What is double materiality?

It is the CSRD principle whereby the company reports two perspectives: impact materiality (how the company affects people and the environment) and financial materiality (how sustainability matters affect the company's value). Both determine what must be disclosed.

Who does it apply to and from when?

To large companies and financial institutions in the EU (and to certain companies based outside the EU with EU activity), with phased entry. In 2025 the European Commission proposed, within the Omnibus package, simplifying the scope and deferring deadlines, so it is worth verifying the applicable timeline and thresholds.

How does it relate to the EU Taxonomy?

The EU Taxonomy indicators (percentage of activities, revenue and expenditure aligned with environmental objectives) are reported within the ESRS framework. CSRD/ESRS is the disclosure vehicle; the Taxonomy provides part of the metrics.

Glossary · EU regulation · Sustainability

CSRD / ESRS — sustainability reporting in the EU

The CSRD (Directive (EU) 2022/2464) requires large companies and financial institutions in the EU to report audited sustainability information following the ESRS standards. It introduces double materiality and raises ESG data to the same level of rigour —traceability, audit, digital format— as financial data.

What it requires

Double materiality — report both the company's impact on the environment and the impact of sustainability on the company.
ESRS standards — cross-cutting topical standards plus environmental (E1-E5), social (S1-S4) and governance (G1).
Assurance — the information is subject to independent assurance.
Digital format — XBRL tagging in the management report (ESEF) so it is machine-readable.

Why it is a data challenge

Complying with the ESRS means consolidating hundreds of data points from scattered sources (HR, energy, supply chain, finance) with traceability and auditability on a par with financial reporting, and cross-referencing them with the EU Taxonomy. Without a governed and automated data layer, the ESG close becomes a fragile, non-auditable manual process.

How Vermont Solutions helps

A governed and auditable ESG data layer

We modernise the data architecture to consolidate ESRS data points with finance-grade lineage and traceability, automating the sustainability close over scattered sources.

See legacy and data modernisation →

Fuentes

Directive (EU) 2022/2464 (CSRD) — EUR-Lex

Last updated: 2026-06-19. Editorial content by Vermont Solutions, citable with attribution. This does not constitute regulatory advice; verify the current status of the CSRD/ESRS (including the Omnibus package) at eur-lex.europa.eu.