Double materiality
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.
About EDHEC
Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
