Double Materiality and ESG for Banks

Elisa Menicucci ()
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Elisa Menicucci: University of Roma Tre

Chapter Chapter 5 in ESG Integration in the Banking Sector, 2025, pp 85-106 from Springer

Abstract: Abstract The chapter explains what exactly is double materiality, especially in the banking sector to achieve CSRD compliance. According to the CSRD, companies have to undertake a double materiality assessment to identify which sustainability matters are most material for an efficient allocation of the resources and for shaping bank strategy. The discussion starts from the difference between materiality and double materiality. Double materiality builds on the historical accounting and auditing convention of materiality and it takes this concept one step further by considering that companies are materially vulnerable to environment-related events and risks as well as they materially contribute to environmental issues. Hence, the ESG-related impacts on the bank can be material and the impacts of a bank on the ESG dimensions matter for materiality. These two perspectives have also been commonly referred to as “outside-in” materiality and “inside-out” materiality, respectively. On the one hand, banks have an impact on people and the environment (the inside-out view). On the other hand, sustainability-related developments and events create (new) risks and opportunities for banks (the outside-in view). Since double materiality is becoming a powerful concept to understand and put into practice the ESG strategy, the chapter describes double materiality, its rationales, proposals and challenges as well as the implications for implementing and realizing the ESG dimensions in banks. The chapter also shows some of the challenges in undertaking a double materiality assessment and it introduces some of the strategic implications for banks.

Keywords: Materiality; Double materiality; Stakeholder engagement; Banking sector (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-81677-2_5

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DOI: 10.1007/978-3-031-81677-2_5

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