DIFFERENCES IN METHODOLOGY FOR ASSESSING DOUBLE MATERIALITY: DO ENTITIES UNDERSTAND THE ESRS REQUIREMENTS IN THE SAME WAY?

Abstract

The adoption of the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) has made the concept of double materiality a mandatory component of sustainability reporting in the EU. While prior literature has explored the theoretical basis for double materiality, there is limited empirical research on how entities are applying the ESRS guidance in practice. This study investigates whether companies interpret and apply the ESRS 2 IRO-1 requirements on double materiality assessment in a consistent and transparent manner. A comparative case study of seven multinational entities—Sanofi, Ørsted, Maersk, Puma, Mercedes-Benz, Carlsberg, and Rockwool—was conducted using publicly available sustainability reports. The analysis focused on the methodological components required under ESRS 2 IRO-1, including scoring systems, materiality parameters, weighting approaches, treatment of human rights, use of likelihood, and materiality thresholds. The findings reveal significant variation in how entities structure and disclose their materiality assessments. While core ESRS parameters are broadly applied, approaches differ in scoring logic, weighting of impact factors, and threshold clarity. Some companies deviate from ESRS guidance by applying likelihood to actual impacts, and only a minority provide transparent thresholds for materiality. The results suggest a lack of methodological standardization in early ESRS reporting. This paper contributes to the growing literature on ESRS implementation by highlighting current inconsistencies and underlining the need for clearer guidance to improve the comparability, and reliability of double materiality disclosures.