Double Materiality Assessment for CSRD: A Guide for ESG Leaders

Introduction

As we adapt to the constantly changing field of sustainability reporting, the introduction of the Corporate Sustainability Reporting Directive (CSRD) brings with it both challenges and opportunities. To ensure compliance, it is crucial to conduct a Double Materiality Assessment (DMA). This seemingly intricate process is essential in identifying the most significant ESG issues that affect your bank and stakeholders.

This blog is a comprehensive guide, empowering you to understand, execute, and leverage the Double Materiality Assessment for a robust CSRD reporting strategy.

What is Materiality, and Why Does it Matter?

"Materiality" is a principle that helps us focus on the most significant Environmental, Social, and Governance (ESG) issues that can affect your financial performance, value creation, reputation, and legal standing. The CSRD (Corporate Sustainability Reporting Directive) highlights the importance of "double materiality." 
This concept requires us to consider how your bank's activities impact the environment and society and how external environmental and social factors can pose risks and opportunities to the bank.

By conducting a thorough Double Materiality Assessment, you gain a clear picture of these interconnected aspects. This allows you to:

• Prioritise Sustainability Efforts: Channel resources towards the most impactful ESG issues, maximising your positive contributions.
• Enhance Risk Management: Identify and mitigate potential ESG-related risks affecting financial stability.
• Strengthen Stakeholder Engagement: Demonstrate transparency and accountability by aligning your sustainability strategy with stakeholder concerns.
  
  
  

What is a Double Materiality Assessment?

A double materiality assessment (DMA) is a mandatory step for banks complying with the Corporate Sustainability Reporting Directive (CSRD) in the EU. It's essentially a process to identify which sustainability issues are most significant for the bank and its stakeholders.

The key thing to remember about double materiality is that it considers sustainability from two angles:

• Inside-out: How the bank's operations impact the environment and society (environmental damage, labour practices, etc.).
• Outside-in: How environmental and social factors affect the bank's finances (e.g., climate change regulations, resource scarcity).

By considering both these perspectives, the DMA helps to focus sustainability reporting on the most relevant issues. This means reports are more meaningful and less likely to be cherry-picked for positive aspects.

Throughout this blog, we assume the Materiality Assessment is a Double Materiality Assessment (DMA).

The Materiality Assessment: A Step-by-Step Guide

Now that we understand the significance of Materiality, let's delve into the steps involved in conducting a comprehensive assessment:

Step 1: Stakeholder Engagement – Building Bridges of Communication

• Identify Key Stakeholders: Investors, employees, customers, communities, and regulators have valuable insights on ESG impact. Establish open communication channels with these groups.
• Gather Stakeholder Perspectives: Conduct surveys, workshops, and focus groups to understand their priorities and concerns regarding your environmental and social footprint.
• Analyse Stakeholder Feedback: Categorise and analyse the collected data to identify recurring themes and areas of greatest concern.
  
  

Some of these activities should be completed in person, but much of this can be systemised, as we will cover later in this blog.

Step 2: Defining Your ESG Universe – Mapping the Sustainability Landscape

• Industry Benchmarking: Research how other leading global banks are addressing ESG issues. This approach helps identify relevant ESG topics within your industry.
• Regulatory Mapping: Analyse the CSRD requirements and understand the specific ESG disclosures expected from financial institutions.
• Internal Brainstorming: Engage internal teams across various departments (risk, operations, HR) to brainstorm potential ESG issues relevant to your operations.
  
  

Step 3: Impact & Risk Assessment – Quantifying Sustainability's Influence

• Impact Assessment: Evaluate your activities' potential environmental and social impacts. Consider factors like greenhouse gas emissions, resource consumption, labour practices, and social equity.
• Financial Materiality: Analyse how these ESG impacts could financially impact the bank through factors such as regulatory fines, reputational damage, or, conversely, opportunities for green finance initiatives.
• Prioritisation Matrix: Develop a matrix that plots ESG issues based on their impact severity and financial significance. This helps identify the most material issues requiring in-depth reporting.

Step 4: The Materiality Matrix – A Visual Representation of Priorities

The Materiality Matrix is a powerful tool that visually summarises the results of the assessment.  Here's how it works:

• X-axis: Represents the financial significance of an ESG issue, considering its potential impact on financial performance.
• Y-axis: Represents the severity of an ESG issue's impact on the environment and society.
• Data Points: Each ESG issue is plotted within the matrix based on its scores for both axes.

Scoring the Materiality Matrix for CSRD Compliance

Here's an example scoring system you can adapt for your assessment:

Impact Severity (Y-Axis)

• High: Severe negative impact on environment or society (e.g., significant greenhouse gas emissions, labour rights violations). (Score: 3)
• Medium: Moderate negative impact on environment or society (e.g., moderate resource consumption, lack of diversity in the workforce). (Score: 2)
• Low: Minimal negative impact on the environment or society (e.g., negligible waste generation, strong safety record). (Score: 1)
  
  

Financial Significance (X-Axis)

• High: Significant potential financial risk or opportunity (e.g., regulatory fines for pollution, green finance initiatives attracting new investments). (Score: 3)
• Medium: Moderate potential financial risk or opportunity (e.g., increased operational costs due to resource inefficiency, potential reputational damage from social controversies). (Score: 2)
• Low: Minimal potential financial risk or opportunity (e.g., minor energy cost fluctuations, positive brand image from community engagement). (Score: 1)
  
  

Calculating a Materiality Score

Multiply the scores for Impact Severity and Financial Significance for each ESG issue. This will result in a value between 1 (low materiality) and 9 (high materiality). Issues with higher scores require more significant focus in your CSRD reporting and sustainability strategy.

Important Note: This is a simplified example. You can customise the scoring system based on your risk profile, industry benchmarks, and stakeholder feedback.

Free Materiality Matrix Template for Banks and CSRD

Unfortunately, there isn't a universally accepted, free Materiality Matrix template specifically tailored for CSRD and banks. However, here are some resources that can be helpful:

• Global Reporting Initiative (GRI): The GRI provides comprehensive sustainability reporting standards, including resources for Materiality Assessments. While not free, they offer a paid service called the GRI Materiality Disclosures Service that can guide you through the process. https://www.globalreporting.org/
• Sustainability Accounting Standards Board (SASB): SASB offers industry-specific ESG reporting standards, including a set for the Financial Services Sector. These standards can inform your selection of relevant ESG topics for your Materiality Assessment. https://sasb.ifrs.org/
  
  
  

Step 5: Strategic Integration – Embedding Sustainability into Your Operating Models

The final stage involves integrating the findings of the Materiality Assessment into your overall sustainability strategy. You leverage this knowledge to:

• Set Measurable Sustainability Goals: Establish clear and measurable goals for addressing the identified material issues.
• Develop Action Plans: Formulate concrete plans to achieve these goals, outlining specific actions, timelines, and responsible teams.
• Performance Monitoring & Reporting: Regularly monitor progress towards your goals and disclose these efforts in a transparent and comprehensive CSRD report.
  
  

Industrialising the Double Materiality Assessment: Our Live, Proven Solution

For many institutions, the Double Materiality Assessment has been a manual, resource-intensive process — dependent on spreadsheets, siloed surveys, and consultancy-led workarounds. While the need for a structured and auditable DMA process is now clear under CSRD, few technology solutions have delivered the scale, control, and usability required for large financial services organisations.

At Revvence, we've changed that.

We’ve developed and deployed a live, end-to-end materiality assessment solution used by one of Europe’s top 10 banks. It delivers a fully industrialised DMA workflow — including stakeholder engagement, IRO scoring, narrative capture, and seamless integration into the CSRD disclosure process — all within the organisation’s existing ESG and reporting platform.

What Our DMA Solution Delivers

1. Intelligent Form Design for Stakeholders and Data Capture

Our solution is built around structured forms that guide users through data capture, scoring, and commentary, tailored to internal and external stakeholders.

• Stakeholder Engagement Forms

  • Collect contact details and categorise stakeholders for structured outreach.

  • Deploy targeted surveys to capture perspectives of stakeholder groups.

  • Enable open-text commentary for qualitative insights and nuance.

• ESG Data Input Forms

  • Structured data capture for environmental, social, and governance topics.

  • Benchmarking fields to log competitor or peer disclosures.

  • Options to pre-populate fields with internal data sources, reducing manual entry.

2. Built-in Assessment and Scoring Logic

Our system supports dual materiality scoring — impact and financial — while embedding an IRO (Impact, Risk, Opportunity) lens to align with ESRS 1.

• Impact and Financial Assessment Forms

  • Capture scoring across severity and likelihood for impact materiality.

  • Evaluate potential financial effects via cost, revenue, or risk drivers.

  • IRO scoring logic applies institutional weightings to calculate final materiality.

• Materiality Matrix Automation

  • Dynamically generate the materiality matrix using live scoring data.

  • Allow for manual adjustments and annotation where governance requires it.

3. Structured Workflow and Task Management

The platform breaks the assessment into clear, assignable tasks, with built-in controls for collaboration, approval, and audit.

• Role-based Task Assignment

  • Define responsibilities across stakeholder engagement, data entry, and review.

  • Tag internal and external SMEs to topics and trigger tailored scoring sheets.

• Automated Workflow Management

  • Monitor progress in real time through dashboards and task trackers.

  • Built-in alerts, notifications, and deadline reminders reduce risk of delays.

• Review and Challenge Controls

  • Track feedback, resubmissions, and final approvals — all logged for audit.

4. Seamless Integration with CSRD Disclosure Process

Unlike standalone tools or consultant-managed spreadsheets, our solution is designed to flow directly into your CSRD reporting.

• Disclosure Scoping and Tagging

  • Automatically determine which ESRS datapoints are in scope based on materiality.

  • Link topics to disclosure owners and generate structured inputs.

• Narrative Development and Review

  • Enable business units and ESG leads to draft, review, and sign off on narrative commentary within the platform.

• Data Population and Report Generation

  • Automate the population of disclosure templates with assessed data.

  • Maintain traceability from raw inputs to final report-ready outputs.

  • Stay aligned with the latest regulatory updates and guidance.

The Result

With this solution, institutions can:

• Replace fragmented spreadsheets with a structured, auditable process

• Empower internal teams — reducing dependency on external consultants

• Accelerate time-to-completion and minimise rework

• Improve quality, traceability, and confidence in published disclosures

• Build a repeatable, scalable framework to support future ESG cycles

Conclusion

Systemising the Materiality Assessment process will transform it from a tedious task to a strategic business-as-usual exercise that empowers the bank to effectively manage its ESG performance and position itself as a leader in sustainable banking practices.

You might also be interested in learning more about how GenAI can be used in your broader ESG/CSRD platform strategy.  Our blog, "Unleashing the Power of Generative AI for ESG Reporting", is available here.

How can we help?

Revvence can help in several valuable ways:

• We have delivered a systemised DMA tool for a top-ten European bank using Oracle EPM - we can show you the solution.
• The design and delivery of end-to-end ESG/CSRD compliance and reporting solutions.
• Check out Revvy, our Narrow-GPT for Finance Transformation. Read all about Revvy here.