# Double Materiality

*ESG & Sustainable Finance — Finicade finance glossary*

Double materiality asks two questions: how sustainability issues affect the company financially, and how the company affects people and the environment.

Double materiality asks two questions rather than one: how sustainability issues affect the company financially, and how the company affects people and the environment. US disclosure has generally stopped at the first; EU rules require both. The distinction explains most transatlantic disagreement about ESG reporting, since the two framings imply different audiences and different obligations.

**Also known as:** double materiality assessment, impact materiality

**Related terms:** [CSRD](https://finicade.com/glossary/csrd), [Materiality](https://finicade.com/glossary/materiality), [ESG Rating](https://finicade.com/glossary/esg-rating), [Disclosure](https://finicade.com/glossary/disclosure), [Sustainable Investing](https://finicade.com/glossary/sustainable-investing)

Source: https://finicade.com/glossary/double-materiality