Step-by-step guide · CSRD
How to Do a Double Materiality Assessment for CSRD
A double materiality assessment (DMA) is the first thing you do under the CSRD: it decides which sustainability topics are material — and therefore which ESRS disclosures you actually have to make. This guide walks through the seven-step process used to run both impact materiality (inside-out) and financial materiality (outside-in), set thresholds and document your conclusions so they hold up under assurance.
The short answer
To run a double materiality assessment for the CSRD, work through seven steps: (1) understand your business context and value chain; (2) map and engage your stakeholders; (3) identify the sustainability matters that could be relevant, down to ESRS sub-topic and sub-sub-topic level; (4) assess impact materiality — your effects on people and the environment (inside-out); (5) assess financial materiality — the sustainability risks and opportunities that affect your business (outside-in); (6) set thresholds and produce the final list of material topics; and (7) document the judgments and conclusions for assurance. A topic is material under the CSRD if it is material from either the impact or the financial perspective. A single data backbone in CarbonTool keeps the evidence, thresholds and audit trail in one place so the result feeds straight into your ESRS disclosures.
Why the assessment has to be defensible
The double materiality assessment is the foundation of your whole CSRD report: it determines your disclosure scope, and it is one of the first things a limited-assurance provider will test. A weak DMA — undocumented judgments, no stakeholder evidence, an unexplained threshold — puts every downstream disclosure at risk. Getting it right matters because:
It sets your entire disclosure scope
The material topics you conclude on determine which ESRS you report against and which data points you must collect. Get the scope wrong and you either over-report or leave a gap an auditor will find.
Assurance providers test it first
CSRD reports carry limited assurance. The DMA process, its inputs and the judgments behind each material topic are exactly what an assuror reviews — so the trail has to be complete and reproducible.
It is the link between data and narrative
A defensible assessment ties measured data — emissions, value-chain exposure, stakeholder input — to the topics you disclose, so your report rests on evidence rather than opinion.
Not sure whether you are in scope yet, or how ready you are? Run the free CSRD readiness checker before you start, then come back to the steps below.
The 7 steps of a double materiality assessment
A robust DMA is a sequence, not a single workshop. Work through these steps in order — each one builds the evidence the next one (and your auditor) depends on.
- 1
Understand your business context and value chain
Map your activities, business relationships, products and services across your own operations, your upstream supply chain and your downstream use and end-of-life. This context defines where impacts, risks and opportunities can arise — you cannot assess what you have not mapped.
- 2
Map stakeholders and engage them
Identify affected stakeholders (workers, communities, suppliers, customers) and users of your information (investors, lenders, regulators). Engage them through surveys, interviews or workshops to gather evidence on which matters they consider significant, and record what you asked and what they said.
- 3
Identify sustainability matters at sub-topic and sub-sub-topic level
Use the ESRS topical list (climate change, pollution, water, biodiversity, workforce, communities, consumers, business conduct) as a starting point and break each down to sub-topic and sub-sub-topic level, adding any entity-specific matters your context surfaces. This is your long list of candidate topics.
- 4
Assess impact materiality (inside-out)
For each matter, assess your actual and potential positive and negative effects on people and the environment. Score severity using scale, scope and irremediable character, and for potential impacts factor in likelihood. A matter is impact-material where severity (and, for potential impacts, likelihood) crosses your threshold.
- 5
Assess financial materiality (outside-in: risks and opportunities)
For the same matters, assess the sustainability-related risks and opportunities that could affect your cash flows, performance, position, cost of capital or access to finance over the short, medium and long term. Score by the magnitude of the financial effect and its likelihood to decide what is financially material.
- 6
Set thresholds and produce the final material topic list
Define and document the thresholds that separate material from non-material on each lens, then combine the two: a matter is material if it clears the threshold on impact OR financial materiality. The result is your final list of material topics, which drives the ESRS you report against.
- 7
Document judgments and conclusions for assurance
Record the methodology, inputs, scoring scales, thresholds, stakeholder evidence and the rationale for every material and non-material decision. Keep it traceable and version-controlled so a limited-assurance provider can follow exactly how each conclusion was reached.
The two perspectives, side by side
"Double" materiality means you look at each sustainability matter through two lenses. A topic is material under the CSRD if it clears the threshold on either lens — you do not need both.
Impact materiality (inside-out)
Your organisation's actual and potential effects on people and the environment, across your own operations and your value chain. You assess each impact by its severity — scale, scope and irremediable character — and, for potential impacts, its likelihood. This is the lens that catches a topic even when it has no near-term financial consequence for you.
Financial materiality (outside-in)
The sustainability-related risks and opportunities that could affect your cash flows, development, performance, position, cost of capital or access to finance over the short, medium and long term. You assess each by the likely magnitude of the financial effect and its likelihood. This is the lens an investor cares about most.
Where CarbonTool makes the DMA easier
A double materiality assessment lives or dies on evidence and traceability. CarbonTool gives you one data backbone for the whole process: the measured emissions and value-chain data that inform your impact and financial judgments, a stakeholder-engagement and supplier portal to gather inputs, and a full audit trail so every threshold and conclusion can be traced when an assurance provider asks. Because the same backbone feeds CSRD, VSME, GRI, CDP and PCAF outputs, the topics you conclude are material flow straight into your ESRS disclosures — no re-keying between a materiality spreadsheet and your report. Pricing is transparent with unlimited users and a free 30-day trial, and the platform is built by the BuildGreen team, so companies in Romania and across the EU get a locally-rooted partner with enterprise-grade depth. To compare options, see our guides to the best CSRD software and CSRD software in Europe, or look up any term in the sustainability glossary.
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Impact materiality (inside-out) is about your organisation's actual and potential effects on people and the environment, scored mainly on severity and likelihood. Financial materiality (outside-in) is about the sustainability-related risks and opportunities that affect your business — cash flows, performance, cost of capital and access to finance. Under the CSRD a topic is material if it is significant from either perspective; it does not need to be material on both.
A robust double materiality assessment has seven steps: understand your business context and value chain; map and engage stakeholders; identify sustainability matters at sub-topic and sub-sub-topic level; assess impact materiality (inside-out); assess financial materiality (outside-in); set thresholds and produce the final material topic list; and document judgments and conclusions for assurance. Some methodologies group these differently, but the same activities always need to happen.
Two broad groups. Affected stakeholders are those your activities affect — workers in your own operations and value chain, local communities, suppliers, customers and end-users. Users of sustainability information are those who rely on your report, chiefly investors, lenders, business partners and regulators. Engage both, because affected stakeholders inform impact materiality while information users inform financial materiality, and keep a record of how you engaged each.
Define a threshold for each lens before you score. For impact materiality, set the severity level (and likelihood for potential impacts) at which an impact becomes material. For financial materiality, set the magnitude of financial effect (and its likelihood) that makes a risk or opportunity material. Thresholds can be qualitative or quantitative, but they must be consistent, applied to every matter and documented with a rationale so assurance providers can test them.
Limited-assurance providers expect a clear record of your DMA process: the methodology and scoring scales used, the value-chain mapping, evidence of stakeholder engagement, the thresholds you set and why, and the rationale for every material and non-material conclusion. It should be traceable and reproducible — anyone reviewing it should be able to see how each topic ended up on or off the list. Keeping this in one auditable system, rather than scattered spreadsheets, makes assurance far smoother.
Your list of material topics determines which topical ESRS you report against and which specific disclosure requirements and data points apply. Cross-cutting standards (ESRS 1 and 2) always apply, including disclosure of the DMA process itself, but topical disclosures are switched on only for material matters. So the assessment directly sets the scope of your CSRD report — which is why the conclusions must be defensible. In CarbonTool the same data backbone that informs the DMA feeds those ESRS disclosures.
Run your double materiality assessment on one backbone.
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