Dutch regulator offers tips on double materiality as EU requirements loom

July 11, 2024|Written by |Dutch Authority for the Financial Markets

Dutch companies are starting to voluntarily incorporate double materiality into their corporate disclosures ahead of such measures becoming mandatory in the EU, despite finding the new rules to be complex, according to a report by the national financial regulator.

There has been a growing push in recent years to reflect the principle of double materiality – capturing a company’s impact on the environment, as well as the impact of environmental factors on its activities – into corporate sustainability reporting requirements.

The EU’s corporate responsibility sustainability directive (CRSD) will require double materiality analyses from large listed companies from the 2024 financial year, for reports published in 2025 onwards.

Ahead of the changes, the Dutch Authority for the Financial Markets (AFM) said it had conducted research into 29 companies and found that while implementation of the new requirements is proving challenging, “they have already started making the necessary adjustments”.

“This is the cornerstone for proper sustainability reporting. Our review shows that it can be done,” AFM board member Hanzo van Beusekom said in a statement.

The AFM report includes a list of pointers for companies to help ensure they are meeting the double materiality requirements. Recommendations include disclosing the role of the value chain and reporting on the relationship between impact and risk in both the short- and long-term.

“These waypoints are based on the European Sustainability Reporting Standards (ESRS) and a number of good practices that we already see in annual reporting from listed companies,” the AFM said.

The report highlights numerous examples of good practice that Dutch companies have already put in place, including supermarket giant Ahold Delhaize’s reporting of its stakeholder engagement process, and efforts by chemicals company AkzoNobel to disclose risks and impacts along its value chain.

“While this early start is commendable, issuers have yet to take steps to achieve fully transparent ESRS disclosures in their 2024 reporting,” the report notes.

This page was last updated July 11, 2024

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