Double materiality is a concept introduced in the CSRD that requires companies to consider and report on both financial and environmental/social impacts.

Traditionally, materiality in financial reporting focuses solely on information that could influence investors’ decisions.

Double materiality broadens this perspective by adding a second dimension: the impact of the company’s activities on society and the environment.

Financial Materiality

Financial materiality remains a critical component, requiring companies to disclose information that affects their financial performance and position. This includes risks and opportunities related to sustainability that could impact the company’s value, such as regulatory changes, market shifts, and resource availability.

Environmental and Social Materiality

Environmental and social materiality, the other dimension of double materiality, compels companies to disclose how their operations impact the environment and society. This encompasses a wide range of factors, such as greenhouse gas emissions, resource usage, labor practices, and community relations. Companies must report on their contributions to climate change, biodiversity loss, human rights issues, and other societal impacts.

The introduction of double materiality is a game-changer for corporate sustainability reporting. Here are some key reasons why it is important:

Holistic Reporting

Double materiality promotes a more comprehensive view of a company’s impact, encouraging transparency about both financial and non-financial factors. This holistic approach ensures that stakeholders, including investors, customers, employees, and communities, receive a fuller picture of a company’s performance and impact.

Enhanced Risk Management

By considering environmental and social impacts, companies can better identify and mitigate risks. For instance, a company heavily reliant on water resources might identify risks related to water scarcity and take steps to manage them, thereby safeguarding both its operations and the surrounding communities.

Improved Accountability

Double materiality holds companies accountable for their environmental and social impacts. This accountability drives companies to adopt more sustainable practices, leading to positive changes in their operations and contributions to global sustainability goals.

Informed Decision-Making

Investors and other stakeholders can make more informed decisions based on comprehensive data. Understanding both the financial and non-financial impacts of a company’s activities enables better assessment of long-term viability and ethical considerations.

While the benefits of double materiality are clear, its implementation poses several challenges:

Data collection and reporting

Collecting accurate data on environmental and social impacts can be complex and resource-intensive. Companies need robust systems and processes to gather, analyze, and report this information.

Standardization

Standardizing the metrics and methodologies for reporting on double materiality is crucial. Consistent and comparable data ensures that stakeholders can accurately assess and compare companies’ sustainability performance.

Regulatory compliance

Adapting to new regulatory requirements under the CSRD requires significant effort. Companies must stay informed about evolving regulations and ensure their reporting practices comply with the latest standards.

1 – Climate change

Climate change is perhaps the most widely recognized planetary boundary.

What is climate change, an expression that is repeated everyday?

Climate change refers to the long-term alteration of temperature and typical weather patterns in a place.

The primary challenge lies in the increase of greenhouse gas emissions, primarily carbon dioxide. These gas emissions result from human activities such as burning fossil fuels (oil, gas, and coal) and deforestation. Real-world examples include the melting of polar ice caps, extreme weather events like hurricanes and droughts, and shifts in agricultural patterns affecting food security.

2 – Biodiversity loss

Biodiversity loss encompasses the decline in the variety and abundance of species within a particular ecosystem. There is not one biodiversity but there are biodiversities.

Human activities such as habitat destruction, pollution, overexploitation, and introduction of invasive species contribute to this phenomenon.

Major challenges include the extinction of species, disruption of ecosystem services like pollination and water purification, and loss of genetic diversity essential for resilience.

Examples include the dwindling populations of iconic species like elephants and tigers, and the collapse of coral reefs due to ocean acidification.

3 – Nitrogen and phosphorus cycle

Excessive nitrogen and phosphorus inputs into ecosystems disrupt natural nutrient cycles, leading to pollution and ecosystem degradation.

Agricultural runoff, industrial processes, and sewage discharge are primary sources of these pollutants. Challenges include eutrophication of water bodies, harmful algal blooms, and the creation of oxygen-depleted dead zones.

Real-world examples include the Gulf of Mexico’s “Dead Zone” caused by fertilizer runoff from the Mississippi River and the decline of fish populations due to oxygen depletion.

4 – Land system change

Land system change involves alterations in land use, such as deforestation, urbanization, and conversion of natural habitats for agriculture or infrastructure development. If you want to read further, have a look at our soil erosion article.

The major challenge is the loss of biodiversity-rich ecosystems and their services, along with the release of stored carbon into the atmosphere.

Examples include the Amazon rainforest’s rapid deforestation for cattle ranching and soy cultivation, leading to habitat loss for countless species and contributing to climate change.

5 – Freshwater use

Freshwater use refers to the extraction and consumption of freshwater resources for various human activities, including agriculture, industry, and of course domestic use.

The challenge lies in unsustainable water extraction rates, leading to water scarcity, depletion of aquifers, and deterioration of freshwater ecosystems.

Real-world examples include the depletion of the Ogallala Aquifer in the United States due to intensive agricultural irrigation and the drying of rivers and lakes worldwide due to over-extraction.

6 – Ocean acidification

This is for me the scariest planetary boundary noun, not because all the others are less important but rather that it could be the title of a scary movie or serie. Authors, directors and producers, be ready to go on this passionate matter, please, sensibilise the whole world!

I am very impacted by ocean acidification given that I eventually discovered the immensity of salty water and its role in the balance of Planet Earth, regarding CO2 absorption, biodiversities, mix of green and blue waters, and the ratio land Vs. salty water.

Ocean acidification is the decrease in pH levels of the Earth’s oceans, primarily caused by the absorption of carbon dioxide from the atmosphere.

This phenomenon poses a significant challenge to marine life, particularly organisms with calcium carbonate shells or skeletons, such as corals and shellfish.

Examples include the bleaching of coral reefs due to increased acidity and the disruption of marine food webs as key species struggle to adapt.

7 – Stratospheric ozone depletion

Stratospheric ozone depletion refers to the reduction of the ozone layer in the Earth’s stratosphere, primarily due to the release of ozone-depleting substances like chlorofluorocarbons (CFCs) and halons.

The major challenge is the increased exposure of living organisms to harmful ultraviolet (UV) radiation, leading to skin cancer, cataracts, and damage to ecosystems.

Real-world examples include the Antarctic ozone hole and the recovery efforts following the implementation of the Montreal Protocol.

8 – Atmospheric aerosol loading

Atmospheric aerosol loading involves the release of fine particles and droplets into the atmosphere. Primarily they come from human activities such as industrial processes, transportation, and biomass burning.

The challenge lies in the impact of aerosols on human health, air quality, and climate change.

Examples include smog in urban areas, which contributes to respiratory illnesses, and the formation of haze from forest fires, affecting visibility and regional climate patterns.

9 – Chemical pollution

Chemical pollution refers to the release of harmful synthetic chemicals into the environment, including pesticides, industrial pollutants, and household chemicals.

The major challenge is the widespread contamination of air, water, soil, and food, posing risks to human health and ecosystems.

Real-world examples include the contamination of water bodies with mercury from industrial processes, leading to bioaccumulation in fish and potential health risks for consumers.

Microplastics are tiny plastic particles less than 5 millimeters (0,19685 inch) in size that come from a variety of sources, including the breakdown of larger plastic items and the shedding of synthetic fibers.

These minuscule fragments pose a significant environmental threat due to their pervasiveness in the environment, where they can be ingested by marine life and enter the food chain, ultimately impacting human health.

Understanding the origins and implications of microplastics is crucial for implementing effective mitigation strategies to combat their widespread presence in ecosystems.

Sources of Microplastics

1. Cosmetic and Personal Care Products
   • Many personal care products contain microbeads, which are washed down the drain and enter water systems. Despite bans in some regions, they remain a significant source in areas without regulations.
2. Synthetic Clothing
   • Washing synthetic textiles releases microfibers into wastewater, which are not fully captured by wastewater treatment plants and end up in water bodies.
3. Plastic Waste
   • Mismanaged plastic waste, such as littering and inadequate disposal, breaks down over time into microplastics through physical, chemical, and biological processes.
4. Industrial Processes
   • Industrial abrasives, such as plastic pellets used for sandblasting, contribute to microplastic pollution when improperly managed.
5. Packaging and Single-use Plastics
   • Items like plastic bottles, bags, and wrappers degrade into microplastics when exposed to environmental conditions.
6. Agricultural and Aquaculture Activities
   • Use of plastic films for mulching, plastic piping, and equipment in aquaculture can degrade into microplastics.

Sources of Microplastics

1. Cosmetic and Personal Care Products
   • Many personal care products contain microbeads, which are washed down the drain and enter water systems. Despite bans in some regions, they remain a significant source in areas without regulations.
2. Synthetic Clothing
   • Washing synthetic textiles releases microfibers into wastewater, which are not fully captured by wastewater treatment plants and end up in water bodies.
3. Plastic Waste
   • Mismanaged plastic waste, such as littering and inadequate disposal, breaks down over time into microplastics through physical, chemical, and biological processes.
4. Industrial Processes
   • Industrial abrasives, such as plastic pellets used for sandblasting, contribute to microplastic pollution when improperly managed.
5. Packaging and Single-use Plastics
   • Items like plastic bottles, bags, and wrappers degrade into microplastics when exposed to environmental conditions.
6. Agricultural and Aquaculture Activities
   • Use of plastic films for mulching, plastic piping, and equipment in aquaculture can degrade into microplastics.

May be the issue would rather be microplastics: Vs. biodiversities?

Why biodiversities? If you want to know ore about biodiversity.

Microplastics in the Environment

1. Marine Environments
   • Microplastics are widely distributed in oceans and seas, affecting marine life. They are ingested by a wide range of organisms, from plankton to whales.
2. Freshwater Systems
   • Rivers and lakes contain microplastics primarily from urban runoff, wastewater effluent, and atmospheric deposition.
3. Soil and Terrestrial Ecosystems
   • Microplastics are found in agricultural soils, often due to the application of sewage sludge and plastic mulch. They can also be transported through wind and water runoff.
4. Atmosphere
   • Microplastics can become airborne and are found in atmospheric dust, leading to deposition in remote areas far from their source.