CSRD Materiality Assessment: Step-by-Step for Netherlands and DACH Companies

Introduction

The Corporate Sustainability Reporting Directive (CSRD) is the most significant shift in corporate sustainability regulation in Europe in a generation. For Dutch and German companies in scope for Wave 1, the materiality assessment is the foundation of everything — get it wrong, and every subsequent piece of your disclosure is built on sand.

This guide walks you through the materiality assessment process step by step, with specific guidance on what European regulators and assurance providers are looking for.

Understanding Double Materiality

CSRD introduces the concept of double materiality — which requires companies to assess materiality from two directions simultaneously:

Impact materiality (Inside-out): How does your business affect society and the environment? This includes your emissions, your impact on communities, your supply chain labour practices, your product safety record.

Financial materiality (Outside-in): How do sustainability topics — climate change, biodiversity loss, regulatory change, social trends — affect your business financially? What are the risks to your revenue, costs, assets, and financial position?

A topic is material if it meets the threshold for either direction — not both. This 'or' logic trips up many companies who assume they only need to report on topics that are financially material.

Step 1: Define Your Value Chain

Before you can assess what's material, you need to define the scope of your analysis. CSRD requires you to consider impacts, risks, and opportunities across your entire value chain — upstream (your suppliers and their suppliers) and downstream (your customers, end users, and end-of-life disposal).

Practical approach: map your top 20 upstream suppliers and your primary downstream use cases. You don't need to capture every tier of the supply chain in Year 1 — a documented, reasonable approach that improves annually is what ESRS requires.

Step 2: Identify Potential Material Topics

Use the ESRS topic list as your starting framework. ESRS covers Environment (E1–E5: climate change, pollution, water, biodiversity, circular economy), Social (S1–S4: own workforce, workers in value chain, affected communities, consumers), and Governance (G1: business conduct).

For each topic, gather preliminary evidence: regulatory requirements in your sector and geography, industry benchmarks, peer company disclosures, and stakeholder input.

Step 3: Stakeholder Engagement

CSRD explicitly requires stakeholder engagement as part of the materiality process. This doesn't mean an annual survey. It means a structured process of identifying your affected stakeholders (employees, customers, suppliers, local communities, investors, lenders, NGOs), engaging them on their sustainability priorities and concerns, and documenting their input in your materiality methodology.

Minimum viable approach for Year 1: interviews with 5–10 key stakeholders per group, plus a broader survey. Document the methodology, the participants, the questions asked, and how the input influenced your materiality conclusions.

Step 4: Score and Prioritise

For each potential topic, assess: the severity and likelihood of your impact (for impact materiality) and the financial magnitude and probability of the risk or opportunity (for financial materiality). Use a consistent scoring methodology — typically a 1–5 scale for both severity and likelihood, plotted on a materiality matrix.

Document your scoring methodology and the assumptions behind each score. This documentation is what your assurance provider will review.

Step 5: Validate and Approve

The materiality assessment must be reviewed and approved by the board or management body before being finalised. Document this approval — who approved it, when, and what governance process was followed.

Step 6: Translate to Disclosure

Your material topics determine what you disclose in your CSRD report. For each material topic, you need to identify the relevant ESRS disclosure requirements and data points, and build the data collection systems to populate them.

Common Mistakes That Fail Assurance

The mistakes we see most frequently are: assessing impact and financial materiality as one combined exercise (they must be assessed separately and then combined); not engaging stakeholders (assurance providers check for evidence of engagement); not documenting the methodology (a materiality matrix without a documented process is worthless); and treating the assessment as a one-time exercise rather than an annual review.

Getting Support

Chabil Consulting runs CSRD materiality assessments for Dutch and German companies, typically completing in 3–4 weeks. We use the Carbon Clarity Score™ (CCI) as the baseline assessment tool, aligned to CSRD and EcoVadis methodology. Contact us at hello@chabilconsulting.com.