La CSRD (Corporate Sustainability Reporting Directive) Since 2024, many European companies have been obliged to report extensively on several social and environmental criteria. Under this directive, the companies concerned must first create their double materiality matrix.

So what exactly is this matrix? What is the difference with a simple materiality analysis? What are the key steps to achieve it? In this article, we try to answer all your questions about double materiality.

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Note: in order to reduce the reporting burden on businesses, new measures have been announced by the European executive concerning CSRD.

Initially, the companies concerned must meet at least 2 of the following 3 criteria:

• More than 250 employees;
• 25 million euros in balance sheet;
• 50 million euros in turnover.

Small and medium-sized companies listed on a regulated European market have the obligation to comply with it.

Following this announcement, reporting requirements will only apply to large companies with more than 1000 employees, with a turnover of more than 50 million euros or a balance sheet total of more than 25 million euros.

Finally, the evolutions also lie in the Two-year deferral (until 2028) reporting requirements for companies that are currently required to produce a report from 2026 or 2027 and listed SMEs with an expected entry into force in 2027.

To find out more about these new measures, you can refer to the European Commission website.

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What is a double materiality matrix?

Understanding the concept of “materiality”

The materiality matrix comes from English Materiality and comes from the financial register. Originally, it was a question of choosing (accounting) indicators to measure the level of performance of a company. This concept has been transposed to the field of CSR by making it possible to map and prioritize a company's CSR priorities and by taking into account the expectations of internal and external stakeholders.

Thus, the materiality matrix is a matrix that makes it possible to classify the various CSR issues and to prioritize them according to:

• Expectations and needs of priority stakeholders of the company, internal (employees, managers, CSE...) as well as external (customers, suppliers, beneficiaries, investors, associations and institutional partners...)
• Strategic impacts on the business model of these CSR issues

Concretely, the materiality matrix therefore makes it possible to bring together internal and external visions on the various CSR issues in order to identify “material” subjects, i.e. those on which the company will have to focus its efforts since they have a real impact on its performance and its ecosystem.

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The double materiality matrix: a further analysis, and a strategic exercise

Concretely, the analysis of double materiality deals with two aspects:

• Financial materiality, “Outside in”, that is to say how the outside (regulations, markets and customers, employees) will impact the business. It leads to risks and opportunities. It is the materiality treated in the classical materiality matrix. Financial materiality makes it possible in particular to analyze how environmental changes (natural, climatic, social, legislative) affect the company in terms of risks and opportunities in the short, medium and long term.
• Impact materiality, “inside out”, that is to say the impact of business on society and the planet (= social, societal, environmental issues). It is illustrated by impacts, positive and negative. Impact materiality assesses the extent to which a company has impacts on its environment and ecosystem, whether negative or positive, real or potential, in the short, medium and long term.

To exploit the full potential of the double materiality matrix, it is essential to succeed in positioning this exercise as a strategic challenge.

Indeed, the materiality matrix can allow the company to have very concrete material to present to its stakeholders and its COMEX, in order to implement or resume its CSR strategy.

Beyond the legal obligation under the CSRD, this double materiality analysis allows the company to have a global vision of the expectations of its various stakeholders on its CSR issues. It is a key tool for making the right choices in your CSR strategy and to avoid dispersing while keeping the most priority issues in mind.

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The key steps to build your double materiality matrix

1. Identifying risks, impacts and opportunities (IRO)

These are all the material challenges for the company that will appear on the matrix: Positive and/or negative impacts for impact materiality, and Risks and Opportunities for financial materiality.

To identify these IROs, several levers can be useful to you:

• Browse the list of ESRS, CSRD reporting indicators;
• Organize collective intelligence workshops to think about the Impacts, Risks and Opportunities of your business. This can be done with multiple departments and hierarchical levels. The question you are going to try to answer: what should we do or not do for our company to still exist in 10 years?

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2. Interviewing stakeholders

The double materiality matrix produced as part of the CSRD must include a phase of dialogue with its main stakeholders: this makes it possible to understand the expectations of your stakeholders concerning CSR issues and to prioritize and classify them.

This questioning of stakeholders can be done both qualitatively (interviews with 5 to 10 stakeholders) and quantitatively (questionnaire).

At this stage, two dimensions can be taken into account:

• Their expectations on each of the IRO: although sometimes expectations are currently low, this allows you to be prepared for future challenges.
• Their perception of your maturity level on these IRO.

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3. Assessment and scoring of impacts, risks and opportunities

Once all IROs have been identified and stakeholders have been interviewed, risks, opportunities, and impacts must now be assessed. Very concretely, it is a question of defining a score for each IRO in order to determine its importance.

To do this, we recommend that you:

• Bringing together all the IROs in a table (Excel for example)
• Determining a scoring system Impacts and Risks and Opportunities, according to various criteria: intensity of the IRO, extent, probability, irremediability... To date, the company is free to use a personalized scoring system (from 1 to 4 for example).
• Conduct a workshop to write down the various IROs, according to the challenges of the stakeholders (using the elements collected in phase 2) and of the company.

From a certain threshold, the issue is considered material in terms of its impact. The materiality threshold chosen must be justified and an EFRAG methodological guide specifies how to read the table. Details on the approach with its value chain are also available.

There is no hierarchy between impact and financial materiality: if the subject is judged to be material from the point of view of financial impact or materiality, it should be included in the sustainability report. For each impact, whether negative or positive, real or potential, a score is given to determine its materiality, the higher the score, the more material the impact is considered to be.

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4. Synthesis work

Finally, it is time to consolidate the information and create the matrix, in order to then be able to prepare the sustainability report.

The company will then have to consolidate its results, i.e. check that the data has been weighted according to the number of stakeholders interviewed and according to the size of the group and its subsidiaries.

All of this information forms the sustainability report, integrated into the management report. It must be available in the XHTML electronic information format, for transmission to ESAP (European Single Access Point).

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Tips for a successful double materiality matrix

Who should be involved in the company to achieve a double materiality?

Succeeding in its dual materiality matrix requires involving the entire company in this exercise, in particular the management and administrative committees.

It is also recommended to form internal alliances to manage the workload represented by the double materiality matrix.

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Do you need support to create your double materiality matrix?

Carrying out your double materiality analysis can be a tedious exercise due to the multitude of information to be processed. So, for a successful analysis, it is important to surround yourself with the right people.

As far as possible, it is recommended to be accompanied by a firm (at least for carrying out the first analysis) with significant experience, and to choose the right contacts.

The human and affinitarian aspect is very important to choose the right provider: it is necessary to choose a consulting firm that is aligned with the values of the company and to establish a good working relationship, because you are going to spend a lot of time with this person.

Attention, the legislation prohibits an auditor from also providing advice!

In addition, exchanging with other companies that have already completed this exercise can be useful before embarking on the realization of your double materiality.

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Do we really need to make it a strategic exercise?

We leave you with these words from Sébastien Guillon, sustainability consultant at the CSR consulting firm Haatch, delivered during a workshop on double materiality organized for members of Impact at Work:

“Being able to make it a strategic exercise is super important. It is not necessarily perceived as such at the beginning, but you have to succeed in making it an exercise that will involve everyone and make them think. This must be used to rethink your business model, to change the models and to train your entire ecosystem. The aim is not only to act as a company, but across the entire value chain.”

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