Double Materiality Analysis according to ESRS – What does the auditor look for?

published on 2 October 2024 I reading time approx. 1 minute

On the path to the first CSRD-compliant sustainability report, many companies currently face the challenge of conducting a double materiality analysis according to the European Sustainability Reporting Standards (ESRS). By identifying and evaluating sustainability-related impacts, risks, and opportunities (IROs), this assessment sets the framework for the report's content focus and plays a central role in its quality and relevance.

During the mandatory content review of the report, the auditor will determine whether the process for identifying the material sustainability matters meets the regulatory requirements. This includes aspects such as the correct application of assessment factors and consideration of the list of potentially relevant sustainability matters (ESRS 1 AR16). Additionally, it is crucial for the auditor that the materiality analysis is substantively robust. By involving appropriate stakeholders or experts, it must be ensured that the identification and evaluation of IROs are based on sound knowledge and are not arbitrary. The identified material matters must be plausible in relation to the company’s business model.

The key factor for the auditability of the materiality analysis is a comprehensive documentation of the procedure, which allows the auditor to clearly trace each step and assess whether the ESRS requirements have been met. The documentation must show how the material matters were identified, who was involved in each phase, what criteria were applied, and what decisions were made.

The approach should be coordinated with the auditor as early as possible to avoid subsequent adjustments and related delays in the auditing process. This can be done, for example, through an auditing support during the report preparation phase.