Double materiality
Under the European Sustainability Reporting Standards, impact materiality and financial materiality are interconnected perspectives. IFRS Sustainability Disclosure Standards use a financial-materiality approach focused on information that could reasonably be expected to affect primary users’ decisions. A matter may be material under one perspective but not the other; apply the applicable framework and jurisdictional requirements.
Worked example
A factory harms a local river. The impact may be material to people and the environment even if management judges its immediate financial effect immaterial; separately assess legal, reputational and other financial effects.
Common mistake
Assuming impact and financial materiality are identical, or assuming a financial effect can be ignored merely because it is not immediate.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |