The Stages of Double Materiality Assessment (DMA)
The double materiality assessment process can be broken down into eight sequential stages, from developing the methodology to external assurance of the results. This breakdown was presented by ESG expert Viktoriia Olisnevych in her presentation "The Stages of Double Materiality Assessment (DMA)" at a webinar held by the Green Transition Office under the Ministry of Economy, Environment and Agriculture of Ukraine.
The first stages lay the groundwork for the assessment itself. The DMA methodology sets out the sequence of stages, the scales, criteria, and materiality thresholds, and the approach to stakeholder engagement. The company then examines the context of its own operations, including its business model and strategy, organizational structure, geography, value chain, and regulatory environment.
The next step is to compile a list of ESG topics for assessment. The standard list of ESRS topics and sub-topics is supplemented with company-specific topics if it does not fully reflect the particulars of the company's operations. Where a conclusion on whether a topic is material or not is already evident from the company's operating context, it can be recorded without a detailed assessment of every possible impact, risk, or opportunity. This is known as a "top-down" approach, introduced by the Simplified ESRS.
Once the list of topics is set, each one is broken down into positive and negative, actual and potential impacts. For every impact, severity is scored on a pre-defined scale covering magnitude, scope, and irremediability, and potential impacts are additionally assessed for likelihood of occurrence. Companies approach this calculation differently in practice. Borregaard, for example, uses separate, detailed scales for environmental and social impacts. At OLB Bank, impact severity is calculated as the arithmetic mean of the relevant criteria, while the final result is derived using a geometric mean.
To assess financial materiality, a list of risks and opportunities is compiled for each defined topic. For each one, the likelihood and potential scale of the financial effect are determined, and the assessment is aligned with the company's overall risk management system. If a company already has an internal risk-scoring scale, it can be adapted for DMA purposes.
Stakeholder engagement shapes the outcome of the DMA. The first group of stakeholders is consulted on the company's impacts. It includes employees, local communities, public authorities, consumers, contractors, civil society organizations, and even nature itself as a "silent stakeholder." The second group consists of users of sustainability reporting: investors, lenders, banks, insurers, business partners, and analysts. Engagement formats can include interviews, surveys, online questionnaires, working meetings, focus groups, and consultations.
Once impact materiality and financial materiality have both been assessed, the company moves on to finalizing the results. At this stage, it is advisable to consolidate the findings into a materiality matrix, showing which topics are material from the standpoint of the company's impact on people and the environment, which are material in terms of impact on the company's own financial position, and which are material on both dimensions at once.
Validation of the DMA results should involve the company's relevant functions. Final conclusions need to be approved at the appropriate management level, since DMA affects the content of the report as well as strategic priorities, risk management, resource planning, and market communication. The next stage is reporting on the DMA results.
"The main practical principle when preparing for assurance is that every material statement in the report on the DMA process must be backed by supporting documentation," said Viktoriia Olisnevych. That covers the methodology, scoring tables, discussion records, evidence of stakeholder engagement, and explanations of key professional judgments.
How challenging these steps are in practice was shown by a survey of four Ukrainian companies that have already gone through DMA. Three relied fully or partly on external consultants, while one carried out the assessment in-house using EFRAG's methodological templates. All four used a materiality matrix, and the process took anywhere from 3 to 12 months. This range was attributed to differences in business models, data availability, team experience, and available resources. On average, companies rated their own results at 7-8 out of ten. The biggest shared challenge was justifying the assessments of impacts, risks, and opportunities; this stage proved the most resource-intensive for all four companies. Three of the four respondents also struggled to integrate DMA into strategic planning, risk management, and broader decision-making.
Survey participants also shared practical advice for companies just starting out: study the standard's requirements in advance, train the team and set up a working group, document data sources at every stage, involve senior management, and clearly substantiate the evidence behind any assigned scores.
The full study is available on the Green Transition Office website: Download (PDF)
The Green Transition Office is an independent advisory body under the Ministry of Economy of Ukraine that helps to implement reforms in the field of green transition, energy and climate policy of Ukraine. The Green Transition Office operates with the financial support of the UK International Development and is implemented by Dixi Group.
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