Double Materiality Analysis: Insights from Practice with Robbe
Double Materiality Analysis: Insights from Practice with Robbe
As a consultant at 2Impact, Robbe works closely with organisations on their Double Materiality Analysis (DMA). In this interview, he shares his perspective and experiences: what a DMA is, the challenges organisations often face, and the value this analysis can bring.
What is a DMA and why is it important?
The purpose of a double materiality analysis is to identify the most important and relevant ESG topics for an organisation, i.e. the material topics. There are many ESG issues, but not all of them are relevant for every organisation. It is therefore essential to establish focus.
A DMA is carried out from two perspectives. The first is impact materiality: the impact an organisation and its value chain have on society and the environment. The second is financial materiality: the influence that society has on the organisation and its financial performance. Combining these perspectives provides a complete and balanced picture of what truly matters. The concept of materiality has been around for some time and can be found for example in the GRI and ISSB. However, the concept of double materiality was specifically introduced in the ESRS standards.
To translate these insights into actionable results, a structured process is required. In practice, this is often done through a four-step approach. First, the organisational context is mapped: the business model, the value chain and the stakeholders. Next, relevant ESG topics are identified, including their impacts, risks and opportunities. This is followed by an assessment, usually in collaboration with internal and external experts. Finally, the topics and their associated IROs (impacts, risks and opportunities) are prioritised and validated so that they can become an integral part of the organisation’s strategy.
What are the most common challenges and misconceptions when carrying out a DMA?
One of the biggest challenges is that organisations often lose sight of their value chain when identifying ESG topics and IROs. They tend to focus on their own operations but forget that significant impacts also occur within the chain. It is important to include the impact of value chain partners in the analysis because the organisation contributes to these and therefore shares responsibility.
A second challenge is stakeholder engagement. Involving stakeholders in a DMA is not mandatory, but it can provide valuable insights and strengthen relationships between the organisation and its stakeholders. If direct engagement proves too difficult, organisations can opt for proxies, such as an HR manager representing employees or a procurement manager representing suppliers. This can work, but I always recommend making use of existing sources that already capture stakeholder perspectives, such as employee satisfaction surveys or customer research.
Another misconception is that many organisations approach the DMA as a mandatory reporting exercise, a box to tick for ESRS compliance. In reality, it can be much more: a tool to support strategic decision-making, strengthen stakeholder relationships and embed sustainability within the organisation.
What has personally stood out to you or surprised you when working with DMA?
What I enjoy most is that every DMA leads to different outcomes. This is due to the differences between sectors and companies, which makes the work dynamic and engaging. No project is ever the same.
In addition, I learn a great deal about an organisation in a short time. A DMA project usually takes two to three months, during which I immerse myself in the business model and context. This is very energising for me. There is also scope for tailoring the process to the specific needs of each client.
On 16 October you are organising a DMA training. Who is this training intended for and what can participants expect?
On 16 October I am organising a DMA training aimed at both small and large organisations, whether they are carrying out their first DMA or looking to improve a previous analysis. The training provides practical methods and tips and shows how to integrate the outcomes into business strategy. The aim is to ensure that a DMA is not seen as a box-ticking exercise, but as a valuable tool for strategy.
If a company has already carried out a DMA, how often should it be updated or repeated?
Although the ESRS standards do not prescribe a specific frequency, I recommend organisations perform a “light update” every year. This ensures that the analysis reflects new internal and external developments, such as legislation or changing trends. A light update also provides the opportunity to incorporate feedback from auditors, moving towards a compliant DMA.
However, if there are significant changes. such as a merger, acquisition or entry into a new market, then a thorough revision is required.
What benefits or insights does a well-executed DMA deliver that often surprise companies?
Ideally, a DMA should not lead to major surprises. The outcomes should be logical. Nevertheless, certain risks or opportunities may come to light that had previously been overlooked, particularly when external stakeholders are consulted.
The greatest advantage is that a DMA is far more than an exercise to achieve ESRS compliance. It is a strategic instrument. It provides a clear overview of which topics are truly important for the organisation, giving direction to policy and sustainability strategy. Companies sometimes discover that they have taken little or no action on a significant theme. In such cases, a DMA can act as a catalyst for new initiatives.
Finally, if you could give one piece of advice to organisations starting their first DMA, what would it be?
My main advice is: start with the basics. Clearly set out your business model and value chain and identify which topics are obviously material. Use as much information as is already available, such as sector reports, annual reports of peers or double materiality analyses published by industry associations.
By starting with the most obvious topics, you build a solid foundation step by step. You can always refine the process later and add extra themes. This approach keeps the process manageable and ensures immediate value.
Are you interested in the DMA training? Register here. Would you like to know more about DMA or do you have any questions? Please contact robbe@2impact.nl
