Market Trends: Linking Materiality Assessments To Risk Methodologies

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Executive Summary

ESG and sustainability factors have become drivers of material risk, shaping operational resilience, corporate reputation and compliance posture. Rising stakeholder scrutiny over environmental degradation and labour practices is eroding customer trust and tightening access to capital. Meanwhile, climate-related disruptions and social risks – ranging from extreme weather events to supply chain exploitation – are climbing up enterprise risk registers as they increasingly threaten business continuity. The EU Omnibus Package mandates double materiality assessments (DMAs) to assess this two-way exposure: how sustainability factors affect business performance, and how corporate activities impact the environment and society. Though the European Financial Reporting Advisory Group (EFRAG) encourages firms to integrate DMAs into enterprise risk management (ERM) frameworks, practical guidance on integration remains limited. This report outlines the resilience imperative for integrating DMAs into ERM frameworks and highlights the tools available to support materiality assessments.
Summary for decision-makers
Double materiality assessments (DMAs) integrate ESG and financial perspectives, equipping firms with a critical tool for resilience
Converging ESG and operational pressures are forcing firms to rethink risk through a double materiality lens
When left unassessed and unmitigated, ESG and sustainability risks translate into financial and operational consequences
Risk assessments reveal acceptable thresholds for ESG risk by linking external pressures to internal value creation
Figure 1. DMAs reveal the ESG impacts and financial materiality of ESG and sustainability risks
Figure 2. Industry breakdown of ESG risks and the corresponding material impacts for chief risk officers (CROs)

About the Authors

Mahum Khawar

Mahum Khawar

Analyst

Mahum is an Analyst at Verdantix, specializing in AI integrations within risk management software and operational resilience. She advises technology buyers and software vendor...

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Katelyn Johnson

Katelyn Johnson

Senior Manager

Katelyn is a Senior Manager at Verdantix, specializing in enterprise risk management and external risk and resilience. She helps executives navigate today’s evolving ris...

View Profile

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