative thresholds: entities describe topics as "somewhat material" without defining what score or threshold triggered inclusion.

For practical application, manufacturing entities should start with a process map. List every production step from raw material receipt to finished goods dispatch. For each step, identify energy inputs, emissions outputs, waste streams, water use, and workforce exposure. Then extend the map upstream (key suppliers, raw material origins) and downstream (product use phase, end-of-life). Score each sustainability matter using ESRS 1.45-48 severity criteria. Where supplier-specific data is unavailable, use sector averages from the European Environment Agency or ILO country risk assessments as proxy evidence, and disclose the use of estimates per ESRS 1 paragraph 67.