Doubling Down on Double Materiality

The concept of double materiality is new and a bit complicated to understand. However, it is something all of us focusing on sustainability need to know about.

Here’s the general concept in a nutshell:  

Double materiality is a concept that refers to the two-way relationship between a company and the environment. On one hand, environmental, social and governance (ESG) factors can affect a company's performance, risks, finances, and opportunities. This is called financial materiality.

On the other hand, a company's activities can have an impact on the environment and the community. This is called environmental and social materiality.

Double materiality is important for sustainability reporting because it helps companies identify and disclose the most relevant ESG issues for their business and stakeholders. By applying double materiality, companies can provide a comprehensive and balanced view of their sustainability performance, as well as their contribution to the global goals such as the UN Sustainable Development Goals (SDGs).

Double materiality also helps investors and other users of sustainability information to make informed decisions based on a holistic understanding of a company's value creation and impact. By considering both financial and environmental and social materiality, investors can assess how a company manages its ESG risks and opportunities, as well as how it contributes to or detracts from the common good.