Three videos to help you understand the challenges and opportunities of CSRD double materiality analysis

You already read tons of articles and white papers on CSRD and still have trouble fully getting to grips with the whole concept?

Here, you won’t find another top-down vision of CSRD.

At AXA Climate we decided to talk to the people who are directly concerned with this new regulation. We gathered 30+ members of our ecosystem of partners and the Cambridge Institute for Sustainability Leadership (CISL) community, to collectively tackle the challenges of double materiality.

And with all their inputs, we realized a series of 3 metaphorical videos to understand the challenges, fears, and opportunities surrounding CSRD. You will find them below this article.

First, what is the sole purpose of CSRD?

The Corporate Sustainability Reporting Directive, known as the “CSRD” is progressively entering into application since January 1st, 2024.

Beyond being a reporting obligation, the CSRD can be leveraged as a strategic management tool whose aim is to foster a better understanding of interactions between business models and sustainable development through four main objectives:

1. Gain a clearer and more objective vision of the wider strategic environment of the company, and adjust companies’ strategies accordingly
2. Ensure a better understanding of company’s exposure to sustainability risks and the impact of the company’s activities on the planet and the people
3. Foster greater dialogue, data-management and collaboration between departments, particularly risk, finance, and sustainability
4. Stand out from the competition by demonstrating the company’s commitments in tangible terms.

Then, what is double materiality analysis?

The entry into force of CSRD introduced a new key concept : the double materiality analysis. Its aim is to help companies analyze sustainability topics from two perspectives:

• The « Inside-out » vision : the current or potential impacts of a company’s activities and value chain on the environment, ecosystems, health and safety, employees, and communities
• The « Outside-in » vision : the current and future effects of environmental, social, and societal topics on the development, performance, and results of the company

In other words, how do the company’s actions impact people and the planet, and how do sustainability issues impact the company’s financial wellbeing?

How can you use this tool to go beyond reporting obligations?

The double materiality assessment brings benefits beyond compliance. Indeed, if the CSRD was “just” a regulatory exercise, then it would be the most expensive in the world. But if the text is so ambitious, it is because it should be used by the company to unveil opportunities across its activities and value chain and re-examine its sustainability strategy accordingly, thereby making it a learning exercise.

In order to be transformative, the exercise of double materiality assessment requires a shift in mindset, methodology, and ways of working, which is very challenging. The company must have a value chain-approach in the process to make this exercise more objective and go beyond a narrow and static vision of its business.

How can we accompany you on your CSRD journey?

At AXA Climate, we propose a scientific and flexible approach to assessing financial and impact materiality, easily implementable into your risk mapping methodology. To do so, we partner with Arengi, a pure-player in risk management.

We have a team of consultants who can support and advise you in the process of understanding and preparing CSRD reporting. To do this, we can put our expertise at your disposal for :

• Double materiality analysis
• Gap analysis
• Analysis of risks and opportunities to respond to ESRS E1, 3, 4 and 5 thanks to our scientific team, climate and biodiversity experts, in-house and public data.
• Formation with the regulation school and tailor-made workshops

But, before we meet, let’s make sure you fully internalized the concept. Follow us on a cruise to the island of double materiality a beautiful island where sustainability matters are just as important as financial considerations, through the 3 metaphorical videos below.

“2 minutes to understand the importance of double materiality anaysis”

“2 minutes to understand the challenges behind double materiality analysis”

“A first step to overcoming the challenges of double materiality analysis”