UK SRS materiality and double materiality: one assessment or two?

A financial, investor-focused test. UK SRS S1 paragraph 18 says information is material "if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports". The risks and opportunities in scope are those that could reasonably be expected to affect the entity's cash flows, its access to finance or cost of capital over the short, medium or long term (paragraph 3).

No. UK SRS, like the ISSB standards it endorses, applies single, financial materiality. Impacts on people and the environment matter under UK SRS S1 only through the risks and opportunities they create for the entity (paragraph 2). EU CSRD and the ESRS apply double materiality, which adds an impact perspective in its own right.

Double materiality is the EU's two-limbed test. The Accounting Directive requires information necessary to understand the undertaking's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking's development, performance and position. The CSRD's recital 29 names this "the double materiality perspective" and says each perspective is to be considered in its own right.

Partly. The EFRAG and IFRS Foundation interoperability guidance says the definition of financial materiality in ESRS is aligned with the definition of materiality in IFRS S1. What is not aligned is the regime: ESRS adds impact materiality, so an ESRS assessment also has to identify impacts that are material in their own right. A group can build the financial limb once and add the impact limb for ESRS, keeping the evidence for each.

No. The phrase "enterprise value" does not appear in UK SRS S1 or S2. The test is influence on the decisions of primary users of general purpose financial reports, by reference to cash flows, access to finance or cost of capital.

No. UK SRS S1 paragraph B19 says materiality judgements are specific to an entity, so the standard "does not specify any thresholds for materiality or predetermine what would be material in a particular situation". An entity considers quantitative and qualitative factors, such as the magnitude and nature of an effect (B21).

At each reporting date. UK SRS S1 paragraph B28 requires an entity to reassess its materiality judgements to take account of changed circumstances and assumptions, because information that was material in a prior period may no longer be, and the reverse.

Only if they, or group companies, are in CSRD scope or choose to report under ESRS. From financial years beginning on or after 1 January 2027, CSRD applies to EU undertakings exceeding both a net turnover of EUR 450 million and an average of 1,000 employees, and a non-EU parent is caught where its EU turnover exceeds EUR 450 million for each of the last two consecutive financial years and it has an EU subsidiary or branch above EUR 200 million. UK SRS itself never requires one.

No. UK SRS S1 paragraph B25 says an entity need not disclose information that is not material, even if a standard lists it as a minimum requirement, so leaving it out is compliance, not a departure. The FCA's explain limb for UK SRS S1 works at the level of the sustainability-related risks and opportunities the company has identified; a company that identifies none states that fact.