Sustainability reporting under the EU Corporate Sustainability Reporting Directive (CSRD), using the European Sustainability Reporting Standards (ESRS), is based on a particular materiality concept. Ignoring which companies fall within its scope and when, which materiality concept underpins this reporting?

Correct answer: C) Double materiality, considering both the company's impacts on people and the environment and the sustainability matters that affect the company's financial position

Explanation

The CSRD and ESRS use double materiality. A sustainability matter is material if it is material from an impact perspective (the company's effects on people and the environment, 'inside-out'), from a financial perspective (effects on the company's cash flows and financial position, 'outside-in'), or both. This differs from the ISSB standards, which focus on financial materiality for investors. Materiality is not set as a fixed percentage of profit.