Implementing an ESRS-compliant double materiality assessment (DMA) can be a steep learning curve. While the recent ‘stop the clock’ provisions offer much-needed breathing room, they also offer the opportunity for a less time-pressured, strategic ‘reset’. Having just completed an ESRS-aligned DMA for a multinational engineering group, we’re sharing some of our key early insights – lessons that we hope will help others to navigate this evolving space:

• 𝗜𝗻𝘃𝗼𝗹𝘃𝗲 𝘆𝗼𝘂𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗿𝗶𝘀𝗸 𝘁𝗲𝗮𝗺𝘀 𝗳𝗿𝗼𝗺 𝗱𝗮𝘆 𝗼𝗻𝗲: Co-designing the DMA process with these teams will support alignment – and ultimately integration – with existing risk management, compliance and reporting systems. This is likely to become even more important for those companies that will also need to apply the ISSB, given that quantitative risk / opportunity assessment will sit front and centre in the process.
• 𝗖𝗮𝗿𝗿𝘆 𝗼𝘂𝘁 𝗿𝗲𝗴𝘂𝗹𝗮𝗿 ‘𝘀𝗲𝗻𝘀𝗲-𝗰𝗵𝗲𝗰𝗸𝘀’: The technical nature of the ESRS provides valuable rigour to the DMA process. But a detail-orientated, compliance mind-set needs to be balanced with a strategic mind-set that doesn’t lose sight of what really matters. This means stepping back at different stages in what can be a very involved process and considering (with your project steering team) whether the picture makes sense as a whole.
• 𝗘𝗻𝗴𝗮𝗴𝗲 𝗮𝘂𝗱𝗶𝘁𝗼𝗿𝘀 𝗲𝗮𝗿𝗹𝘆 𝗮𝗻𝗱 𝗼𝗳𝘁𝗲𝗻: It can be easy to be defensive and reactive when facing auditors. But don’t wait until the end to hand over your documentation. Involving auditors at key stages can help identify and remedy methodological issues early, while leveraging their insight into how the ESRS is likely to be interpreted in practice.
• 𝗕𝗲 𝗱𝗶𝘀𝗰𝗶𝗽𝗹𝗶𝗻𝗲𝗱 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗽𝗮𝗽𝗲𝗿 𝘁𝗿𝗮𝗶𝗹: Don’t leave evidence gathering to the end and ‘hope it’ll be ok’. Prepare early for audit scrutiny, not after the fact. In particular, be ready to justify your thresholds for materiality and the assumptions underlying your assessments. These are likely to be under the spotlight.

𝗟𝗼𝗼𝗸𝗶𝗻𝗴 𝘁𝗼 𝗺𝗼𝘃𝗲 𝗳𝗼𝗿𝘄𝗮𝗿𝗱𝘀 𝗼𝗻 𝘆𝗼𝘂𝗿 𝗗𝗠𝗔 𝗷𝗼𝘂𝗿𝗻𝗲𝘆? Let’s start a conversation – we’re always open to sharing ideas and exploring ways to support.

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