by Maria El. Stefanaki, Attorney-at-Law, LL.M. Cambridge/ESG Officer (ISO/ IEC 17024), MSc (c) in Sustainability Management,
The 2026 Omnibus revision (Directive 2026/470) – while substantially narrowing the CSRD’s scope to companies exceeding 1,000 employees and €450 million turnover, dropping sector-specific standards, reasonable assurance and reducing mandatory datapoints by 61% – it preserves the Double Materiality Principle (DMA) intact, confirming that the conceptual shift from compliance to systemic corporate responsibility remains legally entrenched.
In particular:
Α. The Double Materiality 4-Steps Exercise:
According to the Double Materiality Assessment companies should follow – as provided in the EFRAG’s guidance – four steps:
- Understanding context – map the business model, value chain, and stakeholders to identify where impacts, risks, and opportunities (IROs) could arise.
- Identifying impacts, risks, and opportunities – for each sustainability topic (ESRS sub-topics), pinpoint actual/potential IROs across own operations and the value chain.
- Assessing materiality – score each IRO on both dimensions: impact materiality (severity, scope, irremediability, likelihood) and financial materiality (magnitude, likelihood of financial effect).
- Reporting – consolidate results into a materiality matrix/list, set thresholds for “material” topics, and document the process for the sustainability statement (CSRD/ESRS disclosure).
Thus, according to the above double materiality assessment, as “material” topic is considered the topic that has material impact on the company within the reported year and not all topics that are considered in general as material (ex. “The Health and Safety” topic is always a crucial topic for every company). However, a specific topic will be considered as material, in the framework of the double materiality assessment, only if there has been a significant impact on the health and safety of the stakeholders, within the reported year (ex. in case of a serious work – related accident). However, if the accident is of minor importance or if the accident would have been serious in the first place, but the measures already undertaken by the company have minimised its impact to the company, then the specific topic, won’t be considered as material for the sustainability statement.
B. Why DMA matters:
- Continuity of past work. Any DMA already conducted under EFRAG IG 1 stays compliant. Companies don’t need to re-run assessments or migrate methodology — the 61% datapoint cut just narrows what gets disclosed, not how materiality was or is determined. This approach protects the investment already sunk into scoping, stakeholder engagement, and impact/financial dual testing.
- It’s the gateway, not a datapoint. Double materiality decides which of the remaining ~320 data points are actually “material” and therefore mandatory for a given company. If the methodology itself had changed, the whole downstream reporting logic would need rebuilding — the datapoint reduction would be meaningless without a stable filter deciding what’s relevant. The datapoint cut operates inside the DMA framework, not instead of it. Double materiality is the methodological gateway that determines which remaining data points apply; the reduction affects what you report on, not how you conduct the assessment. In other words, simplification only works because the underlying impact/financial dual-test logic still stands to filter and justify what gets reported.
- Commercial and strategic uses survive the compliance shrinkage. Even companies falling out of mandatory CSRD scope (the ~80% now excluded) retain a DMA that’s still useful for stakeholder engagement, sustainability-linked finance, and voluntary VSME reporting — but only because the methodology wasn’t touched. If double materiality itself had been diluted, that residual value would disappear too.
- Interoperability with other frameworks. Since financial materiality stayed intact, ESRS-aligned assessments continue to satisfy the financial-materiality component of other referencing regimes (ex. International Sustainability Standards Board -ISSB — a bridge that would have broken if the dual-test had been diluted to a single blended score only of impact materiality. However, the dual impact/financial test is what lets EU disclosures map onto other international standards. Preserving it keeps EU reporting compatible with broader global sustainability reporting architecture (ex. ΙSSB- focusing only on financial materiality or Global Reporting Initiative (GRI) focusing only on impact materiality), even as the mandatory scope narrows.
- Legal/ investor credibility. Double materiality (impact+ financial materiality) is what distinguishes CSRD from voluntary ΕSG reporting. If Omnibus had scrapped it in favor of single (financial – only) materiality, EU disclosures would have converged toward financial/ investor – only reporting, losing the ΕU΄s differentiator: forcing companies to account for their externalities on people/environment, not just risks to themselves. Preserving it keeps CSRD’s normative ambition (steering real – economy behavior, not just informing capital markets) intact even as scope narrows.(ex. under a financial – only materiality model, a company’s carbon emissions are only reportable if they create financial risk to the company – transition risk, litigation exposure, physical risk to assets etc – not simply because emitting carbon harms the climate.[1]
- Value chain leverage – Because double materiality flows down.Large in – scope companies still need impact data from suppliers/ value chain partners to complete their own assessment. This is why, even for companies now out of scope (the – 80% carved out), double materiality logic remains commercially relevant – as they will still be asked for data by anchor clients.
- Continuity for pending litigation/ due diligence (CSDDD) links .Impact materiality is the conceptual bridge to CSDDD – and the human rights/ environmental due diligence. Losing double materiality in reporting would have weakened the coherence between reporting (CSRD) and due diligence (CSDDD) obligations.
C. Conclusion: From Impact to Opportunity
As stressed out above, the principle of double materiality requires companies to assess not only how external risks affect them (financial materiality), but also how their activities affect the environment and society (impact materiality).
Thus, most importantly, this dual perspective of double materiality constitutes a pivotal conceptual shift: for the first time, the organisation is asked to see itself as part of a broader system. And when a company systematically maps its impact – through the double materiality procedure – it inevitably discovers areas where restoring damage and creating business value coincide. The food company that invests in regenerative agriculture simultaneously reduces long-term operating costs, strengthens supply chain resilience, and creates a premium product with proven environmental value. The energy company that develops renewables through energy community models, acquires social license to operate and long-term investment stability. Tourism that links sustainability with authentic cultural experience creates competitive advantage that cannot be replicated.
The common thread is always the same: the impact currently recorded as risk becomes tomorrow’s field of innovation and differentiation – provided that corporate leadership possesses the maturity to see it.
- [1] That’s the single vs. double materiality distinction that’s been running through this whole problematic: ISSB = investor – only (single), ESRS = investor + impact (double)
