July 16, 2024

Revealing the mysteries around the double materiality assessment for compliance with CSRD

April 02, 2024
2Min Reads
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A key component of the CSRD framework, the Double Materiality Assessment (DMA) is essential in identifying the sustainability-related data that companies must publish.

Greenomy claims that this complex procedure does two things: it examines the company's impact on the social and environmental spheres in addition to highlighting the impact of sustainability on a company's financial success.

 

For many organizations, starting a DMA can be a daunting task. Taking note of this, Greenomy has created a comprehensive six-step guide that helps organizations starting their CSRD reporting journey understand the DMA procedure. With the help of this guide, businesses can be sure they have a well-defined strategy for conducting successful audits and reporting.

 

An environmental, social, and governance (ESG) assessment is the first step in the CSRD compliance process. In this initial phase, a thorough examination of the company's operational environment is conducted, including a review of its operations, commercial partnerships, and global reach. In addition, it evaluates the business's financial, strategic, and environmental policies. The result is a thorough stakeholder map that establishes the framework for productive dialogue and expectation-setting.

 

Companies define their ESG universe after completing the ESG Assessment, identifying all possible material sustainability problems. Using industry standards and the European Sustainability Reporting Standards (ESRS), this step creates a customized ESG universe that encompasses all relevant sustainability issues.

 

The next step in the process is to determine the effects, risks, and opportunities (IROs) and then rate the severity of each. In order to prioritize sustainability subjects for reporting under the ESRS, this assessment uses a scoring mechanism. As a result, cross-departmental coordination is required for an exhaustive examination. Scope, scale, remediability, and likelihood are the assessment's criteria, which offer a strong basis for clear and defensible scoring—a critical component of future audits.

 

Engaging stakeholders is a strategic move that adds a variety of perspectives to the DMA and stimulates creativity by talking with suppliers and staff. A refined set of conclusions from this engagement are submitted to the board for strategic oversight and approval.

 

In the penultimate phase, the DMA results are evaluated in relation to the CSRD disclosure requirements, and a DMA matrix is created to transparently share findings with stakeholders. Ultimately, the ESRS scoping step puts organizations on the right track for successful CSRD reporting by matching specified reporting needs with identified material themes.

 

It was emphasized in our conversation with Quentin Henneaux, a CSRD expert, that the DMA should be viewed as a strategic initiative that incorporates sustainability into the heart of corporate decision-making, rather than just as a formality. With great care, Greenomy's six-step guidance has been developed to lead businesses through this extensive process, providing a solid basis for open and efficient sustainability reporting.

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