What 'double materiality' means and why it is crucial for SMEs

Financial materiality focuses on how environmental and social issues affect the economic position and business continuity of the company. For example, climate change can generate physical risks (e.g. damage to plants) or transitional risks (e.g. new environmental regulations), with direct impacts on costs and competitiveness. The materiality of impact, on the other hand, assesses the effects the company generates on the outside world, such as CO₂ emissions, natural resource use or working conditions in the supply chain. Both perspectives must be analysed through a structured and documented materiality analysis process to identify the issues that are truly significant for the company and its stakeholders. This process is at the heart of reporting according to the European Sustainability Reporting Standards (ESRS).

Small and medium-sized enterprises (SMEs) may mistakenly perceive double materiality as a practice reserved for large groups. On the contrary, the principle is also crucial for SMEs, especially those operating in supply chains of companies subject to the CSRD or wishing to access sustainable finance. Integrating dual materiality analysis into business strategy enables SMEs to anticipate future obligations, differentiate themselves in the market and strengthen their reputation. Moreover, many opportunities, such as calls for tenders, public incentives and rating ESG, are now tied to demonstrating environmental and social responsibility. Understanding and applying the concept of dual materiality therefore allows SMEs to position themselves as reliable players in a rapidly changing business environment.

To effectively implement dual materiality, SMEs must first conduct a dual-perspective materiality analysis, involving internal and external stakeholders (customers, suppliers, employees, local communities). Subsequently, it is crucial to define a clear ESG governance, assigning measurable responsibilities and objectives. The use of digital tools for data collection and processing can simplify the process and ensure transparency. In addition, it is advisable to train internal resources or rely on expert consultants to interpret regulatory requirements (such as those under the ESRS). Finally, dual materiality should be seen as a lever to revise the business model, improve resilience and create shared value, also from a long-term perspective.

The adoption of dual materiality requires time, multidisciplinary skills and a cultural change within the company. For many SMEs, the first obstacle is the lack of specialised internal resources However, the benefits outweigh the obstacles: greater transparency towards stakeholders, better ESG performance, easier access to sustainable credit and a stronger reputation. Furthermore, dual materiality allows a systemic view of sustainability risks, making strategic planning more effective. The dual materiality represents a real opportunity to innovate and make the business models of Italian companies more competitive.

This article has been realised within the project "Biodiversity services EU expansion" (CUP: E43D22000480009) in the framework of the Lombardy Region's call for tenders "PR FESR 2021-2027 - LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalisation of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting and regenerating biodiversity, supporting companies in defining customised climate strategies based on the analysis of their impacts and dependencies on nature. With an established portfolio in Italy, Germany and France and prominent partnerships, 3Bee continues its expansion into international markets to create real impact through technology.