A Critical Appraisal of the EU Corporate Sustainability Reporting Directive: Unpacking the Double Materiality Principle

Abstract

ABSTRACT The EU Corporate Sustainability Reporting Directive (CSRD) is an ESG reporting legislation which sets out a procedure for corporate organizations to make mandatory disclosures concerning their activities. The method to be applied as prescribed by the ESRS Delegated Regulation is by way of a double materiality assessment.

The aim of this work is to make a critical analysis of the double materiality principle to determine its justification for use, how it fits into the sustainability narrative of the EU and a fortiori, its role in the attainment of the EU’s Green Deal objective of 2050 net zero GHG emissions, as well as its Green transitioning policy. Also, an analysis will be made concerning potential challenges these undertakings may face in its implements, and recommendations made on possible ways out.

In the end, several submissions will be made. The first is that the requirement for assessment under the double materiality principle is a key step in the right direction, showing intent. Secondly, it will be submitted that in spite of this, many issues stand in the way of the principle fulfilling its function and finally, that irrespective of any early setbacks, there still lies room for improvements and strict implementation will play a vital role in achieving sustainability within the EU.

Keywords: Sustainability. Sustainability Reporting, Materiality, Double Materiality, Sustainable Development, ESG