Similar to financial reporting, materiality is a core principle in sustainability reporting, requiring entities to disclose only the sustainability information relevant to users (Unerman and Zappettini, 2014; Fiandrino et al., 2022). However, there is no clear consensus on the precise identity of these users (Barker, 2025). As a result, two distinct approaches to materiality have been codified in sustainability reporting standards (Jørgensen et al., 2022). From a first perspective, known as “impact materiality”, a sustainability matter is material when it represents an organization’s, actual or potential, positive or negative, most significant impacts on the economy, environment and people (GRI, 2021). The reported information about these impacts supports the diverse categories of stakeholders (e.g. business partners, civil society organizations, consumers, customers, employees and other workers, governments, local communities, non-governmental organizations, shareholders and other investors, suppliers, trade unions) in making informed assessments and decisions about the organization’s impacts and contribution to sustainable development. In contrast, from a second perspective, termed “financial materiality”, a sustainability matter is material if it generates risks and opportunities that affect or could reasonably be expected to affect the entity’s prospect, influencing its development, financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium- or long-term. From this perspective, information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of financial reports (i.e. existing and potential investors, lenders and other creditors) make on the basis of those reports (ISSB, 2023).

In the European Union, the Corporate Sustainability Reporting Directive (CSRD) has radically transformed the conceptualization of materiality in sustainability reporting (Beyne and Moratis, 2025). The CSRD that was adopted in December 2022 (European Parliament and Council of the EU, 2022) and requires reporting from financial year 2024, aims to increase corporate transparency and accountability and enable stakeholders to integrate ESG factors into their decision-making. It significantly amends the previous Non-Financial Reporting Directive (Directive 2014/95/EU, NFRD in brief), including: extending the companies in scope, requiring a double materiality analysis, further specifying reporting contents, introducing mandatory sustainability reporting standards (i.e. the European Sustainability Reporting Standards, developed by EFRAG), expanding the reporting requirements for value chain, integrating sustainability information in the management report, mandating assurance and digital tagging of the reported information (Hummel and Jobst, 2024).

As a result, companies within the scope of the CSRD will be required to perform a double materiality assessment. This approach integrates both impact and financial materiality, necessitating the identification, assessment, and disclosure of the most significant social and environmental impacts, as well as sustainability-related risks and opportunities (Baumüller and Sopp, 2022; Correa-Mejía et al., 2024; Barker, 2025; Beyne and Moratis, 2025). While the most obvious implications of materiality assessment relate to the reporting process, it is reasonable to expect that adopting one materiality approach over another will help “for a strong organizational sustainability integration” (Beyne and Moratis, 2025, p. 48). In other words, materiality assessment is expected to influence the organizational sustainability behavior (Mio et al., 2020). Although prior research has explored how materiality in sustainability reporting affects investor reactions and firms’ financial performance (e.g. Khan et al., 2016; Consolandi et al., 2022) or explored the challenges that may arise during the double materiality assessment process (Dyczkowska and Szalacha, 2025), the existing literature has not yet examined how organizational practices are shaped by adopting a specific materiality approach.

To contribute to this debate, this paper examines whether the adoption of double materiality in sustainability reporting is related to any organizational changes, specifically in the area of ESG risk management. While companies under the NFRD tended to focus primarily on disclosing social and environmental impacts (Pizzi et al., 2024), companies under the CSRD must integrate the impact materiality analysis by identifying, assessing and disclosing also sustainability-related risks and opportunities. Consequently, we expect that the application of double materiality for sustainability reporting may influence ESG risk management, the process by which companies address and manage the risks associated with sustainability issues.

Our study is informed by two contrasting theoretical perspectives on sustainability reporting: the substantive and symbolic approaches (Marquis and Qian, 2014; Shabana and Ravlin, 2016). These perspectives lead us to hypothesize two alternative relationships between the adoption of double materiality for sustainability reporting and ESG risk management. The symbolic perspective suggests that sustainability reporting is often used by companies to project an image of social and environmental responsibility, without necessarily reflecting substantive and meaningful actions. From this view, we hypothesize that using double materiality for sustainability reporting may not be accompanied by substantive improvements in ESG risk management. Conversely, the substantive approach emphasizes that sustainability accounting and reporting drive real organizational changes, suggesting that such reporting reflects concrete actions rather than superficial compliance with societal expectations. This leads us to conjecture that the adoption of double materiality for sustainability reporting could strengthen ESG risk management.

Using a sample of 442 companies listed in the STOXX Europe 600, we find that the adoption of double materiality for sustainability reporting does not influence ESG risk management. The findings are corroborated along a series of robustness checks and additional analyses. Therefore, our findings suggest that adoption of double materiality does not seem to influence ESG risk management practices, due to symbolic reporting practices. This in turn may derive from pre-existing strong ESG risk management frameworks, or the early stage of double materiality application.

The rest of the paper is organized as follows: Section 2 provides the institutional background on sustainability materiality, while Section 3 reviews the relevant literature. In Section 4, the hypotheses are developed based on the theoretical framework of substantive and symbolic sustainability reporting. Section 5 outlines the methodology, followed by Section 6, which analyzes the findings. Finally, Section 7 concludes with a discussion of the contributions and implications.