materiality assessment Guideline: Amendments to EFRAG
Learn about the key changes to EFRAG's materiality assessment guidance (IG1) and create a compliant CSRD report.
- EFRAG published the final version of its materiality assessment guide (IG 1) in May 2024, incorporating changes from extensive public consultation.
- A new section on groups and subsidiaries clarifies how to roll up subsidiary-level assessments to group level.
- The guide now requires objective and supportable evidence as the basis for materiality decisions.
- Companies may include additional frameworks (GRI, ISSB) in their sustainability reports alongside ESRS.
- The EU Commission's May 2026 draft of simplified ESRS also proposes a simplified materiality assessment process, cutting mandatory data points by over 60%.
Significant changes to the materiality assessment guidelines
What is the materiality assessment guide (IG 1)?
EFRAG provides organizations with valuable assistance in implementing the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). One of these CSRD aids is the materiality assessment guide (Implementation Guidance: Materiality Assessment).
The guide provides organizations with step-by-step instructions on how to carry out materiality assessment as well as information on stakeholder involvement and answers to frequently asked questions.
What you need to know about the changes
In May 2024, EFRAG published the final version of the Implementation Guidance (IG 1) on the implementation of the double materiality assessment. Following extensive public consultation and numerous responses, significant changes were made to the draft from December 2023. This article covers the most significant changes and explains why they matter.
On 6 May 2026, the EU Commission put a draft of simplified ("revised") ESRS out for consultation. The draft proposes a simplified materiality assessment process, mandatory data points cut by over 60%, and total data points reduced by over 70%. The feedback period ran until 3 June 2026. A delegated act is expected later in 2026.
The most important changes to the materiality assessment guide
1. New section on materiality at group and subsidiary level
One of the most significant changes is the introduction of section 3.6.3 "Considerations for groups and subsidiaries." This section provides clear guidance on how material topics identified at subsidiary level should be incorporated into the materiality assessment at group level. It ensures that assessments at group level are comprehensive and consistent.
The parent company may perform its materiality assessment using different approaches or a hybrid combination of the following two:
- Top-down approach where a valuation is carried out at group level, involving or consulting the subsidiaries, also in order to obtain the necessary information.
- Bottom-up approach, in which a valuation is carried out at subsidiary level and the results are consolidated at group level.
There is also a hybrid option. The starting point is to identify the impacts that are common across the group (top-down), and then apply the bottom-up approach for impacts that are specific to one or more subsidiaries. These are determined on the basis of the thresholds at group level.
Details can be found in the IG 1 on page 32 (Section 3.6.3) and page 46 (FAQ 13).
2. Clarification on objective and supportable evidence
The final guidance clarifies what constitutes objective and supportable evidence. This ensures that materiality analyses are based on reliable and verifiable data, which increases the credibility and quality of sustainability reporting.
Scientific evidence and quantitative measurements of impacts, risks and opportunities (IROs) are objective proof of their materiality. However, qualitative information is also recognized as valuable, including input from affected stakeholders. Qualitative information can provide relevant context for understanding quantitative measures.
Details can be found in the IG 1 on page 9 (paragraph 28) and page 44 (FAQ 10).
3. Clarification of the architecture of the ESRS
The final version contains important clarifications to the architecture of the ESRS, particularly with regard to including non-ESRS sustainability information in the sustainability statement. These clarifications eliminate potential inconsistencies and allow companies to include additional, relevant information from frameworks such as SASB and GRI Standards. This gives companies the flexibility to publish more comprehensive sustainability information.
Details can be found in the IG 1 on page 9 (paragraph 25).
4. Consideration of mitigation, restitution and preventive measures
Environmental impacts are assessed in the materiality assessment before any mitigation measures are applied.
To reflect this, the terminology was revised in the final version. The terms "gross" and "net impacts" have been replaced by "before mitigation," "compensation," or "preventive measures."
Details can be found in the IG 1 on page 54 (FAQ 23).
5. Special reference to governance considerations
The company's administrative, management and supervisory bodies (AMBs) must be informed about the material impacts, risks and opportunities (IROs) as defined in ESRS 2 paragraph 26a. This means that material IROs should be taken into account when monitoring the company's strategy and risk management process.
There are no changes to the IG 1 draft in the final version, but a direct reference to ESRS 2 GOV has been added on page 24 (section 3.3) and page 26 (paragraph 100).
6. Inclusion of additional sources for the materiality assessment
The final materiality assessment guidelines have been supplemented with additional sources and tools. These include the GRI Standards and the ISSB Standards, which enable a more comprehensive and well-founded analysis. Using these proven frameworks alongside ESRS leads to higher-quality and better-aligned sustainability reports.
Details can be found in IG 1 on page 35 (section 4.1) and page 38 (section 4.4).
This Excel template guides you step by step through the double materiality assessment process and automatically creates your materiality matrix.
Other relevant additions to the materiality analysis guide
Is there a minimum number of material sustainability aspects that must be disclosed?
There is no minimum (or maximum) number of material sustainability aspects prescribed by the ESRS. Materiality depends on the specific facts and circumstances of the company.
When assessing materiality, is the focus on stakeholder opinions or objective evidence?
The materiality assessment should be based as far as possible on objective data and evidence. There is no conflict between considering the opinions of affected stakeholders and objective evidence. The purpose of both is to gain an understanding of the severity and likelihood of impacts in order to present them in the sustainability statement. Depending on the circumstances, the involvement of affected stakeholders may or may not be necessary.
Conclusion on the changes in the materiality assessment guidelines
The changes to the materiality assessment guidance (IG 1) reflect the extensive feedback from public consultation and aim to improve the comprehensibility, applicability and quality of the guidance. These adjustments help companies carry out their materiality analyses more precisely and with a stronger evidence base, leading to higher quality and consistency in sustainability reporting.
The double materiality assessment is at the heart of CSRD. It is also an important strategic tool for the future viability of companies.
Frequently asked questions about the EFRAG materiality assessment guidelines
What is the EFRAG IG 1 materiality assessment guide?
IG 1 is EFRAG's Implementation Guidance on double materiality assessment under CSRD. It provides step-by-step instructions, covers stakeholder involvement, and answers frequently asked questions. The final version was published in May 2024 after extensive public consultation.
What are the main changes in the final version of IG 1?
The most significant additions are a new section on group and subsidiary materiality assessments, a clarification that materiality must be based on objective and supportable evidence, expanded references to GRI and ISSB standards, and revised terminology around mitigation measures (replacing "gross/net impacts").
How do groups and subsidiaries handle the materiality assessment?
The parent company can use a top-down approach (assessment at group level, subsidiaries consulted), a bottom-up approach (assessments at subsidiary level consolidated upward), or a hybrid of both. Section 3.6.3 of IG 1 sets out the details.
Will the materiality assessment process change with the revised ESRS?
Yes. The EU Commission's May 2026 draft of simplified ESRS proposes a simplified materiality assessment, reducing mandatory data points by over 60%. A final delegated act is expected later in 2026. Until then, the current ESRS and IG 1 guidance remain in force.
