Key sustainability metrics for assessing double materiality

As sustainability reporting matures, businesses are increasingly required to disclose more than financially material data. They must also account for their broader impact on society and the environment. This dual focus lies at the heart of the double materiality assessment (DMA). Whilst DMA is a central component of the EU’s Corporate Sustainability Reporting Directive (CSRD), whether CSRD now applies to your business or not, it is a fundamental tool for all businesses committed to enhancing ESG performance and transparency.

Below, we explore the key sustainability metrics organisations should integrate into their double materiality assessments, the importance of high-quality data, and how to ensure reporting is both compliant and strategically valuable.

Understanding sustainability metrics in double materiality

Double materiality recognises two dimensions of materiality: financial materiality, which concerns how sustainability issues impact a company’s economic performance, and impact materiality, which addresses how an organisation’s operations affect society and the environment.

This dual lens aligns corporate reporting with sustainability and commercial strategies, evolving societal expectations and regulatory requirements. Under the CSRD and the European Sustainability Reporting Standards (ESRS), some companies must assess and disclose both dimensions, but in reality all companies committed to a sustainability strategy need the analysis a DMA provides.

Financial vs. impact materiality

Financial materiality focuses on how environmental, social, and governance risks and opportunities influence a company’s long-term value. For example, carbon pricing or climate-induced supply chain disruptions may have significant financial consequences.

Impact materiality, by contrast, considers an organisation’s broader footprint, how its operations influence ecosystems, communities, and human rights. This includes emissions, water use, labour standards, and biodiversity loss.

Understanding the interplay between these perspectives is essential. Double materiality in business strategy provides a comprehensive framework for managing risk, meeting stakeholder expectations, and driving sustainable growth.

The role of reliable data in sustainability reporting

To develop a robust double materiality assessment, organisations must embed both quantitative and qualitative sustainability performance indicators into their strategic processes. This integration requires aligning ESG priorities with core business goals and stakeholder concerns.

Key steps:

• Identify material topics: Conduct stakeholder mapping and sector-specific analysis to define the ESG themes most relevant to your operations and impact.
• Define KPIs: Establish measurable sustainability metrics that align with your operating model and value chain.
• Undertake materiality scoring: Evaluate the likelihood and magnitude of identified issues across financial and impact dimensions.
• Incorporate findings into strategy: Use the insights to inform governance structures, capital allocation, and operational decisions.

Ikano Insight facilitates this process through ESG advisory services, including Double Materiality Assessment support. They are also an implementation partner for IBM Envizi, a leading platform for embedding sustainability metrics for business strategy across all levels of the organisation.

The role of reliable data in sustainability reporting

The effectiveness of your double materiality assessment metrics depends on the integrity, transparency, and auditability of the underlying data. High-quality data enables benchmarking, enhances decision-making, and strengthens regulatory compliance.

Common challenges

• Fragmented systems: ESG data is often dispersed across departments, regions, and formats.
• Verification gaps: Without rigorous data validation, organisations risk inaccurate disclosures and reputational damage.
• Inconsistent frameworks: Diverse taxonomies and methodologies hinder comparability and progress tracking.

Capturing and consolidating financial and impact materiality metrics across the organisation and its value chain is essential for actionable insights and regulatory alignment.

Key sustainability metrics for double materiality

The following sustainability metrics for double materiality span environmental, social, and governance domains:

Environmental sustainability metrics

Carbon footprint and emissions metrics:

• Total GHG emissions (Scope 1, 2, and 3), carbon intensity, progress against net-zero targets.
• Financial materiality: Regulatory exposure, investor pressure.
• Impact materiality: Contribution to climate change.

Energy usage and efficiency metrics:

• Energy consumption per output unit, renewable energy adoption.
• Supports both cost optimisation and decarbonisation.

Water usage and sustainability metrics: 

• Water withdrawal, recycling rates, and stress-zone usage.
• Material for sectors with high water dependence.

Biodiversity impact metrics:

• Land use, ecosystem disruption, and reliance on ecosystem services.
• Increasingly scrutinised by investors and regulators.

Waste and circularity indicators:

• Total waste generated, hazardous waste treatment, recycling performance.
• Reflects operational efficiency and resource stewardship.

Social sustainability metrics

Human rights and social impact metrics

• Grievance mechanisms, anti-child labour policies, supplier audits.
• Integral to stakeholder trust and brand reputation.

Diversity, equity and inclusion (DEI) 

• Representation by gender and ethnicity, pay equity, leadership diversity.
• Reinforces social licence to operate and talent retention.

Health and safety

• Lost-time incidents, injury rates, employee wellbeing programmes.
• Key to operational resilience and employer responsibility.

Community impact

• Local investment, social value creation, community engagement.
• Demonstrates corporate commitment to societal outcomes.

Governance and value chain metrics

Supply chain sustainability metrics 

• Supplier ESG performance, ethical sourcing practices, due diligence procedures.
• Particularly relevant under the forthcoming Corporate Sustainability Due Diligence Directive (CSDDD).

Governance and transparency

• ESG oversight, anti-bribery policies, tax and financial disclosures.
• Reinforces accountability and strategic coherence.

Data sources & tools for measuring sustainability metrics

A rigorous double materiality assessment relies on a diverse array of high-quality data sources.

Internal sources

• Utility records, IoT data, building systems
• HR and procurement platforms, travel logs
• Supplier audits and performance data

External sources

• Government databases and regulatory submissions
• Academic and NGO studies
• ESG benchmarks and third-party ratings
• Industry-specific frameworks (e.g., GRI, SASB, TNFD)

Tools & technologies

• ESG management systems like IBM Envizi for data consolidation and reporting
• Emissions accounting software
• AI-based analytics for forecasting and scenario analysis

Ikano Insight’s analytics solutions enable businesses to extract value from sustainability data, driving compliance, performance, and innovation.

Best practices for assessing and reporting sustainability metrics

1. Set Relevant, measurable KPIs

Avoid generic metrics and tailor indicators to your specific risks, impacts, and stakeholder expectations.

2. Conduct regular audits

Data audits and third-party assurance help ensure accuracy, reduce greenwashing risks, and increase stakeholder confidence.

3. Embrace predictive modelling

Scenario planning tools can support long-term resilience by testing future risks and opportunities under various assumptions.

4. Engage stakeholders continuously

Employees, investors, and community members offer vital insights into materiality. Stakeholder dialogue should inform metric selection and reporting priorities.

5. Align with regulatory frameworks

Make sure your assessment follows applicable frameworks, such as ISSB, GRI, ESRS, etc. This ensures consistency and comparability in your disclosures.

Conclusion

ESG metrics for double materiality are no longer a “nice-to-have”, they are a business imperative. They allow organisations to quantify their impact, comply with evolving regulations, and make informed decisions that benefit both their bottom line and the planet.

Whether you’re focused on financial materiality and sustainability performance or
broadening your view to include impact materiality in sustainability reporting,
success depends on data: the ability to collect it, trust it, and act on it.

With the right tools, advisory support, and commitment to transparency, your
business can transform ESG obligations into opportunity. At Ikano Insight, we
help companies build that bridge, simplifying complexity, enabling clarity, and
advancing a truly sustainable future.

Written by Peter Jones

Head of Sustainability

Skilled in sustainability strategy and analytics, Peter is passionate about steering organisations toward a sustainable future, leveraging strategic vision and extensive experience for global betterment and bottom-line success.