Double Materiality Assessment

A DMA is a core requirement of the European Union's Corporate Sustainability Reporting Directive (CSRD) and expands the traditional focus on financial materiality in sustainability reporting. DMAs compel companies to identify and assess their actual or potential impacts related to environmental, societal, and economic sustainability matters (impact materiality), and sustainability matters that affect or may affect their current or future financial performance (financial materiality).

Impact Materiality: This assesses how a company's activities have actual or potential impacts related to environmental, societal, and economic sustainability matters, encompassing both positive and negative consequences. This "inside-out" view considers a company's short-, medium-, and long-term impacts across its entire value chain, from resource extraction to product disposal.

Financial Materiality: This aspect, a traditional "outside-in" perspective, evaluates how environmental and social sustainability matters can affect or may affect the company’s current or future financial performance. This includes risks associated with climate change, resource scarcity, and social unrest, and potential opportunities arising from the shift towards a more sustainable economy.

A DMA examines a company's environmental, social, and economic impacts (positive and negative) related to sustainability matters and assesses sustainability-related financial risks and opportunities. This analysis considers how a company's activities affect its surroundings and how sustainability issues can translate into financial losses or gains. For instance, climate regulations could pose financial risks, while resource efficiency could create cost-saving opportunities. By examining all three factors, DMAs provide a holistic view of a company's sustainability performance and its link to financial health.

The European Union's CSRD mandates DMAs for a wide range of companies with more than 500 employees, with phased-in compliance deadlines starting in 2024. However, DMAs offer a strategic opportunity that extends beyond mere compliance. By understanding the two-fold impact of their operations – how they affect the environment and society, and how these factors in turn influence their financial performance – companies can make informed decisions that benefit both their bottom line and the planet, set strategies to achieving positive outcomes and effectively take action that enables these benefits.

A comprehensive DMA hinges on effective engagement with both stakeholders and subject matter experts (SMEs). Stakeholders are individuals or groups like employees, leadership, customers, investors, and communities that offer valuable insights due to their connection to, or potential impact on, the organization's sustainability practices. SMEs are experts in their specialized areas like health and safety, human resources, product engineering, or waste management and bring a deep well of knowledge to the table, making them fundamentally important for informing the DMA process. By incorporating perspectives from both, organizations can gain a well-rounded understanding of their sustainability impact.

The Toolkit provides a comprehensive foundation for conducting a CSRD-aligned DMA, one of the most critical and complex steps in the reporting process. It aligns directly with the methodologies and expectations outlined by the European Financial Reporting Advisory Group (EFRAG). In short, the Toolkit enables companies to perform the DMA with confidence.

Yes. The Toolkit is designed to be scalable and practical for organizations of all sizes, including small and mid-sized electronics companies that may not have dedicated sustainability teams.

It provides structured guidance, sample timelines, and ready-to-use templates that smaller companies can easily adapt to their resources and operations. For many, it will significantly reduce the time and cost of getting started on their CSRD journey while ensuring that their DMA follows industry-specific best practices. 

The Toolkit was developed to minimize dependence on external consultants by providing the tools, templates, and sector-specific insights needed to perform a robust DMA internally. 

That said, some companies may still choose to engage external experts, especially if they have complex global supply chains, require support in collecting or verifying quantitative data (such as Scope 3 emissions), or need help preparing for third-party assurance. For many organizations, the Toolkit can serve as a strong starting point that streamlines and focuses any external engagement that follows. 

If the organization chooses to limit its engagement with an external consultant, there are two key points in the DMA process where expert knowledge would add most value in aligning with the ESRS: 

• Supporting the justification of scoring.
• Planning and engaging with audit controls  and external assurance.

The Toolkit reflects the most up-to-date regulatory guidance and expectations available as of its release. It was developed in collaboration with Anthesis Group and informed by the latest EFRAG methodologies and European Commission guidance on CSRD implementation.  Because CSRD and ESRS interpretations continue to evolve, the Global Electronics Association is committed to keeping the Toolkit and its companion Materiality Resource Hub current, incorporating new examples, templates, and updates as further regulatory clarifications emerge.