What is a double materiality assessment?
A double materiality assessment identifies and prioritises impacts, risks and opportunities under ESRS. It tests impacts on people or the environment and financial effects on the company. Either test is enough under ESRS 1 paragraph 28. CSRD reporters meet the process in ESRS 1 and ESRS 2 IRO-1. Keslio's materiality assessment guide gives the full method.
Why does a double materiality assessment matter to you?
An EU-reporting parent or assurance provider may ask for the assessment record. ESRS 2's IRO-1 disclosure asks the reporter to explain its methods and assumptions, stakeholder input, thresholds, controls, data sources and changes from the prior period. Without that record, a reviewer cannot trace why a matter was included or excluded.
How does a double materiality assessment work?
Map activities, business relationships and geographies, then identify impacts, risks and opportunities. For negative impacts, assess severity and add likelihood when the impact is potential. For positive impacts, assess scale and scope and add likelihood when the impact is potential. Score financial risks and opportunities by likelihood and magnitude. Set thresholds and record each decision.
What mistakes should you avoid?
- Requiring a topic to pass both tests.
- Scoring broad topic labels before defining specific impacts, risks and opportunities.
- Applying the Commission's 3 July 2026 revised ESRS as if in force; on 20 August 2026 it was still awaiting Official Journal publication.
Is a double materiality assessment mandatory for a hotel group in Hong Kong?
Hong Kong operations alone do not create an ESRS duty. The group may still need ESRS information if an EU subsidiary or branch is in scope, or if an in-scope parent asks it for data. Confirm the current CSRD scope, group structure and applicable reporting entity first.
What records should you keep?
Keep the register, methods, sources, consultations, scores, thresholds, rationales, approval and next review date.