| The 2022 EU Corporate Sustainability Reporting Directive incorporates the concept of ‘double materiality.’ This means that companies must report not only on how sustainability issues might create financial risks for the company (financial materiality), but also on the company’s own impacts on people and the environment (impact materiality). Investors are increasingly interested in both sides of this equation. They of course want to understand the risks to their investments, and in this respect the sustainability reporting requirements reinforce investor protection. But many investors also want to know how their investments impact people and the environment. This is partly because of the growing market for sustainable investment products, and partly because investors themselves are required to report on these impacts, especially under the EU’s Sustainable Finance Disclosure Regulation. Source: European Commission |
Double Materiality
