CSRD explained: Supporting clients with their double materiality assessments

The Corporate Sustainability Reporting Directive (CSRD) is reshaping how companies assess and report on their sustainability-related impacts, risks and opportunities. The EU regulation, which entered into force in January 2023, modernises and strengthens the rules concerning the social and environmental information companies have to report.

As many large companies gear up to report under the CSRD for the first time in 2025 on 2024 data, they face the requirement of conducting a so-called “double materiality assessment” (DMA) to determine which sustainability issues are material to the company.

As part of that process, many corporate clients are turning to Nordea to provide an external assessment of their identified sustainability issues. 

“This is not a process that can be rushed through or done in a day,” says Susanne Perneby, a CSRD expert in Group Sustainability at Nordea. “The assessment itself takes a while, and it’s not always easy to determine the threshold where an impact becomes material. The sooner a company can get started with the double materiality assessment, the better.”

She notes that the second wave of companies covered by CSRD, which need to first report in 2026 for fiscal year 2025, should start preparing already this year.

4 steps to conduct a double materiality assessment

Under the concept of “double materiality,” companies have to report not only the outside-in perspective on how sustainability issues could create financial risks or opportunities for the company (financial materiality) but also the inside-out perspective on the company’s own impacts on people and the environment (impact materiality).

An advisory group to the EU Commission published recommendations on how to do a DMA, laying out four steps:

1. Understand the context and define a stakeholder engagement strategy.
2. Identify all actual and potential impacts, risks and opportunities that could be material.
3. Determine the final list of material sustainability topics.
4. Report the materiality process and outcome.

The steps shouldn’t just end there, explains Susanne Perneby. The short list of material sustainability topics coming out of step three should ultimately be integrated into the company’s overall strategy and business model. The process should also be reviewed annually and updated if needed. 

Nordea’s approach to its double materiality assessment

As a company covered by the CSRD, Nordea has conducted its own DMA, and will report an assessment of its material sustainability impacts, risks and opportunities in its annual report for 2024.

To identify the sustainability topics material to Nordea, we set out by first creating a long gross list of impacts, risks and opportunities relevant to a bank, based on both outside perspectives and internal observations. 

We then gathered colleagues from all the group business divisions and internal group functions to provide a holistic view and evaluate the materiality of each topic on the long gross list, taking outset in Nordea’s business activities and using internally determined materiality thresholds. 

The material impacts, risks and opportunities were summarised into key material topics and mapped to the European Sustainability Reporting Standards (ESRS) as outlined in the CSRD. The result was a condensed list reflecting the topics that are material for disclosure purposes.

The DMA was presented to several committees, including Nordea’s Sustainability and Ethics Committee, to properly anchor the result before securing approval by Nordea’s Board of Directors. 

Susanne Perneby notes that the CSRD regulatory landscape remains ambiguous and leaves room for company-specific interpretations, which can make the comparability and transparency that CSRD strives for difficult. Data availability is also a major challenge. Companies need data from the value chain in order to fulfil their own reporting requirements, but that data is typically one year old. 

Engaging with stakeholders

As part of the DMA, it is important to engage with external stakeholders. That includes affected stakeholders, such as suppliers and customers, as well as users of the sustainability reporting, such as investors, lenders and NGOs. 

Many corporate clients have identified Nordea as a key stakeholder to provide an external review in the DMA process. We aspire to be the go-to bank on sustainability issues and we welcome our clients’ invitations to these interviews as a trusted advisor where Nordea can provide insights and an external assessment.