From no materiality to double materiality: a long-run conceptual analysis of corporate reporting regulation

This paper first examines the concept of materiality in regulations on corporate reporting. The focus is on Europe, including international standards as endorsed in Europe. The paper traces the concept of materiality from its first appearances in the 1970s (in EU Directives and UK accounting standards) through to the recent international and EU sustainability standards. The texts of these documents are analysed to reveal how the importance and definition of materiality has varied over time. In some documents, materiality is absent but in others it is one of only three or four key concepts. The scope of materiality had been gradually narrowed in recent years in IFRS, but that was reversed by the concept of impact materiality in GRI standards and then the double materiality of the EU’s sustainability standards. The paper suggests that the concept of impact materiality is unclear. It explains how double materiality entails more disclosure than single. The ambiguity of the concepts is illustrated by examining the changing signifiers used in translations of regulations and standards. The paper then finds that researchers have not taken sufficient account of materiality when scoring corporate compliance with disclosure requirements. Policy recommendations for regulators and researchers follow.