Double Materiality in Action: Challenges for Preparers and Users

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Introduction

Sustainability reporting has moved from aspiration to obligation across many jurisdictions, yet materiality remains a contested terrain. As organisations transition from voluntary disclosures to more standardised regimes (e.g., Corporate Sustainability Reporting Directive (CSRD)/European Sustainability Reporting Standards (ESRS) in the European Union (EU) and International Sustainability Standards Board (ISSB) standards globally), enduring tensions surface between impact and financially oriented views, transparency and information overload, and genuine accountability versus image-enhancing disclosure. Materiality determinations now shape not only what is reported, but how organisations prioritise issues, allocate resources, engage stakeholders, and undergo assurance. 

The adoption of Directive (EU) 2022/2464 (CSRD), in force since January 5, 2023, marks a groundbreaking step toward standardising sustainability reporting practices, a process initiated with the earlier Directive 2014/95/EU (Non-Financial Reporting Directive, NFRD) (Fedele et al., 2025; Nicolò et al., 2025; Krasodomska et al., 2025). The CSRD introduced more comprehensive reporting requirements for a significantly broader range of companies. One of its key innovations is the introduction of the “double materiality” principle. This principle is further elaborated in the ESRS, which are mandatory for companies within the scope of the CSRD (Carungu et al., 2025a, b; Nicolò et al., 2025). Specifically, according to the latest (draft) amended ESRS 1, “the undertaking shall report on a given topic when the topic relates to one or more material impacts, risks and opportunities, as identified through its double materiality assessment” (EFRAG, 2025, p. 8). Double materiality integrates two perspectives: impact materiality and financial materiality. The former considers the effects of a company’s activities on people and the environment over the short, medium, or long term (inside-out perspective). The latter focuses on the impacts of sustainability issues on the company’s financial position, particularly regarding cash flows and market values (Correa-Meija et al., 2023; Krivogorsky, 2024; EFRAG, 2025). In addition to the EU’s regulatory efforts, the establishment of the ISSB by the International Financial Reporting Standards (IFRS) Foundation in November 2021 represents another milestone in the journey toward standardising sustainability reporting. The ISSB's initial agenda focused on developing a set of globally accepted sustainability reporting standards that are consistent, comprehensive, and comparable across regions and industries, drawing on the best practices of IAS/IFRS (de Villiers et al., 2024; Carungu et al., 2025b). From a materiality perspective, the ISSB emphasises the primacy of financial materiality, which prioritises the shareholders’ value perspective and aligns with the “outside-in” dimension of double materiality (Abhayawansa, 2022; La Torre et al., 2020). Moreover, some scholars highlight that materiality assessments also exhibit a dynamic dimension, as the relevance of impacts, risks, and opportunities may evolve over time (Pizzi et al., 2024). This added further substance to a longstanding debate on the interpretation and application of materiality.

Consequently, heterogeneous definitions of the materiality principle create challenges not only for preparers but also for external users, such as auditors, investors, and stakeholders (Baumüller and Sopp, 2022; Miettinen, 2024; Ngu and Amran, 2024). Investors appear to prefer sustainability disclosures that reveal the potential impact of environmental and social issues on firm performance when making investment decisions (de Villiers et al., 2024). Conversely, other stakeholders, primarily environmentalists, seek information evidencing the impacts of firm operations on society and the global ecosystem, thereby privileging an accountability perspective (Adams and Mueller, 2022). However, despite regulatory efforts to establish a double-materiality principle, it remains unclear whether the two sides will be reconciled (de Villiers et al., 2024; Abhayawansa, 2022; Adams and Mueller, 2022). The definitions of materiality exhibit notable limitations: financial materiality tends to neglect social and environmental dimensions, while double materiality can create confusion among stakeholders regarding the prioritisation of information. From a practical standpoint, earlier evidence (EFRAG, 2024; Ernst and Young, 2025) has shown that companies are struggling with double materiality assessments: some adopt more data-driven, evidence-based approaches, while others continue to privilege judgement-based approaches. 

Therefore, this special issue invites contributions that interrogate and advance the theory and practice of double materiality in sustainability reporting. The special issue will welcome both theoretical and empirical studies, employing quantitative and qualitative methods, which are expected to provide valuable insights for both academic and professional audiences.

List of Topic Areas

Potential issues to consider in this special issue include, but are not limited to, the following:

• Double materiality in practice: governance, processes, and decision rules for integrating impact and financial perspectives;
• Stakeholder salience and engagement quality: methods for identifying, ranking, and validating material topics;
• The role and evidentiary input of internal experts and stakeholders in double materiality assessments;
• Framework comparisons (e.g., GRI, ESRS, ISSB): areas of convergence and divergence, and consequences for consistency and comparability;
• Decision-usefulness versus information overload: designing concise, relevant, and verifiable disclosures and metrics;
• Digital enablers: data analytics and Artificial Intelligence (AI) for topic mapping, materiality matrices, value-chain tracing, and assurance processes;
• Governance and incentives: board oversight, sustainability committees, remuneration links, and internal control systems shaping materiality outcomes.

Guest Editors 

Salvatore Principale, University of Rome “La Sapienza”, Italy, salvatore.principale@uniroma1.it

Giuseppe Nicolò, University of Salerno, Italy, gnicolo@unisa.it

Rosa Lombardi, University of Rome “La Sapienza”, Italy, rosa.lombardi@uniroma1.it

Joanna Krasodomska, Krakow University of Economics, Poland, jkrasodo@uek.krakow.pl

Submissions Information

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Author Guidelines

Authors should select (from the drop-down menu) the special issue title at the appropriate step in the submission process, i.e. in response to “Please select the issue you are submitting to”. 

Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.

Key Deadlines

Opening date for manuscripts submissions: 1st November 2026

Closing date for manuscripts submission: 31st January 2027