Double Materiality Assessment under the Revised ESRS (2026)

The revised European Sustainability Reporting Standards are final. On 3 July 2026 the European Commission adopted them as Delegated Regulation (EU) 2026/1563, and on 21 September 2026 they were published in the Official Journal. Most of the attention has gone to the datapoint cuts — we covered those in our article on EFRAG's 2026 draft list of ESRS datapoints. But the changes with the biggest practical effect sit one step earlier: in how you run the double materiality assessment (DMA) that decides which of those datapoints you report at all.

In short: Double materiality stays mandatory under the revised ESRS, but the process becomes more proportionate. Companies may reach topic-level conclusions top-down (ESRS 1 §27), are not required to assess every possible IRO and may rely on information available without undue cost or effort (§32), can assess the value chain with sector or regional data (§33), and only need to update the DMA when significant changes occur (§34). In return, the rules are stricter on gross vs. net assessment (§43), positive impacts (§44) and not disclosing immaterial information (§24). The revised ESRS are mandatory for financial years starting on or after 1 January 2027.

This article explains each change, compares the 2023 and 2026 rules side by side and answers the question most sustainability teams are asking right now: do we have to redo our DMA? If you need a refresher on the basics first, read our step-by-step guide to the CSRD double materiality assessment.

Timeline: from EFRAG advice to binding standards

Date	Milestone
26 Feb 2025	Commission proposes the Omnibus simplification package
3 Dec 2025	EFRAG delivers its technical advice on the simplified ESRS
26 Feb 2026	Omnibus I Directive (EU) 2026/470 published — CSRD scope narrowed to companies with more than 1,000 employees and €450 million net turnover
3 Jul 2026	Commission adopts the revised ESRS (press release)
21 Sep 2026	Revised ESRS published in the Official Journal as Regulation (EU) 2026/1563
10 Nov 2026	Revised ESRS enter into force
FY 2026	Optional: 2023 ESRS, revised ESRS in full, or 2023 ESRS with reliefs (incl. top-down DMA)
FY 2027	Revised ESRS mandatory for all companies in scope

For financial year 2026, the delegated act gives companies a choice. They can keep applying the 2023 ESRS, switch to the revised ESRS in full, or apply the 2023 ESRS with eight specific reliefs — two of which concern the DMA directly: the top-down approach and the "undue cost or effort" and value chain reliefs. Whichever option you choose, you have to state it in the sustainability statement.

What stays the same

Before looking at the changes, it is worth being clear about what has not changed:

• Double materiality is still the foundation. A sustainability topic is material if it meets the definition of impact materiality, financial materiality, or both (the definition now sits in the ESRS glossary).
• Severity criteria are unchanged. Actual negative impacts are assessed on severity — scale, scope and irremediable character; potential impacts on severity and likelihood. For potential negative human rights impacts, severity still takes precedence over likelihood (ESRS 1 §40).
• Impacts, risks and opportunities (IROs) remain the unit of analysis. If you need a primer, see our explainer on IROs under the CSRD.
• Time horizons are unchanged: short term equals the reporting period of the financial statements, medium term up to five years, long term more than five years.
• Financial materiality is still based on the likelihood and potential magnitude of financial effects (§50). No thresholds are prescribed — you set and justify your own.
• The DMA has to be described in the sustainability statement (ESRS 2 IRO-1), and auditors will still review it under limited assurance. Note a small restructuring: the description of your material IROs now sits in ESRS 2 IRO-2, while SBM-3 focuses on their interaction with strategy, business model and financial effects.

The 9 most important changes to the DMA

1. The top-down approach is explicitly allowed

The most visible change. Under revised ESRS 1 §27, a company "may derive a conclusion, without further assessment, on the materiality or non-materiality of its impacts, risks or opportunities for a topic or sub-topic", based on an analysis of its strategy and business model, its sectors, geographies and value chain. EFRAG and the Commission call this the "top-down" approach.

In practice: a software company does not need to score a dozen IROs to conclude that biodiversity is not material, and a steel producer does not need an elaborate scoring exercise to conclude that climate change is. According to the application requirements, qualitative considerations can be sufficient, and the conclusion can be drawn at topic level.

Two limits apply. Where the outcome is not evident, a specific assessment is still required (bottom-up, §28). And you can combine both approaches topic by topic — top-down for the obvious cases, a detailed IRO assessment for the borderline ones.

2. No exhaustive search for every possible IRO

Revised ESRS 1 §32 states that the DMA is based on "reasonable and supportable information" available at the reporting date "without undue cost or effort", and that a company is "not required to assess every possible impact, risk or opportunity" — only the areas where material IROs are likely to arise. The application requirements add that quantitative scoring is not necessarily required.

This ends the "long list of 300 IROs" approach some first-wave reporters took. What remains necessary is a defensible rationale for where you looked and where you did not.

3. Value chain assessment without direct supplier input

Under §33, the value chain part of the DMA can be performed "without direct input from value chain actors", using average regional data, sector data or generally available information. This is the DMA counterpart to the value chain cap: since Delegated Regulation (EU) 2026/1560, in-scope companies may not require more from value chain partners with up to 1,000 employees than the Voluntary Standard (VS) contains. We explain the cap and the VS in detail in VSME vs ESRS after Omnibus.

4. New, explicit rules on gross vs. net assessment

This is the change most likely to require adjustments to existing assessments. The 2023 ESRS left open whether impacts should be assessed before or after mitigation. Revised ESRS 1 §43 now settles it:

• Actual negative impacts are assessed as they actually manifested. Mitigation from previous periods is taken into account; remediation during the reporting period is not.
• Potential negative impacts may only be reduced by prevention and mitigation actions that are already implemented and can reasonably be assumed to be effective. Planned actions and policies that only announce future measures are not considered.

If your 2024 or 2025 DMA scored potential impacts net of planned measures, those scores need a second look.

5. Positive impacts are assessed on their own

Revised ESRS 1 §44: positive impacts are assessed on their own, without netting against negative impacts. And two things explicitly do not count as positive impacts: remediating your own negative impacts and simply complying with the law.

6. The ESRS topic list becomes non-binding guidance

The list of sustainability matters (formerly ESRS 1 AR 16) moves to Appendix A of ESRS 1 and is now non-binding guidance — "one of the inputs" to the DMA. Sub-sub-topics are gone. EFRAG describes the list as "no longer mandatory to consider". It remains a useful checklist, but you no longer have to document a conclusion for every single line. One detail to update in your templates: ESRS E3 is now simply called "Water" — marine resources moved to ESRS E5.

7. A stricter materiality-of-information filter

The revised ESRS distinguish primary users and other users of the sustainability statement (§23). And §24 now reads that a company "shall not disclose" information that is not material — the Commission tightened EFRAG's softer "is not required to" wording. Clearly labelled supplementary information remains possible (§§107–108). A new chapter on fair presentation (§§19–21) clarifies that the statement is judged as a whole, not disclosure by disclosure.

This also affects ESRS 2. In 2023, ESRS 2 applied irrespective of the materiality assessment. The revised text says the ESRS 2 disclosure requirements are "likely to result in material information for all undertakings" — a subtle but real shift that KPMG suggests may require revisiting existing ESRS 2 judgements.

8. Stakeholder engagement can build on due diligence

Engagement with affected stakeholders remains "a key input" (§42). But the application requirements clarify that engagement conducted as part of your due diligence processes is sufficient — no separate engagement process for the DMA is needed. Civil society organisations, NGOs and trade unions can act as proxies for affected stakeholders, and the application requirements note that nature may be considered a "silent" affected stakeholder. ESRS 2 IRO-1 only asks you to describe stakeholder consultation if you consult. Our article on stakeholder analysis in double materiality shows how to organise this proportionately.

9. Updates only when something significant changes

Revised ESRS 1 §34: at each reporting date, consider whether significant changes have occurred — in the business, the value chain or the assessment methodology — and update the DMA only if they have. ESRS 2 IRO-1 asks you to disclose when you last updated your assessment and to avoid boilerplate descriptions.

Other relief worth knowing:

• If you conclude that climate change is not material, IRO-2 §37(b) now only requires the basis for that conclusion — no longer the detailed, forward-looking analysis demanded in 2023.
• Anticipated financial effects can be omitted in quantitative form under certain conditions, with extended phase-ins (wave-one companies: all anticipated financial effects may be omitted before FY2028, quantitative ones before FY2030).
• Acquisitions can be left out of the DMA and the sustainability statement for one year.

2023 ESRS vs. revised ESRS: the DMA side by side

Aspect	2023 ESRS	Revised ESRS (2026)
Double materiality	Required	Required
Approach	Implicitly bottom-up, IRO by IRO	Top-down allowed (§27), bottom-up (§28), or combined per topic
Scope of IRO search	Not limited; topic list to be considered	No need to assess every possible IRO; undue cost or effort (§32)
Topic list	ESRS 1 AR 16	Appendix A, non-binding guidance; no sub-sub-topics; E3 renamed "Water"
Value chain	Expected direct engagement where possible	Sector/regional data acceptable (§33); value chain cap
Gross vs. net	Not specified	Implemented, effective mitigation only (§43)
Positive impacts	Not specified	Assessed on their own, no netting (§44)
Non-material information	Not required to disclose	Shall not disclose (§24), supplementary info if flagged
ESRS 2	Always applies	Likely material for all undertakings
Stakeholder engagement	Expected as part of the DMA	Due diligence engagement sufficient
Updates	Not explicitly regulated	Only if significant changes (§34); disclose date of last update
Climate not material	Detailed explanation incl. forward-looking analysis	Basis for the conclusion
Materiality matrix	Not required	Not required

Do you have to redo your double materiality assessment?

No — not automatically. There is no requirement to repeat a DMA because the standards changed. The trigger is §34: significant changes in your business, value chain or methodology. KPMG puts it plainly: annual updates are not needed unless circumstances or management judgement warrant them.

But "no full re-do" does not mean "no review". If you are a wave-one reporter moving to the revised ESRS for FY2026 or FY2027, check your existing assessment against these five points:

1. Gross vs. net: were potential impacts reduced by planned rather than implemented measures?
2. Positive impacts: were positive and negative impacts netted, or were compliance measures counted as positive impacts?
3. Information filter: does your statement contain information that is not material and should now be dropped?
4. ESRS 2: are your ESRS 2 judgements consistent with the new "likely material" logic?
5. Effort: can you replace a disproportionate bottom-up scoring of obviously material or obviously immaterial topics with a documented top-down conclusion — and save effort in the next cycle?

If you are a first-time reporter for FY2027 (former wave two, now above 1,000 employees and €450 million turnover), you get to design your DMA for the new rules from the start. Our worked double materiality assessment example shows what a proportionate, audit-ready assessment looks like in practice — and our DMA document checklist tells you which inputs to collect first.

What happens to EFRAG IG 1?

EFRAG's Implementation Guidance on materiality assessment (IG 1, May 2024) has not been withdrawn, but it was written for the 2023 standards. In July 2026, EFRAG stated that implementation guidance for the revised ESRS is not yet available, and its 2026 work plan indicates that IG 1 may be reviewed and updated. Until then, use IG 1 as background for concepts such as severity and likelihood — but where it conflicts with the revised ESRS 1 text (for example on gross vs. net), the standard prevails.

What the revised ESRS mean for your DMA workflow

The direction of travel is clear: less mechanical scoring, more documented judgement. That sounds like it makes structured tools less important. In practice, the opposite is true. A top-down conclusion is only defensible if you can show why you reached it; "no exhaustive search" is only acceptable if your auditor can follow where you looked; and an update "only when significant changes occur" requires a clear record of what you concluded last time.

That is what Materiality Master is built for. You can assess IROs in detail where the outcome is not evident, set and document your own materiality thresholds, attach evidence and comments to every judgement, and rely on the audit trail to show when and why anything changed. Once your material topics are set, the ESRS Data Points Mapping Tool translates them into the specific datapoints you need to report.

Consultancies running assessments for several clients can find out more on our page for consultants.

Key takeaways

• The revised ESRS (Regulation (EU) 2026/1563) are mandatory from FY2027; for FY2026, companies can choose between old and new rules or use specific reliefs.
• Double materiality remains mandatory — the definition, time horizons and the need to describe the process are unchanged.
• The process becomes more proportionate: top-down conclusions (§27), no exhaustive IRO search (§32), value chain via sector data (§33), updates only on significant change (§34).
• New rigour where it matters: gross vs. net (§43), positive impacts without netting (§44), and a "shall not disclose" filter for immaterial information (§24).
• No automatic re-do of existing DMAs — but review them against the five points above.
• EFRAG IG 1 is still available but not yet updated for the revised standards.

For the bigger regulatory picture — who is still in scope after Omnibus and what applies to everyone else — read VSME vs ESRS: which standard applies after Omnibus.