As sustainability regulations tighten across Europe, many organisations are grappling with one of the most intricate and time-consuming aspects of the Corporate Sustainability Reporting Directive (CSRD): the Double Materiality Assessment (DMA).
According to Greenomy, while the process initially appears resource-heavy, involving extensive engagement with stakeholders, in-depth value chain analysis, and complex evaluation of impacts, risks and opportunities, it can become far more manageable with the right approach.
When executed strategically, the DMA not only simplifies compliance but also creates a clear foundation for faster and more consistent reporting, ensuring that businesses focus on the issues that matter most.
The key to unlocking these efficiencies lies in early alignment between the DMA and the European Sustainability Reporting Standards (ESRS). Rather than viewing the DMA as a standalone task, companies that integrate ESRS considerations from the outset are better positioned to streamline their reporting processes, avoid duplication, and produce more consistent disclosures that fully comply with CSRD requirements.
Having a strong understanding of ESRS requirements before launching a DMA can significantly cut down on unnecessary work. Companies that begin their assessments with the ESRS framework in mind reduce the risk of revisiting or reworking analyses later to fit CSRD standards. Instead, the DMA outputs directly feed into ESRS-compatible reports, ensuring that all relevant impacts, risks, and opportunities are captured appropriately.
The DMA itself also serves as an integral component of CSRD reporting. Several ESRS disclosures require companies to explain how their DMA was conducted. For example, ESRS 2 IRO-1 mandates transparency about the process used to identify impacts, risks, and opportunities. The resulting materiality outcomes, captured in ESRS 2 SBM-3, form the backbone of the entire sustainability report, determining which additional disclosure standards apply.
Aligning the scope of the DMA with reporting boundaries at the outset is also critical. Decisions regarding which entities, operations and levels of disaggregation are included inform the Basis for Preparation disclosures (BP-1 and BP-2). This ensures consistency throughout the reporting process and meets ESRS 1 chapter 3.7 requirements on data aggregation and disaggregation.
Context setting is another important area where alignment pays off. A thorough DMA involves gathering detailed information about the business model, strategic objectives, key stakeholders and value chain—all elements that directly inform ESRS 2 SBM-1 (Strategy, Business Model, and Value Chain). Collecting data such as NACE codes, sector classifications, geographic reach, and revenue breakdowns early, and structuring them according to ESRS expectations, simplifies later reporting stages.
The identification of impacts, risks, and opportunities (IROs) remains central to CSRD compliance. These IROs determine which topical standards under the ESRS apply. When companies conduct this phase with ESRS priorities in mind—for instance, identifying water-stressed or biodiversity-sensitive areas—they can ensure their reporting will meet regulatory standards from the outset. This alignment also facilitates smoother scoring, prioritisation, and justification processes, which are necessary for disclosures in SBM-3, IRO-1 and financial effect reporting.
Stakeholder engagement further enhances the DMA’s role in efficient reporting. Insights gathered during this process inform disclosures required in SBM-1 and SBM-2, which cover how stakeholder perspectives were incorporated. If companies document these engagements carefully and align them with due diligence processes, they can serve both the DMA and CSRD reporting requirements simultaneously.
Finally, the documentation produced at the conclusion of the DMA becomes a crucial resource for reporting. The finalised list of material and immaterial topics informs IRO-2 disclosures and determines which topical standards must be reported or omitted. Well-organised documentation ensures transparency, creates an audit trail, and supports both internal reviews and external assurance processes.
In short, early ESRS alignment during the DMA process not only improves reporting accuracy but also saves significant time by reducing the need for later corrections or adjustments. By treating the DMA as an integrated part of the reporting workflow, organisations can better navigate regulatory expectations, reduce internal complexity, and build comprehensive reports directly from the materiality work that identifies what matters most.
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