As the EU’s Corporate Sustainability Reporting Directive (CSRD) deadlines edge closer, businesses must get to grips with one of its key components: the double materiality assessment. Put simply, this is a crucial first step in the CSRD process that helps you determine which sustainability topics are most relevant to cover in your report.

While conducting the assessment is a challenge in itself, ensuring your documentation meets the CSRD’s stringent audit requirements adds another layer of complexity.

In this blog post, we'll break down the significance of the double materiality assessment, offer some resources to guide you through the process, and provide some practical tips to ensure your reports are audit-ready.

Quick recap: the double materiality assessment and its role in CSRD compliance

The double materiality assessment is a mandatory step to comply with the European Sustainability Reporting Standards (ESRS)–the governing framework of the CSRD. It helps businesses determine which sustainability topics under the ESRS are ‘material,’ and should be included in their reports. 

A topic can be considered material from two perspectives:

• Impact materiality: This looks at how a company’s activities impact the environment and society. For example, how your production methods contribute to carbon emissions or deforestation.
• Financial materiality: This examines how environmental and social issues affect your company’s financial health. For instance, how climate change could disrupt your supply chain due to extreme weather events.

A sustainability topic meets the double materiality criteria if it’s material from either the impact perspective, the financial perspective, or both. Ultimately, this dual perspective ensures your reports focus on issues that are truly relevant, rather than simply aligning with preference or perceived importance.

Impacts, Risks, and Opportunities (IROs)

When conducting the double materiality assessment, its key to identify Impacts, Risks, and Opportunities (IROs) related to your company’s operations (both inward-facing and outward-facing). 

At the beginning of the double materiality assessment, companies need to identify and assess IROs and connect them to one of the 10 ESRS topics. Some examples include:

• Impacts: These refer to how a company’s operations affect the environment and society. For example, a company’s manufacturing process may contribute to air pollution, or its supply chain may cause deforestation.
• Risks: These are sustainability-related issues that could pose financial or operational risks to the company. For instance, regulatory changes related to carbon emissions could lead to higher compliance costs, or extreme weather events could disrupt supply chains.
• Opportunities: On the other hand, sustainability can offer opportunities for growth and innovation. For example, adopting energy-efficient technologies might reduce operating costs, while launching eco-friendly products can open new markets and enhance brand reputation.

By identifying IROs and matching these to the ESRS topics during the double materiality assessment, companies can assess what topics are material and require further disclosure.

Determining the scope of your organization’s sustainability reporting

To figure out what to report on, your double materiality assessment will help you zero in on the most relevant sustainability issues for your company. You won’t need to report on all 10 of the ESRS topical standards if they’re not relevant (more on these soon)–just those that meet the materiality criteria.

Involving internal and external stakeholders at this stage can help ensure you capture a complete overview of what’s relevant to both your business and the wider community.

How does the double materiality assessment relate to ESRS

The ESRS are made up of 12 topics. This includes 10 topical standards covering environmental, social, and governance matters. It also includes two cross-cutting standards that apply to all companies. These provide the core principles and guidelines for effective reporting across all sectors.

Take a look at the ESRS breakdown below:

Under the CSRD, you don’t have to report on all 10 ESRS topical standards, only those that are material to your business. This is where the double materiality assessment comes into play. It helps you figure out which topics are truly relevant for your business to ensure your reports are meaningful and impactful.

How to perform a double materiality assessment

Looking to get started with your own double materiality assessment? Check out our blog post for all of the essentials and download our free guide to walk you through each step of the process.

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Reporting and communicating on your double materiality assessment – 5 practical tips

Now that we’ve covered some background about the double materiality assessment, let’s dive into five practical tips to ensure your reports meet CSRD and ESRS requirements.

1. Make sure your documentation is in accordance with CSRD / ESRS guidelines

Before starting your double materiality assessment, it’s important to know that your documentation on the process and results is subject to third-party audit. This means all assumptions, steps, and use of thresholds must be clearly documented.

According to EFRAG’s Materiality Assessment Implementation Guidance, businesses must record management's judgements and conclusions throughout the assessment process. They must also provide evidence of ongoing due diligence activities to ensure all material Impact Risk Opportunities (IROs) are identified.

Lastly, businesses must keep detailed records of management’s decisions and outcomes for each IRO, including how thresholds were determined and applied.

2. Work with machine-readable disclosure reports

The CSRD requires companies to submit sustainability reports in .XBRL, a human- and machine-readable electronic reporting format prescribed by the European Single Electronic Format (ESEF) regulation. Companies must digitally ‘tag’ data–like GHG emissions, water usage, and more–using XBRL’s taxonomy of over 1,000 data points. 

This tagging process makes sustainability information easier to analyze, compare, and audit, helping regulators and stakeholders make data-driven decisions. 

Tools like Coolset simplify this by generating audit-ready .XBRL reports, saving you time and ensuring compliance with CSRD requirements.

For more information about how digitally tagged ESRS statements work, check out EFRAG’s ESRS XBRL Taxonomy resources.

3. Stay up to date on disclosure requirements

The ESRS are still evolving, with sector-specific guidelines and disclosures for non-EU companies scheduled for release on June 30, 2026. While this extension gives companies more time to apply the first set of standards, it also means staying on top of ongoing updates is crucial. 

As new requirements emerge, businesses must be prepared for additional work and revisions to comply. Tools like Coolset can help by providing automated updates and guidance, ensuring your reports remain compliant as new standards are introduced.

4. Only collaborate with vetted auditors

Creating reports that stand up to audit can be challenging. To streamline the process, ensure you have access to vetted auditors prior to starting your double materiality assessment. They can provide check-ins throughout the reporting process helping you stay on track and address any concerns.

CSRD software like Coolset offers access to a network of vetted auditors, fast-tracking the limited assurance process and ensuring compliance.

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5. Use the right sustainability compliance tool 

With CSRD deadlines fast approaching, many businesses are turning to technology to lighten the administrative load. 

Coolset’s sustainability management and compliance software automates your entire CSRD compliance journey–from conducting the double materiality assessment to generating audit-proof reports for submission.

Pre-built surveys guide you through each step of the double materiality assessment, with results visualized on a materiality matrix. Based on these outcomes, only the relevant ESRS disclosures are unlocked, preventing you from wasting time reporting on irrelevant data. 

Curated suggested answers speed up the reporting process, and once ready, you can export your report in .XBRL format for submission.

See Coolset in action by starting your self-guided demo below.

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Get in touch for a demo of Coolset’s platform

Carry out your double materiality assessment, report on the relevant ESRS disclosures, and get audit-ready with Coolset. 

Ready to get started? Request a free, customized demo with one of our product experts today and see how our platform can streamline your CSRD compliance journey.