CSRD double materiality scoring under ESRS

No. ESRS uses double materiality as the basis for sustainability disclosures, but it does not prescribe one fixed numeric score, rating scale, or cut-off that every undertaking must use.

A company may use a scoring matrix, but the matrix has to reflect the applicable ESRS criteria and the undertaking's own facts. EFRAG IG 1, which relates to the 2023 ESRS, states that ESRS 1 sets criteria rather than specific thresholds. Unsupported universal cut-offs or fixed point totals should not be presented as an ESRS rule.

Impact materiality is about the undertaking's impacts on people or the environment, including impacts connected with its own operations, products, services, business relationships, and value chain.

For negative impacts, score severity using scale, scope, and irremediable character. For potential negative impacts, add likelihood and the relevant time horizon. For positive impacts, use scale and scope, with likelihood added for potential positive impacts. For potential negative human-rights impacts, severity takes precedence over likelihood.

Financial materiality is about sustainability-related risks and opportunities that have, or could reasonably be expected to have, material financial effects on the undertaking.

A practical scorecard should assess likelihood and potential magnitude of financial effects across short-, medium-, and long-term horizons. Effects can relate to financial performance, financial position, cash flows, access to finance, or cost of capital. ESRS allows appropriate quantitative or qualitative thresholds, so a company can use monetary thresholds, relative thresholds, or qualitative ranges where reliable measurement is not available.

The scoring file should be audit-ready enough to show how the undertaking moved from identified impacts, risks, and opportunities to material matters and disclosures. It should not only show final red, amber, or green labels.

Retain the methodology, assumptions, evidence base, stakeholder or expert input, thresholds, scoring rationale, management validation, and the final list of material impacts, risks, and opportunities (IROs). Under the 2023 ESRS, ESRS 2 IRO-1 and IRO-2 require transparency on the process and the disclosure requirements covered by the sustainability statement. Confirm the corresponding references if the revised ESRS apply.