First “double materiality” disclosures made under the CSRD

Here’s a note from this note from Tom Carr:

A really timely new paper released on the state of CSRD and double materiality disclosures by the early reporters – and what good looks like.

A few things stood out for me:

1. Most companies are finding most topics material 7 of the 10 ESRS topics have been identified as material by over 50% of reporters to date. Unsurprisingly climate and own workforce have been material to everyone.

2. Lack of transparency on thresholds undermines results Over 70% of early reporters didn’t disclose how they derived thresholds – without this definition of what ‘material’ actually is, arguably the results are meaningless!

3. The materiality matrix still rules the roost. A matrix was still the most common form to display results (23 of 48), but tables are becoming more popular. In my experience, whilst a matrix can feel familiar to stakeholders they don’t really tell the full story that double materiality tells.

4. There isn’t yet consensus on the right level for disclosure EFRAG allows companies to disclose at whatever level they feel is appropriate, and companies are taking a varied approach. Some disclose at topic level, some at sub-topic, and others at sub-sub topic. Others are mixing levels of granularity. In general, sub-topic level seems to be making most sense, but practicality is really the key here. It’s best to just flex disclosures to be most meaningful for stakeholders, rather than trying to stick religiously to a single rule.

5. Amongst early reporters, 75% aren’t properly looking at the value chain impacts. Value chain impacts, risks and opportunities are the hardest area to assess, but in my experience is where the real value in DMA lies. The most significant impacts and risks often lie deep in the supply chain, and opportunities are often only uncovered when the end-consumer is considered.

Big creds to Maximilian Müller and Nina Valkyser for this really great report – it’s worth a read.