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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Sustainability Audit, ESG Rating and Emerging Mandates from Government and Regulators

Meridian Pharma Ltd, an Indian company with European subsidiaries, assesses sustainability matters both for their effect on the company's finances and for the company's effect on society and the environment. The board says it wants a single assessment covering both views. Which term describes this approach, used in the EU's CSRD and ESRS?

The approach is double materiality. It requires a company to assess sustainability matters from two angles together: how they affect its financial position and how its operations affect people and the environment. The EU's CSRD and ESRS are built on this concept.

  1. ASingle materiality
  2. BDouble materialityCorrect
  3. CResidual materiality
  4. DComparative materiality

Explanation

Double materiality combines impact materiality (the company's effect on people and the environment) with financial materiality (the effect of sustainability matters on the company). The EU's CSRD and ESRS use this concept. Single materiality covers only one of these views, typically the financial one.

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