Double materiality: how do you carry it out, and what does it cost?

The double materiality assessment decides what a large company discloses in its sustainability statement: only matters judged material go into it. From the 2027 financial year, it applies to companies with more than 1,000 employees and €450 million in turnover, which will report in 2028 under the revised ESRS, the simplified European Sustainability Reporting Standards.

The guidance from EFRAG (European Financial Reporting Advisory Group), the body that prepares these standards for the European Commission, breaks the assessment into 4 steps. None of them sets a numerical threshold: the company decides for itself where the line falls between what matters and what does not, and the statutory auditor checks the process that leads there.

1What is double materiality?

A sustainability matter is material if it is material from an impact perspective, from a financial perspective, or from the 2. ESRS 1, the general standard of the ESRS, therefore looks at each matter in 2 directions: the company's effect on people and the environment, and the matter's effect on the company's financial position.

Impact materiality

An actual negative impact is judged by its severity, which rests on 3 criteria: its scale, its scope and its irremediable character. A potential negative impact is also judged by its likelihood; where it concerns human rights, severity takes precedence over likelihood. For an industrial site that draws water from a river, these criteria read as follows:

• Scale is the share of the river's flow that the site withdraws at low water, when the other users of the river are short of water.
• Scope is the number of municipalities, farms or natural habitats downstream that depend on the same resource.
• Irremediable character is the possibility of restoring the environment, low for an over-abstracted aquifer that takes decades to recover.

Positive impacts are judged by their scale and scope, and by their likelihood if they are potential. They are assessed separately and do not offset negative ones: an assessment that details its positive effects and skims over its negative ones gives an unbalanced picture of the company.

Financial materiality

A risk or opportunity is material if it may have significant financial effects, judged by combining its likelihood and its potential magnitude. The assessment generally starts from impacts, which often turn into risks, then separately assesses risks unrelated to them, such as physical climate risks like floods or droughts, covered in business adaptation to climate change.

These effects are assessed over 3 time horizons, the same as in the 2023 ESRS: the short term, which is the period covered by the financial statements, the medium term, up to 5 years, and the long term, beyond that. A site exposed to flooding, a risk addressed in adapting a territory to climate change, may thus carry a low risk in the short term and a high one in the long term.

Thresholds, set by the company

The standard provides the criteria but no numerical threshold. It requires qualitative considerations and appropriate quantitative thresholds, and the company discloses its own. For financial materiality, the EFRAG guidance cites thresholds expressed as a share of turnover, costs, balance sheet total or equity. A group carries out the assessment at consolidated level, whatever its legal structure.

2Who must carry out the assessment, and from when?

Directive (EU) 2026/470, known as Omnibus, adopted on 24 February 2026, restricts the Corporate Sustainability Reporting Directive (CSRD) to companies that exceed both 1,000 employees on average and €450 million in net turnover, alone or as a consolidated group. The balance sheet total criterion disappears, and these thresholds are assessed at the balance sheet date of each financial year.

Large companies, from the 2027 financial year

Second-wave companies, whose entry had been postponed by 2 years in April 2025, report for the first time on the 2027 financial year, meaning a statement published in 2028 for a calendar financial year. The assessment comes first: it determines which data to collect during the year, so it takes place in 2026 or at the very start of 2027.

In France, the directive must be transposed by 19 March 2027 at the latest. As of 27 October 2026, it has not been: the bill adapting French law to EU law, which leaves the thresholds to a decree, is still awaiting examination by the Assemblée nationale (the French National Assembly). Until then, French law retains the former criteria of the second wave, 2 out of 3 among more than 250 employees, €50 million in turnover and a €25 million balance sheet total. Our article on the CSRD after Omnibus tracks this timeline.

Companies already reporting

First-wave companies, which have reported since the 2024 financial year, do not have to redo their assessment merely because the standard has changed, and EFRAG's cost-benefit analysis attributes no new cost to them on this point. ESRS 1 requires them to check, at each reporting date, whether significant changes alter their conclusions, to update the assessment if so, and to disclose the date of the last update. For the 2026 financial year, they may already apply the top-down approach and the value chain limit of the revised ESRS, while keeping the 2023 standards for the rest.

The list of matters changes form and the rule on mitigation measures is now written into the standard: we advise these companies to carry out a documented review of their mapping, without redoing the whole exercise. Only those above the new thresholds remain in scope from 2027; in France, the others with more than 500 employees return to the mandatory greenhouse gas emissions report.

SMEs

A small or medium-sized enterprise (SME) does not have to carry out a double materiality assessment. The voluntary standard adopted in July 2026 for companies with 1,000 employees or fewer, derived from EFRAG's Voluntary Sustainability Reporting Standard for SMEs (VSME), works through data points, without a materiality assessment. EFRAG had estimated the cost of this assessment, required by the optional modules of the draft standard, at between €6,000 and €20,000 for an SME, before removing it.

An SME may, however, receive a questionnaire from a customer subject to the ESRS, on top of ratings such as EcoVadis. That customer cannot ask it for more than the voluntary standard provides: this is the value chain cap, which protects companies with 1,000 employees or fewer.

3What do the revised ESRS change?

Delegated Regulation (EU) 2026/1563, which contains the revised ESRS, was adopted by the Commission on 3 July 2026 and published in the Official Journal of the European Union on 21 September 2026. The standards enter into force on 10 November 2026 and are mandatory for financial years beginning on or after 1 January 2027. They are adopted texts, which apply in France without transposition.

The top-down approach

The company may reach a conclusion without a detailed assessment on a topic, based on the analysis of its strategy, business model, sectors, geographies and value chain (ESRS 1, paragraph 27). If the conclusion is not obvious, it carries out a specific assessment. The bottom-up approach, matter by matter, remains permitted, and the 2 can be combined from one topic to another.

The text adds that the company is not required to assess every possible impact and that a qualitative analysis may be enough. It may assess its value chain using sector or regional averages, without direct data from its suppliers or customers.

The list of sustainability matters

The list of sustainability matters, which the company had to take into account under the 2023 standards, becomes an appendix of non-binding guidance, with 2 levels, topics and sub-topics, instead of 3. It remains the best way to check that no major topic has been missed.

What is not material is no longer disclosed

A company does not disclose information required by a standard if it is not material, except for voluntary information (paragraph 24). With more than 60% fewer mandatory data points, according to the Commission's press release, the statement narrows to the matters retained, and the assessment decides everything it contains.

For potential impacts, prevention measures already implemented and considered effective now count in the assessment; those not yet implemented do not (paragraph 43). EFRAG's 2024 guidance recommended assessing environmental impacts before any mitigation measure; the revised standard does the opposite for measures already in place.

4How do you carry out the assessment, step by step?

EFRAG's implementation guidance of May 2024 proposes 4 steps, by way of illustration. Written for the 2023 ESRS, it remains the only implementation guidance on materiality as of 27 October 2026. The revised standard follows the same logic for impacts: understand, identify, assess.

Understand the context

The company describes its activities, its business relationships and its upstream and downstream value chain, then identifies the most affected stakeholders. The documents it already has save time: risk map, vigilance plan under the French duty of vigilance law, Bilan Carbone® (the French carbon accounting method) and its scope 3, market analyses.

Identify impacts, risks and opportunities (IROs)

The company draws up the long list of matters, positive and negative, actual and potential, from the list of sustainability matters, sector analyses and input from its sites. Under the top-down approach, some topics are concluded at this stage, when the activity is enough to decide: climate for a cement maker, water for a semiconductor manufacturer.

Score and set thresholds

The remaining matters are scored, and the decisions that call for judgement are always the same:

• The scale for each criterion, for example from 1 to 5, and what each level means for the company, in tonnes, cubic metres or people affected.
• The impact materiality threshold, and the reason for any difference between the threshold applied to positive impacts and the one applied to negative impacts.
• The financial threshold, expressed for example as a share of turnover, costs, balance sheet total or equity, to be reconciled with the materiality used for the financial statements.
• How measures already in place are taken into account: they reduce a potential impact only if they are implemented and effective.

Consult stakeholders

A dedicated consultation is not mandatory. The results of stakeholder engagement carried out as part of due diligence, which the standard treats as an essential input, are sufficient; if the company does consult, it states how the consultation was used. In France, the statutory auditor also checks that the social and economic committee (CSE), the employee representative body, has been consulted on sustainability information, as the French Labour Code requires.

Document the assessment for the statutory auditor

The standards prescribe no documentation, but EFRAG considers it reasonable to expect some, if only for the assurance provider. The limited assurance engagement covers the process by which the company determines what it discloses, and the French Commercial Code makes it one of the 3 subjects of the certification.

In the statement, disclosure IRO-1 describes this process in 5 points: the steps and thresholds, prioritisation, the link with due diligence, changes in methodology and the date of the last update. The standard rules out boilerplate text that recites the criteria without showing the company's judgement.

5How much does a double materiality assessment cost?

No public price list exists for an assessment carried out by a provider: neither the Commission, nor EFRAG, nor the supervisory authorities publish one. Public figures come mainly from EFRAG's cost-benefit analysis of December 2025, based on a survey of 158 companies, 82 of which had already published a first statement, and from a handful of public contracts.

EFRAG's figures

The survey measures the cost of the first statements of first-wave companies, prepared under the 2023 ESRS:

• The double materiality assessment accounts for 20% of internal costs, level with preparing disclosures and ahead of understanding the standards, at around 15%.
• The median of reported internal costs is about €500,000, of which 53% on average recur every year.
• External costs come on top, with a median of about €300,000, and the double materiality assessment is the largest item, according to the same survey.
• These external costs include IT, consulting and the statutory auditor's assurance, which also covers the assessment process.

On the public procurement side, the Société française du tunnel routier du Fréjus, the French operator of the Fréjus road tunnel, awarded a CSRD support engagement in late 2024 for €109,530 excl. VAT, over 37 months according to the contract notice. The double materiality assessment is included with the rest of the statement, without a separate price.

For a second-wave company, EFRAG estimates the reduction due to the revised ESRS at around 40% in the first year, whatever its size, compared with the 2023 ESRS applied without phase-in of requirements. These estimates relate to the draft standards of late 2025, before the adopted text. The Commission, for its part, announces savings of more than 30% per company.

What drives the budget

Without a public price list, the cost of an assessment depends on 5 factors, worth examining before comparing quotes:

• The number of sectors and countries in the group, since a group that produces and distributes across several continents has more topics to conclude on.
• The data already available: a recent Bilan Carbone®, a risk map or a vigilance plan shortens the first 2 steps.
• The depth of value chain covered, from sector averages to data requested from suppliers, which takes much longer to gather.
• Stakeholder consultation, from a simple reuse of the due diligence engagement to a series of interviews and workshops.
• The share of the work done in-house, and the level of evidence the statutory auditor requires on how the criteria and thresholds were set.

At Projet Celsius, we see the savings promised by the revised ESRS as coming from starting with the sector's matters and the documents the company already holds. The statutory auditor, for their part, focuses on the process, its criteria and its thresholds. An assessment built on an existing Bilan Carbone® and risk map costs less than one started from scratch, and it stands up better to verification.

6Key takeaways

• A matter is material through its impacts, its financial effects or the 2 together, and the assessment decides everything the sustainability statement discloses.
• From the 2027 financial year, the assessment applies to companies with more than 1,000 employees and €450 million in turnover; SMEs do not carry one out.
• The revised ESRS permit a top-down approach and accept qualitative analysis as sufficient, but no threshold is given: the company sets its own and discloses them.
• No public price list exists; according to EFRAG, the assessment accounts for 20% of the internal costs of a first statement and is the largest item of external costs.

For the place of climate in this statement, our article on the ESRS E1 climate standard details what a Bilan Carbone® provides, and our transition plan guide what the standard expects of a trajectory. Our briefing on the revised ESRS compares the options for the 2026 financial year.

Further resources

Frequently asked questions

1What is double materiality?

It is the principle that determines the content of the sustainability statement required by the CSRD. A matter is material through its impacts on people and the environment, judged by their severity and likelihood, through its financial effects on the company, judged by their likelihood and magnitude, or through the 2. Only material matters are disclosed.

2Which companies must carry out a double materiality assessment?

Companies subject to the CSRD. From the 2027 financial year, under the Omnibus Directive of February 2026, these are companies that exceed both an average of 1,000 employees and €450 million in net turnover, alone or as a group. Newly covered companies report for the first time on the 2027 financial year. In France, transposition of these thresholds is expected by 19 March 2027 at the latest; until then, French law retains the former second-wave criteria.

3Do you have to consult stakeholders for a double materiality assessment?

A dedicated consultation is not mandatory. The revised ESRS accept that the results of stakeholder engagement carried out for due diligence are sufficient, without a separate dialogue. If the company does consult, it explains how the consultation was used. In France, the certification of the statement also checks that the social and economic committee (CSE) has been consulted on sustainability information.

4Do you need to redo the double materiality assessment every year?

No. At each reporting date, the company checks whether significant changes alter the conclusions of its assessment, and updates it if so. It discloses the date of the last update. The move to the revised ESRS does not require the assessment to be redone, but a documented review is prudent.

5How much does a double materiality assessment cost?

No public price list exists for an assessment outsourced to a provider. According to EFRAG's cost-benefit analysis of December 2025, the assessment accounts for 20% of the internal costs of the first statement of first-wave companies, whose reported median is about €500,000. It is also the largest item of external costs. The cost depends mainly on the number of activities, the data already available and the depth of value chain covered.

6Does an SME have to carry out a double materiality assessment?

No. An SME outside the scope of the CSRD has no assessment to carry out. The voluntary standard adopted in July 2026 for companies with 1,000 employees or fewer works without a materiality assessment. A customer subject to the ESRS cannot ask it for more information than this standard provides.

Ask Guillaume your questionA personal reply within 24 working hours

Send my questionor: guillaume@projetcelsius.com