David Milligan

“Double materiality”: what does it mean for non-financial reporting?

Companies have been publicly reporting on their financial performance for over a hundred years. However, they are increasingly having to make public non-financial disclosures relating to sustainability and environmental, social and governance (ESG) matters as a result of rules, laws and regulations issued by stock exchanges, governments and regulators worldwide. In the context of non-financial reporting, there has been increasing awareness of the concept of “double materiality” in recent years. In this article we clarify what “double materiality” means and provide the context of its regulatory background within the EU. We also consider the significance of “double materiality” and give our views on the potential consequences for companies of non-compliance.