Double materiality

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The principle of double materiality in the context of ESG (environmental, social and governance) reporting consists of identifying material ESG issues from two perspectives: financial and impact. Companies subject to the CSRD must describe these issues so that the results of the materiality assessment are translated into both the business strategy and the identification of ESG topics in sustainability reports. Financial materiality assesses the impact of ESG on a company’s financial results, such as revenues, costs, assets and liabilities. Impact materiality assesses the potential impact of the company’s activities on the environment and society, both directly and indirectly through the value chain. The principle of double materiality combines these two perspectives, considering that an ESG topic is material if it is financially relevant, influential or both, allowing for better risk management and long-term value creation.

Careful
Sustainability due diligence is the process by which companies identify, prevent, mitigate and account for their actual or potential negative impacts on the environment and people throughout their value chain. The ESRS defines the core elements of this process, which includes incorporating due diligence into the corporate governance model, sustainable investment strategies, dialogue with affected stakeholders, identification and assessment of negative impacts on people and the environment, actions to prevent negative impacts, and monitoring the effectiveness of the actions taken and communicating them. Each of these steps is linked to specific information in accordance with the ESRS reporting standards, which help companies meet their sustainability responsibilities by ensuring transparency and accountability to stakeholders.

Value chain
The ESRS standards require companies to use a whatsapp number in australia value chain approach to ESG disclosure . Companies must therefore be aware of the activities and processes they impact during material sourcing, production, distribution, and the use and post-use of products by customers. The assessment of material impacts, risks and opportunities must cover the entire value chain to ensure a comprehensive approach to managing ESG impacts. Reporting in this regard must be consistent with the results of the due diligence process and also meet the requirements of the ESRS thematic standards. If information is difficult to obtain upstream or downstream in the value chain, companies must explain the steps they took to obtain it and the obstacles they encountered. In this way, companies can provide accurate and relevant information on their full environmental and social impact.


The future of regulation and standards

In the future, ESG reporting, in line with the CSRD and ESRS reporting standards, is expected to be a boost for global sustainability standards, but also a tool for corporate development. European non-financial reporting standards create a universal system for comparing entities, thereby increasing transparency and trust in the market. Companies, thanks to the advantages of reporting, will have a better chance in tenders where a high ESG rating is required. For example, banks and financial institutions are increasingly requiring ratings at appropriate levels as a condition for granting loans.



The benefits of ESG measures, such as ensuring sustainability by moving away from solutions that negatively impact the environment, as well as improving equity and social responsibility and good governance practices, mean that modern companies are increasingly integrating ESG into their strategies. In the future, ESG regulation will continue to evolve to meet the growing global demands and challenges included in the 2030 Agenda, such as climate neutrality and the protection of human rights.

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