What is a double materiality analysis?
CSRD allows companies to analyze and understand the connections between their operations and the surrounding environment, and then strategize to reduce the environmental impact they cause. When companies answer questions in ESRS, they need to consider how they affect their environment and how the environment affects them. This is called a double materiality analysis.
Companies typically conduct such assessments before they start filling in data points, to ensure they understand the full impact they have.
One example
Before responding to data points, a chemical company can conduct an assessment in which they specify:
- How they affect the environment through the use of chemicals that harm the environment.
- How the environment affects them through legislation on which chemicals they can use, and whether consumers might dislike the chemicals in the product. '
In practice, a double materiality assessment could become endless if companies do not limit what is included. Therefore, the ESRS specifically states that the aspects included must be of importance.
Double materiality analysis provides key insights for your business
A double materiality analysis maps:
- How the business affects climate, environment and other factors (inside-out analysis)
- How climate, environment and other factors affect the business (outside-in analysis)
The analysis maps the areas where the company's operations have the greatest impact on the environment. These areas must then be reported in detail.
How can the Nordic Swan Ecolabel be used in the stakeholder dialogue?
In connection with the double materiality analysis, the business must carry out a stakeholder dialogue. The dialogue will identify new sustainability areas that should be assessed in the materiality analysis, and also help to assess which areas and factors should be given the greatest weight in reporting.
When Nordic Ecolabelling develops requirements for goods and services, we conduct both market research and dialogue with various stakeholders along the value chain for the product in question. We are sending out proposals for a broad, open consultation. The knowledge we gain from these processes lays a solid foundation for the Nordic Swan Ecolabel's requirements, and can also be useful for companies that want to use the Nordic Swan Ecolabel in sustainability reporting.
The Nordic Swan Ecolabel's experts have broad knowledge of the environmental problems that characterise the industries they work with. They can provide very valuable input to the double materiality analysis. They are also happy to participate in stakeholder dialogue with companies that have eco-labelled goods and services.
Nordic Ecolabelling monitors the process where CSRD is to be simplified to ensure that it is easy to use labelling and that the analysis continues to be robust.
Look at the background document for the product groups that are relevant to your company to see how we have analysed the environmental impact and set requirements in relevant areas.