Impact materiality is indeed considered the starting point for the double materiality assessment in
the ESRS. The reason is that material impacts on sustainability matters can generate financial risks
and opportunities in the future. The ESRS framework follows this structure because:
Interrelation Between Impact and Financial Materiality
Double materiality includes two dimensions:
a) Impact materiality (how the company affects people and the environment).
b) Financial materiality (how sustainability matters affect the company’s financial performance).
Impact materiality assessments often precede financial materiality because many sustainability
issues initially manifest as external environmental and social impacts before affecting the company’s
financial results.
Regulatory Confirmation of Impact as the Starting Point
According to ESRS 1, section 3.3, impact materiality is typically assessed first, unless a financial risk or
opportunity exists independently of an impact.
A sustainability matter may become financially material over time due to regulatory changes,
evolving market expectations, or direct financial consequences.
Illustration of the Double Materiality Process
Example: A company engaged in high carbon emissions might initially consider this an impact
materiality issue (environmental harm). However, increased carbon pricing, regulatory changes, and
shifting investor p
