AMF, the French Financial Markets Authority assessed a sample of ESRS statements published by French listed companies under the CSRD for financial year 2024.
This report is very valuable as it gives you information on what the financial marketplace is expecting from your sustainability reports. We will send you the information regrouped by subject. Below you will a summary of the key findings related to the Double Materiality Assessment (DMA) process (ESRS 1 & ESRS 2 IRO-1).
Presentation of the DMA process (in IRO-1)
Overall, a heterogeneity was noted with regard to the level of detail and degree of compliance with the required data points on the presentation of the DMA process (IRO-1 data points).
Some companies provide detailed explanations per topic while others present more generic information on how the process was conducted.
Compliance with all IRO-1 data points was generally partial. For instance, a large number of companies do not disclose the topical IRO-1 associated with their non-material topics, although these are always to-be disclosed data points.
Specific information on the DMA process related to social topics is provided only in very rare cases.
Input parameters, sources/assumptions
Some companies provide incomplete or boilerplate disclosures on the input parameters used (for instance, only focusing on material topics or providing broad references applicable to all topics such as “industry benchmarks”).
Others disclose very specific information on the sources/assumptions that informed the DMA process.
For social-related topics information on input parameters is often not specified, contrary to other environmental topics.
Some companies provided interesting contextual information on the methodology used in relation to certain materiality criteria. For example, they explain that
- the “scale” of the impacts is assessed in relation to % of people concerned vs. environmental parameters, or
- pollution impacts’ severity is assessed via concentration metrics vs. volume metrics only.
Duplicating the content of ESRS 1
Many provide extensive explanations on the definition of impact materiality and financial materiality and the different criteria that must be considered in application of the ESRS (often by duplicating the content of ESRS 1).
These elements can be useful for non-expert readers in the context of the first ESRS application.
However, in some cases, the IRO-1 disclosures have little informative value as they reproduce the content of ESRS 1 with no or few methodological explanations specific to the issuer (for instance, only boilerplate disclosures stating that judgements were applied).
Therefore, it is sometimes difficult to understand how the two processes for impact and financial materiality are designed in practice.
Unclear distinction between a risk and an impact
In some cases, the distinction between a risk and an impact is not clear due to misuse of terminology (e.g. use of the term « risk » associated with the description of an impact) or because the company explains that the same materiality threshold is used for both impact and risks.
Information on materiality thresholds
Information on impact materiality thresholds is very often generic or missing, limiting the understanding of the DMA methodology used and demonstrating the need for further guidance in this area.
Example of generic disclosures are:
- boilerplate disclosure on the existence of a threshold
- theoretical quantitative threshold (such as: “on a scale from 1 to 5 in terms of materiality score, the impact materiality thresholds is set at 3”), which does not inform on the parameters specific to the entity that define materiality.
Companies may have had difficulties identifying relevant thresholds at consolidated level and only defined generic thresholds at macro level.
A focused assessment of E2 and E4 disclosures showed that the information on how impact thresholds are determined is generally not provided at the topic-level although materiality depends on the nature of topics.
Good practices
Conducting an assessment at the level of IRO (vs. at the higher level of topics only) is important since companies should present their IROs and how they manage them, in line with CSRD objectives.
It is key to maintain the assessment of actual and potential impact as well as risks before taking into consideration mitigation efforts, to provide a complete overview of the company’s sustainability profile (meaning not a net assessment).
The most useful data points in IRO-1 are information on the input parameters and their link with the materiality thresholds specific to sustainability topics, as well as information on the nature of financial thresholds (several good practices were identified in 2025).
These disclosures are most useful when the company specify which inputs (sources, tools) were used in relation to a particular sustainability topic (e.g. mention of databases such as UNEP’s ENCORE, WWF’s Water Risk Filter in relation to specific environmental topics or mention of specific rating tools for the business conduct topic). Many companies also cited the Aqueduct water risk tool from the Word Resources Institute to assess water-related risks.
Good practices include the following information in IRO-1:
- a brief explanation on how criteria for impacts or risks are assessed, with concrete examples of input parameters taken into account (e.g. for the “scope” criteria: % of sites or financial expenditures related to the impact)
- information on the difference between the assessment methodology for risks and for opportunities (cases were rare)
- specific information on impact vs. financial materiality thresholds (see below on thresholds)
- precise explanations on the alignment or partial alignment between financial materiality assessment and the ERM (enterprise risks management) process.
Good practices already observed for financial thresholds include:
- Explaining the articulation with the company’s overall risk management process and ESRS thresholds (either to explain alignment or differences).
- However, some companies provided boilerplate explanations on the alignment with the financial statement thresholds.
- Specifying the nature of the thresholds used (e.g. based on EBITDA or revenue) or even giving the threshold itself: e.g. “critical if >27% of EBITDA”, “threshold set at a probable risk of €50 million.
Limits and difficulties identified by companies or auditors on the DMA
As a good practice, several companies explicitly report challenges related to the execution or scope of their materiality assessment
However, the consequences of these difficulties are not always clear (reliability of data? limited scope/coverage? etc.) and the reasons for limitations were not always given.
Examples of challenges and limits identified by companies are:
- Difficulties in defining materiality thresholds
- Lack of value chain data or reliability of value chain data. As a consequence, several companies focused their DMA this year on their own operations and tier-1 value chain – a company mentions in particular the lack of upstream data to assess negative biodiversity impacts and water-related IROs.
- Difficulties in quantifying sustainability risks (translating qualitative risks into measurable financial or impact terms).
- Risks associated with certain topics were not assessed (limited scope/coverage of the DMA assessment)
Very few auditors specifically point out limits in the company’s DMA process.
Source: https://www.amf-france.org/sites/institutionnel/files/private/2025-10/amf_study_csrd_reporting_the_way_forward_2025.pdf
When you use Cleerit ESG to structure and document your IROs and double materiality assessment you increase both ESRS compliance and make CSRD useful for your business as it will help you identifying issues material for your resilience and competitiveness. Contact us if you want to know more >>>