EFRAG Implementation Guidance 1 is the non-authoritative but central reference document that sets out the illustrative process for conducting a double materiality assessment under ESRS 1. Published in final form in May 2024 and now read against the Simplified ESRS, it remains the starting point for any DMA preparer.
What EFRAG IG 1 is, and what it is not
EFRAG Implementation Guidance 1 — Materiality Assessment — is the illustrative reference document published by the European Financial Reporting Advisory Group to assist undertakings in applying the double materiality assessment required under ESRS 1. It was released in final form in May 2024 following public consultation on a December 2023 draft.[1]
The critical point is that EFRAG IG 1 is non-authoritative. It does not form part of the ESRS. Where any contradiction arises between the guidance and the standards, ESRS prevails. Its function is to reduce interpretive variance by describing a worked process, not to create new rules.
For the full methodological context, see our 2026 regulatory guide to double materiality. This article focuses on what IG 1 contains, how it is structured, and how it is read under the Simplified ESRS.
What the document contains
EFRAG IG 1 is organised into four principal sections that collectively describe the DMA process end-to-end:
- The scope and purpose of the materiality assessment — framing the DMA as central to the sustainability statement and explaining its relationship to other ESRS requirements. IG 1 §1
- The double materiality concept — defining impact materiality and financial materiality, their criteria, and their interaction. IG 1 §2
- The illustrative DMA process — the four-step process from context mapping through documentation, with figures and flowcharts. IG 1 §3
- Frequently asked questions — twelve FAQs addressing practical implementation questions raised during consultation. IG 1 FAQ 1–12
The document is supplemented by EFRAG IG 2 (Value Chain Implementation Guidance) and EFRAG IG 3 (Detailed ESRS Datapoints), which together form the non-authoritative guidance family for ESRS Set 1.
The IG 1 four-step process
Map the organisational context · Identify impacts, risks and opportunities · Assess and score against materiality criteria · Report and document. The structure is preserved in the Simplified ESRS but with greater flexibility on approach (top-down or bottom-up).
What the final version changed from the draft
The May 2024 final version introduced several clarifications against the December 2023 exposure draft. Three are worth noting for DMA preparers:[2]
Considerations for groups and subsidiaries (new §3.6.3)
The final version adds explicit guidance on how material topics identified at subsidiary level should be incorporated into the materiality assessment at group level. This addresses a common practical question from multinational preparers.
Objective and supportable evidence (clarified §2.2)
The final version clarifies what constitutes objective and supportable evidence for materiality conclusions. Scientific evidence and quantitative measurements are identified as objective proof. Qualitative information is recognised as valuable to underpin the assessment, including information from affected stakeholders, provided it provides relevant context for quantitative measures.
Direct reference to ESRS 2 GOV (§3.3)
The final version makes explicit the requirement that the administrative, management and supervisory bodies (AMBs) must be informed of material impacts, risks and opportunities, linking the DMA process directly to the governance disclosures under ESRS 2.
Additional sources and tools
The final version expands the list of sources and tools available for materiality assessment, including explicit reference to GRI and ISSB Standards as reference frameworks for preparers seeking cross-standard interoperability.
How IG 1 reads under the Simplified ESRS
EFRAG’s Simplified ESRS technical advice of 3 December 2025 introduces changes to ESRS 1 that affect how IG 1 is read in practice. Notable interactions:
- Top-down or bottom-up. IG 1 describes an illustrative process that is predominantly bottom-up — identifying IROs and aggregating upward. Simplified ESRS 1 explicitly permits top-down assessment, starting at the topic level. IG 1’s process remains valid but preparers now have an additional approach not featured in the guidance.[3]
- Fair presentation framing. Simplified ESRS 1 frames the sustainability statement under the fair presentation principle. IG 1 pre-dates this framing, so sections emphasising mechanical compliance with disclosure requirements should be read against the newer fair presentation lens.
- Reduced re-assessment frequency. Simplified ESRS 1 confirms a full DMA need not be repeated annually unless significant changes occur. IG 1 FAQ 7 addresses update frequency but should now be read alongside the newer Simplified ESRS position.
- Proportionality mechanism. Simplified ESRS 1 introduces an explicit proportionality mechanism. IG 1 did not anticipate this mechanism in its current form.
EFRAG has indicated that implementation guidance will be refreshed following adoption of the delegated act on the Simplified ESRS, expected mid-2026. Until then, IG 1 should be read as the primary procedural reference, with Simplified ESRS 1 governing where any inconsistency arises.
Frequently asked questions about IG 1
Sources
- European Financial Reporting Advisory Group (EFRAG), Implementation Guidance 1: Materiality Assessment, final version, May 2024.
- European Financial Reporting Advisory Group (EFRAG), Feedback Statement on IG 1: Materiality Assessment, May 2024, summarising amendments made to the December 2023 draft.
- European Financial Reporting Advisory Group (EFRAG), Simplified ESRS Technical Advice to the European Commission, delivered 3 December 2025, provisions on top-down and bottom-up DMA approaches.
