The Corporate Sustainability Reporting Directive (CSRD) will come into effect for large listed companies for the 2024 financial year. According to the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) an important part of the CSRD is the double materiality analysis. The aim is to demonstrate what effect a company has on the outside world (impact materiality) and how sustainability matters can have an effect on the wellbeing of a company (financial materiality). Moreover, the double materiality gives insight into the impact, opportunities and risks in the field of sustainability and can provide input for the strategic direction of a company.
To gain insight into how listed companies already provide information regarding the double materiality in current annual reports, the AFM conducted research into annual reports of 29 companies. Based on this research, the AFM prepared a report with three categories with a total of 10 waypoints to support companies on implementing the double materiality analysis in their reporting:
A. Stakeholder engagement: show the manner in which stakeholders are engaged
1. Be transparent on the representativeness of stakeholder engagement.
2. Disclose input received from stakeholders.
B. Due diligence: identify the sustainability matters
3. Use due diligence to identify sustainability matters.
4. Use international frameworks, such as the OECD Guidelines: link
5. Disclose the relationship between due diligence and the double materiality analysis.
C. Double materiality analysis: disclose the analysis in a transparent manner
6. Disclose the role of the value chain.
7. Connect the business activities to identified material topics.
8. Provide insight into the materiality assessment of sustainability topics.
9. Disclose the materiality of impacts, risks and opportunities.
10. Report on the relationship between impact and risk in the short and long term.
The AFM will assess how companies deal with this CSRD requirement in their supervision on annual reporting for the 2024 financial year.
See more information here: link