Frequent Asked Questions (FAQs)
Is the software compatible with existing reporting standards (CSRD, ESRS)?
A: Yes, our software is fully compatible with CSRD and ESRS. We keep a close eye on regulatory updates and integrate changes directly into the platform. This way, your reporting always stays up to date and aligned with EU sustainability requirements.
How long does a typical Double Materiality assessment take with the software?
A: If you include a quantitative survey, a typical assessment takes about 4–6 months, mostly due to scheduling and coordinating with multiple stakeholder groups. If you decide based on available secondary data with limited participation, the process can be significantly shorter.
How are users trained (tutorials, webinars, support)?
A: Our software includes the Caribou navigation system to guide users step by step. We are also developing a Peer Academy with tutorials and videos. Additionally, we offer custom consulting and sustainability support if you need guidance beyond the software’s functions.
How does the software visualize the results of the Double Materiality assessment?
A: The software generates a 5×5 matrix with the financial materiality axis and the impact materiality axis. Additionally, it provides a communication matrix showing which topics are material, double material, or not material, making it easy to interpret and communicate the results.
Why is a double materiality analysis important for companies, and what are the benefits?
A: A double materiality analysis is essential because it shows both sides of a company’s sustainability impact: how environmental and social factors affect its financial performance, and how the company itself influences people and the planet. This dual perspective helps identify and manage risks, uncover opportunities, and strengthen long-term resilience. It also ensures compliance with the CSRD, while at the same time laying the foundation for a credible sustainability strategy and reporting that stakeholders can trust.
Which regulatory requirements (CSRD, ESRS) are behind the double materiality principle? And do you need to report under CSRD?
A: The double materiality principle is a core element of the Corporate Sustainability Reporting Directive (CSRD) and is operationalized through the European Sustainability Reporting Standards (ESRS).
Do you need to report under CSRD?
Following recent regulatory developments (including the Omnibus simplification proposals), the scope is expected to focus more strongly on large companies. In general, CSRD applies to:
EU companies:
• More than €450 million net turnover at the balance sheet date, and
• More than 1,000 employees on average during the financial year
Non-EU companies:
• At least €450 million net turnover generated in the EU, and
• In addition, at least one of the following in the EU:
o A subsidiary with more than €200 million net turnover, or
o A branch with more than €200 million net turnover
Timeline update (“Stop-the-clock”)
As part of the so-called stop-the-clock decision, the application of CSRD has been postponed by two years. This means that, in practice, reporting obligations will begin two years later than originally planned.
Is our Double Materiality module compatible with the VSME Standard? Are there any benefits if our company does not fall under mandatory CSRD reporting?
A: Yes, our Double Materiality module is fully compatible with the Voluntary SME (VSME) Standard. For SMEs, a Double Materiality Analysis is not mandatory, but our module makes it highly valuable. By using it, you can:
· Build a sustainability strategy based on evidence and clear priorities.
· Demonstrate a sound and transparent methodology to larger customers, suppliers, and financial partners.
· Increase competitiveness in supply chains where sustainability criteria are becoming decisive.
· Prepare your company for potential future regulations in a structured way, reducing the risk of costly adjustments later.
Even if you are not obliged to report under CSRD, using our module strengthens credibility, resilience, and long-term business opportunities.
Why does Double Materiality require participation of diverse stakeholder groups?
A: Engaging diverse stakeholders—such as employees, customers, suppliers, investors, and civil society—ensures that your assessment of material sustainability topics reflects a wide range of perspectives and expertise. EFRAG strongly recommends this engagement as a core part of a robust Double Materiality Analysis.
It helps you identify key risks and opportunities, make informed decisions, and build credible, transparent sustainability strategies and reporting. In cases where topics are already well covered by research, industry associations, or sector studies, direct stakeholder engagement may be optional, as there is enough information to make sound judgments.
What is a Materiality Analysis? What is the difference between impact materiality and financial materiality?
A: Materiality means identifying the most important social, environmental, and governance (ESG) topics for a company and its stakeholders. A Double Materiality Analysis assesses both:
-The financial risks and opportunities these ESG topics pose to the company (financial materiality), and
-The positive and negative impacts the company has on the environment and society (impact materiality).
Since both perspectives are equally important, this approach is called Double Materiality.
What are impacts, risks, and opportunities?
A: Impacts: There are both positive and negative impacts of a sustainability topic on the environment or society. Impacts can include, for example, promoting biodiversity, improving quality of life in communities, or reducing greenhouse gas emissions. Negative impacts could include environmental pollution, loss of habitats, or social inequalities.
Risks and Opportunitie:
-Financial risks refer to potential negative financial consequences that may result from environmental or social factors. These can arise, for example, from stricter environmental regulations, resource scarcity, or changes in consumer behavior. Such risks can increase costs, reduce revenues, or decrease the value of assets.
-Financial opportunities, on the other hand, refer to potential positive financial benefits that may result from sustainability topics. These include cost savings through more efficient resource use, new market opportunities through sustainable products and services, as well as an enhanced brand reputation, which can lead to higher revenues.
The significance of the impacts of a sustainability topic is measured by 4 criteria:
1. Scale of impacts: Refers to the size and magnitude of the environmental, social, and governance impacts of a company, such as how extensive and severe they are.
2. Scope of impacts: Relates to how widespread the impacts are, and refers to the regions – local, regional, national, or global – in which a company’s activities have ecological and social impacts.
3. Irremediability of impacts: Describes the extent to which the impacts of the company are irreversible or cannot be remedied, i.e., the permanent consequences of its activities.
4. Likelihood of impacts: Indicates how likely it is that the potential environmental, social, and governance impacts of the company will actually occur.
The significance of each topic for financial materiality is measured by 2 criteria:
1. Scale of impacts: Refers to the extent to which environmental, social, and governance factors can influence a company’s economic performance and financial position.
2. Likelihood of impacts: Refers to the assessment of how likely it is that certain environmental, social, and governance factors will affect the company’s financial performance.
Do I always need a quantitative survey, or are participative workshops/interviews sufficient for a CSRD-aligned Double Materiality assessment?
A: You can choose the approach depending on your company’s size and maturity. EFRAG recommends that the best practice is a quantitative survey, validated through workshops, interviews, or other participative methods. However, for smaller companies just starting their sustainability journey, a workshop or interviews can be sufficient. At a minimum, some form of participative engagement is recommended. Surveys are suggested but optional.