CSRD: Conducting the materiality assessment

Overview of materiality analysis focusing on scope, materiality, and inside-out/outside-in perspectives. Includes an illustrative matrix with example topics like climate emissions and soil sealing.

CSRD

The CSRD significantly expands sustainability reporting requirements for companies in the EU starting in 2025. It mandates a double materiality analysis, taking into account both external impacts and financial risks. Companies are advised to begin preparations in 2024.

Overview of the CSRD

The Corporate Sustainability Reporting Directive (CSRD) is a European directive that significantly expands sustainability reporting for companies. It replaces the Non-Financial Reporting Directive (NFRD) and, from 2025, will affect up to 50,000 companies in the EU, including 13,000-15,000 in Germany. The introduction is staggered, beginning with large companies. The CSRD is based on 12 European Sustainability Reporting Standards (ESRS) and requires a double materiality assessment to ensure comprehensive and transparent reporting on climate, environment, social aspects, and corporate governance.

The materiality assessment

The materiality assessment is a central component of sustainability reporting, designed to identify relevant topics that are significant for a company and its stakeholders. This analysis examines which environmental, social, and governance (ESG) aspects have a material impact on the company and, conversely, what impact the company has on its environment and society.

The concept of double materiality expands this analysis by considering two dimensions: impact materiality and financial materiality. Impact materiality refers to the company’s impact on the environment and society, regardless of whether these impacts have financial consequences. Financial materiality, on the other hand, considers financial risks and opportunities arising from sustainability issues that could affect the company’s financial position.

Double materiality ensures that the company considers both the external effects of its activities and the internal risks and opportunities related to ESG topics in its reporting. This provides a more comprehensive and forward-looking representation of corporate responsibility and supports informed decision-making by investors and other stakeholders.

To meet the CSRD reporting obligations from 2025, the materiality assessment should be conducted in 2024. This allows the reportable topics and data points to be identified early, avoiding unnecessary effort in implementation in 2025.

7 Steps to implementation

1. Analyse your company, its products, the environment, and the entire value chain from raw material sourcing to end use.
2. Identify relevant stakeholders who may be affected by the company’s activities.
3. Create a systematic and comprehensive list of potential materiality topics as a starting point for the analysis.
4. Identify material impacts, opportunities, and risks in the areas of environment, social, and governance.
5. Assess and select topics and risks, and set a company-specific materiality threshold.
6. Review and update the materiality assessment annually to respond to new developments.
7. Document the entire materiality assessment process clearly and transparently for audits.

Special considerations

In conducting the materiality assessment, it is essential to involve relevant stakeholders to ensure that the analysed topics are genuinely significant. The assessment should consistently include all sub-topics of the 12 ESRS standards. Even sub-topics on which the company has no direct influence may be material. Clear criteria for determining materiality must be defined to comprehensively cover both impact and financial materiality. The assessment should be updated regularly (annually) to reflect new developments and changing expectations. A transparent process and careful documentation are essential to ensure the traceability and credibility of the results. Furthermore, the findings should be integrated into the company’s strategy and risk management to address material topics effectively.

Companies can take advantage of many facilitations in the first years of reporting. This is particularly relevant when the data landscape is challenging, and data collection and quality assurance processes are not yet fully established (see article on Implementing the CSRD).

nxt statista as a partner in CSRD implementation

As experienced management consultants, we support companies to professionally and efficiently meet the requirements of the CSRD. For over 20 years, we have stood for strategic excellence and data expertise. Our in-depth knowledge of EU regulations and extensive expertise in our focus industries make us a valuable partner in implementing the CSRD. Our market research experts help you better understand your stakeholders and gather data for the materiality assessment. Supported by specialists in data science and data engineering, our consultants develop customised reporting solutions. We understand the needs of departments and management, and we can also communicate effectively with software engineers and programmers. Our in-house marketing agency then brings the report and insights to life in an engaging way.

Our unique advantage: We bring all of this under one roof, allowing us to fully support you with your challenges. Contact us!

Let’s speak about what we can do for you

* Name

* E-Mail

* Company

* Your message

I agree with the privacy policy. Statista needs the contact information you provide to reply to your message. Information on when we delete personal data, the countries where we save data (e.g. US, EU, Singapore), and the companies we collaborate with can be found in our privacy statement.

How can we help you?

Get in touch

offices