Introduction

Double Materiality Assessments are becoming an ongoing strategic management process, not a one-time reporting exercise. Following the 2026 revision of ESRS, and as IFRS Sustainability Disclosure Standards gain traction globally, companies have an opportunity to build a more integrated approach that satisfies multiple reporting needs while improving the quality of internal decision-making. The strongest DMAs are specific, evidence-based, stakeholder-informed, and clearly connected to strategy, governance, financial relevance, and operational action.

This FAQ reflects BSR's perspective on emerging leading practices and is intended to provide practical business guidance on key questions from BSR members.

How can companies refresh their Double Materiality Assessment over time?

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During each reporting cycle, companies can consider whether significant changes have occurred that could affect previous materiality conclusions and update the assessment where needed. This does not mean automatically redoing the DMA each year. Following minimum compliance means reassessing material impacts, risks, and opportunities when there are meaningful changes in the business, value chain, regulation, stakeholder evidence, or external context. Leading practice goes further: companies use the refresh to sharpen impact, risk, and opportunity (hereafter: IRO) definitions, improve documentation, validate assumptions, and strengthen the link between materiality outcomes and business decisions.

BSR sees “round two” DMAs as an opportunity to make the assessment more focused and decision useful. Rather than automatically reassessing or rescoring every individual IRO, companies can start with their strategy, business model, sector, geographies, and value chain to identify where materiality conclusions are reasonably clear and apply more granular IRO-level assessment where further analysis is needed. The refresh can also strengthen the evidence, documentation, and connection between material topics and strategy, actions, targets, metrics, and financial effects.

How do the revised ESRS affect the Double Materiality Assessment? Do companies need to change their approach?

The short answer is no, but companies should refine their approach rather than rebuild it. The revised ESRS retain double materiality as the foundation for determining what information is material and reportable. What has changed is the emphasis: the revised standards are shorter, more principles-based, and provide greater flexibility in how companies conduct and document their materiality assessments. They also reduce mandatory data points significantly while maintaining the need for robust management judgement and evidence.

From BSR's perspective, the simplifications reinforce—not diminish—the strategic importance of the DMA. With fewer prescribed disclosure requirements, companies need to be confident that they have identified the right impacts, risks, and opportunities (IROs). We recommend focusing less on exhaustive scoring exercises and more on producing decision-useful IROs that are clearly linked to business strategy, governance, actions, metrics, and financial implications.

Practical actions include reviewing the methodology used for the DMA, strengthening documentation of management judgment, improving IRO definitions, and ensuring the DMA continues to support both ESRS and IFRS Sustainability Disclosure Standards reporting.

How should companies align an ESRS-based DMA with an IFRS Sustainability Disclosure Standards-based financial materiality assessment?

Companies can treat ESRS and IFRS Sustainability Disclosure Standards as related but with distinct lenses. ESRS uses double materiality: impacts on people and the environment, and financial risks and opportunities for the company. IFRS S1 and S2 focus on sustainability-related risks and opportunities that could reasonably affect enterprise value and are useful to investors, lenders, and other creditors.

Instead of conducting two disconnected assessments, companies can build one IRO register that includes the list of impacts, risks, and opportunities, and tag which are relevant for ESRS and IFRS reporting. Practical actions include mapping ESRS financial materiality conclusions to IFRS S1/S2 requirements, documenting investor relevance, connecting IROs to financial statement line items where possible, and ensuring climate-related risks are assessed consistently across ESRS E1 and IFRS S2.

How should companies incorporate stakeholder perspectives when updating a DMA?

Stakeholder perspectives remain an important input to impact materiality as well as financial materiality, but companies do not necessarily need to conduct a separate stakeholder engagement exercise specifically for the DMA. Companies can leverage insights from ongoing due diligence and other existing engagement processes and use additional targeted engagement where it helps identify blind spots, fill evidence gaps, or validate conclusions.

BSR believes that stakeholder engagement improves the quality, credibility, and prioritization of IROs, especially for issues that are hard to see from headquarters or through internal data alone. Practical actions include refreshing stakeholder maps, prioritizing rights-holders and affected groups, using existing due diligence channels, documenting how input influenced conclusions, and closing the loop by explaining how stakeholder insights shaped decisions.

What is leading practice for assessing and quantifying sustainability impacts, risks, and opportunities within a DMA?

Leading practice is to use qualitative assessment for completeness and prioritization, quantitative metrics for monitoring, and financial quantification for selected priority IROs where business decisions require it. Minimum compliance does not mean monetizing every impact or risk. However, companies should be able to explain why an IRO is material and what evidence supports that conclusion.

BSR recommends avoiding quantification for its own sake. Quantitative or semi-quantitative scoring is useful where it improves comparability, helps resolve uncertainty, or supports management decision-making; well-supported qualitative judgment may be more appropriate where the materiality conclusion is clear. In either case, companies should document the evidence, assumptions, thresholds, and governance underpinning the conclusion.

How does a top-down DMA work in practice, and can companies still use a bottom-up approach?

The 2026 revised ESRS explicitly allows both approaches. With a top-down approach, companies begin with their strategy and business model, sectors, geographies, and upstream and downstream value chain to identify topics where materiality or non-materiality is reasonably evident. More granular assessment of individual IROs is then used where the conclusion requires further analysis.

Companies may still use a bottom-up approach that assesses individual IROs, and they may combine top-down and bottom-up approaches across different topics. The key is not the amount of scoring performed, but whether the company applies the ESRS materiality criteria consistently and can support its conclusions with reasonable evidence and documented judgment.

How should Double Materiality Assessments align with Enterprise Risk Management?

DMAs should feed ERM, and the financial materiality assessment should align with a company’s approach to ERM as much as possible. Alignment does not mean that the DMA and ERM registers need to mirror one another. Common differences include broad ERM categories such as “ESG risk” or “climate risk,” shorter ERM time horizons, and different levels of aggregation. Companies can bridge these differences by cross-mapping DMA IROs to enterprise risks, retaining more granular sustainability information in a linked register where useful, aligning escalation criteria, and documenting differences in scope, thresholds, and time horizons.

Should severity and likelihood be scored?

Not necessarily. The 2026 Revised ESRS¹ clarify that quantitative information or quantitative scoring is not necessarily required for determining the materiality of impacts, risks, or opportunities. Qualitative analysis may be sufficient to reach a materiality conclusion. This applies to both impact materiality and financial materiality. Companies still need to apply the relevant ESRS materiality criteria, for example, severity and, where relevant, likelihood for impacts, and magnitude and likelihood of financial effects for risks and opportunities, and support conclusions with reasonable and supportable evidence.

Numerical or semi-quantitative scoring can still be useful where it helps compare IROs, resolve uncertainty, or support management decision-making, but scores should support rather than determine materiality conclusions. Under the top-down approach explicitly provided for in the revised ESRS, companies may first consider their strategy and business model, sectors, geographies, and value chain to identify topics where materiality conclusions are reasonably clear, and undertake more granular assessment where further analysis is needed.

A qualitative assessment does not mean an undocumented or subjective assessment. Companies should be able to explain the criteria, evidence, assumptions, and management judgment underpinning the conclusion and demonstrate appropriate governance over the materiality decision.

How should companies use DMA outputs beyond sustainability reporting?

DMA outputs are most useful when they inform business decisions, not only sustainability disclosures. The assessment can help management understand where the company has its most significant impacts, dependencies, risks, and opportunities and where action, ownership, or investment may be needed.

BSR recommends translating material IROs into management questions: What are we exposed to? What action is needed? Who owns the response? What metrics show whether conditions are improving? What decision should change?

Practical applications include informing sustainability strategy, enterprise risk management, product design, sourcing, investment planning, transition planning, stakeholder engagement, due diligence, and target setting. A strong DMA output should connect each priority IRO to policies, actions, targets, metrics, owners, financial relevance, and governance cadence. That is what makes the assessment decision-useful.

How can companies prepare for assurance over the DMA process?

Companies should prepare for assurance by ensuring the DMA is documented, repeatable, and well-governed. This means documenting the methodology, scope, stakeholder inputs, scoring criteria, thresholds, assumptions, limitations, governance reviews, and final judgments.

Companies can also identify owners and controls for material IROs and related disclosures. Practical actions include creating a DMA methodology document, maintaining an IRO register, documenting why topics were included or excluded, retaining evidence for management judgment, aligning internal control over sustainability reporting with finance and risk processes, and conducting a pre-assurance readiness review. Assurance should not be treated as a year-end reporting hurdle; it should be built into the DMA refresh cycle from the start.

How do companies move from a CSRD-aligned DMA to the sustainability statement?

The DMA determines which sustainability topics and related information are material; the next step is to translate those conclusions into applicable reporting requirements and understand what is needed to address them. This typically includes mapping material topics and IROs to relevant ESRS disclosures, assessing data, policy and process gaps, identifying appropriate owners, and developing a roadmap to address priority gaps.

The DMA can also provide an important input into refining a company’s sustainability strategy and governance. Companies can use the results to reassess strategic priorities, clarify ownership and accountability for material IROs, strengthen governance and oversight, and align policies, actions, targets, and metrics with the issues that matter most.

BSR can support companies across this transition, including ESRS disclosure mapping and gap assessments, IFRS Sustainability Disclosure Standards and local IFRS-aligned gap assessments, reporting roadmaps, and data-owner engagement. BSR can also provide board and senior leadership briefings and capacity building on DMA, helping boards and executives understand the implications of materiality findings and effectively exercise their governance and oversight responsibilities.

Conclusion

The strongest DMAs are specific, evidence-based, stakeholder-informed, and clearly connected to strategy, governance, financial relevance, and operational action.

Integration with ERM is especially important. Sustainability risks often have different time horizons, data challenges, stakeholder dimensions, and value-chain characteristics than traditional enterprise risks. At the same time, they increasingly affect resilience, cost, revenue, capital allocation, reputation, compliance, and long-term value. Companies that embed DMA outputs into risk governance, business planning, and management routines will be better positioned to anticipate disruption and act with confidence.

BSR supports companies in refreshing DMAs, aligning ESRS and IFRS approaches, strengthening stakeholder engagement, preparing for assurance, integrating DMA outputs into ERM and governance, and operationalizing material IROs through strategy, targets, metrics, and decision-making. Companies seeking to strengthen the strategic value of their DMA should contact BSR to explore tailored support.