Double materiality is the clear choice for companies that are serious about sustainability. For those unfamiliar with the concept, a materiality assessment is a process businesses use to identify the issues most significant—or material—to the firm.

Rooted in accounting practices, materiality traditionally focused on financial issues relevant to investors. In sustainability, single materiality most often means considering environmental and social impacts on the company’s bottom line, typically considering topics important to both internal and external stakeholders. Double materiality goes further, providing a more holistic perspective by pairing an outside/in point of view (how external factors impact the company) with an inside/out approach (the company’s impacts on people and the planet). 

For instance, a company with warehouses or infrastructure in high-risk areas—such as those prone to stronger hurricanes or more intense wildfires—faces substantial outside/in risks. Storms can damage or destroy buildings, shut down critical transportation routes, and sever power lines, making it difficult for employees to access facilities and impacting business continuity. Under double materiality, the company would also assess its contributions to environmental, societal, and economic challenges, such as its greenhouse gas emissions, recognizing these as materially impactful to the company and the wider world.

Also significant is double materiality’s emphasis on a company’s entire value chain, capturing a more granular view of both risks and opportunities across all operations, including suppliers. This comprehensive perspective reveals insights that a single materiality assessment, with its narrower focus, simply cannot provide.

Recognizing both outside/in and inside/out impacts gives companies a clearer picture of their material issues and responsibilities. Beyond risk management, double materiality also provides better information for strategic decision-making—think of it as a supercharged market research tool, actively soliciting insights and perspectives from key stakeholders. This comprehensive data collection results in a more holistic understanding of the company and the world in which it operates, strengthening overall alignment and resilience.

We wholeheartedly endorse this dual approach—a merging of financial and societal impacts—as sustainability increasingly underpins a company's competitive advantage and is essential to its long-term success.

More Reasons Why Double Materiality is Better

In addition to the reasons outlined above, we believe Double Materiality is the gold standard for the following reasons: 

• Stakeholder Alignment: Double Materiality positions your company to meet the evolving expectations of investors, regulators, employees, and communities.

• Regulatory Preparedness: The EU's Corporate Sustainability Reporting Directive (CSRD) requires EU businesses and many U.S.-based firms (i.e. those with large EU subsidiaries, among others)  to report on double materiality. Embracing this now prepares your firm to implement CSRD reporting.

• Risk and Innovation Insight: Pinpoints risks while opening pathways for innovation in climate action, biodiversity, and social impact, transforming challenges into opportunities.

• Strategic Coherence: Enhances strategy alignment, optimizes resource use, and integrates business and sustainability goals—essential for lasting resilience and a competitive edge.

• Enhanced Decision Making: Guides smarter decisions by blending financial and societal factors, strategically directing resources for maximum impact.

For Sama Sustainability, it's no longer about whether double materiality is required; it's about embracing the most strategic and inclusive approach to business. For that reason, double materiality is by far the better choice.