Definition 

Double materiality is an approach to corporate reporting and sustainability that takes into account two distinct but interrelated dimensions of materiality: financial and impact

Financial Materiality: This dimension aligns with traditional accounting principles, emphasizing the significance of information to the financial decisions of capital providers. It encompasses factors directly related to a company's financial performance and impacts on its ability to generate profits and returns for investors.

Impact Materiality: In contrast to financial materiality, impact materiality broadens the scope to consider the impacts of a company's activities on various stakeholders, including the environment and society, irrespective of their immediate financial implications. This perspective acknowledges the wider responsibility of corporations and aims to capture non-financial factors relevant to stakeholders and the broader sustainability goals and policies.

Double materiality, as embraced by the European Sustainability Reporting Standards (ESRS), requires companies to disclose both their material sustainability impacts and any material financial risks or opportunities arising from sustainability matters. It seeks to strike a balance between financial and non-financial considerations, recognizing the interconnectedness between economic and ecological factors in corporate decision-making.