ESG
Europe’ s sustainable finance system is evolving as policymakers work to balance reporting requirements with the need for strong market oversight.
The main reason for this change is the European Commission’ s updated European Sustainability Reporting Standards( ESRS). These standards set the rules for how companies report sustainability information under the Corporate Sustainability Reporting Directive( CSRD). When the Omnibus I simplification package was approved in December 2025, the CSRD framework was downsized, removing more than 60 % of its previous data points but keeping“ double materiality” as its main principle.
WHAT IS DOUBLE MATERIALITY?
The concept of double materiality has significantly influenced business ESG reporting in recent years.
Companies are already required to provide information about ESG topics that affect their activities on purely financial grounds. This is materiality.
Double materiality requires companies to report on how their activities, including supply chains and value streams, affect the environment and society. The term grew in prominence largely as a result of the European Union’ s Corporate Sustainability Reporting Directive( CSRD), which, from 2024, mandated a double materiality assessment.