How to assess human rights in a double materiality assessment

A human rights double materiality assessment identifies the people a company may affect, evaluates actual and potential impacts across operations and the value chain, and determines which issues are material enough to report. It starts with the affected people and the severity of potential harm, then works towards the ESRS datapoints.

This is a structured process for finding where the business may affect people and deciding what belongs in the Sustainability Statement. HR data and supplier questionnaires feed into it, though neither one is the assessment. The scope is wide: own employees, workers in the supply chain, affected communities, and consumers and end-users where relevant.

This guide reflects the revised ESRS Delegated Act adopted by the European Commission on 3 July 2026. The revised standards are intended to apply to financial years beginning on or after 1 January 2027, following the European Parliament and Council scrutiny process. Companies reporting for 2026 have transitional choices and reliefs.

For context on where human rights sit within CSRD and which disclosure requirements apply, see our overview of human rights reporting under CSRD.

What is a human rights double materiality assessment?

A human rights double materiality assessment is the human rights application of the wider double materiality assessment (DMA) process required under CSRD. It asks 2 questions at once. How seriously does the company affect people, and how do human rights issues affect the company?

The assessment should cover the company’s own operations, subsidiaries and value chain. It considers actual and potential impacts, negative and positive impacts, risks and opportunities. The output determines whether human rights topics are material, and therefore whether they require disclosure under the relevant ESRS social standards.

The 2 materiality lenses work as follows:

• Impact materiality: how seriously the company may affect people, including through its business relationships and value chain activities.

• Financial materiality: how human rights issues may affect the company’s financial position, performance, cash flows, access to capital, resilience or market access.

Both lenses are relevant. A company with severe supply chain labour risks may face impact materiality (harm to workers) and financial materiality (regulatory exposure, reputational damage, supply disruption) at the same time. Neither lens overrides the other.

The revised ESRS retains double materiality as the starting point for topical disclosure. The move towards a more judgement-led, top-down assessment raises the value of evidence, because companies have to explain and defend their conclusions.

Which people should be included in the assessment?

Before identifying specific risks, you need to set the assessment boundary. Who are the people the business can affect?

Start with those people. Legal entity structure comes second, and it rarely matches where the impacts sit.

The ESRS S1 to S4 social standards organise affected people into 4 groups:

Serious impacts can arise at several points in the business model. When mapping exposure, consider:

• Direct operations and facilities

• Contracted services and outsourced functions

• Suppliers and subcontractors at multiple tiers

• Sourcing regions, particularly those with higher country or commodity risk

• Distribution channels and product use

• Technology and data practices

• Communities near facilities or affected by projects

The value chain cap introduced in the revised ESRS limits the sustainability information you can request from smaller value chain partners. Your responsibility to assess material impacts stays. Where direct supplier data is thin, draw on country and sector risk intelligence to fill in the picture.

A 6-step method for assessing human rights

The method below follows the requirements of the revised ESRS Delegated Act and the principles of the UN Guiding Principles on Business and Human Rights. It produces a documented, auditable assessment.

1. Map the business and the people it touches

Start with a structured map of the company’s activities, relationships and geographic footprint. It should cover:

• Business activities, products and services

• Countries, sourcing regions and commodity categories

• Supplier and contractor categories

• Workforce models, including agency workers, seasonal workers and contracted labour

• Facilities, projects and nearby communities

• Customer segments and end-user groups

The aim is to find where the company has plausible exposure to serious harm. Cataloguing every possible social issue burns the effort in the wrong place. What comes out of this step is an initial map of potentially affected groups and points of exposure, which shapes the rest of the assessment.

2. Identify actual and potential human rights impacts

With the map in place, separate 2 types of impact:

• Actual impacts are harms that have occurred or are occurring now.

• Potential impacts are harms that could occur if conditions, practices or relationships are left unaddressed.

Both need attention. Actual impacts demand a response and a disclosure. Potential impacts need an assessment of how likely they are and how severe they could be.

Useful evidence sources at this stage:

• Existing risk registers and internal assessments

• Supplier and procurement data

• Worker surveys and grievance data

• Health and safety records

• Previous audits and corrective actions

• Country and sector risk information

• Product and customer complaints

• Community engagement records

• Civil society, trade union and credible media reporting

Policies, codes of conduct and supplier self-assessments are inputs to the assessment. None of them proves that risks are understood or controlled.

3. Engage affected stakeholders and their representatives

Affected people and their representatives can reveal conditions that internal systems miss, and they test whether management’s understanding of risk holds up.

Relevant groups may include:

• Workers and trade unions

• Supplier worker representatives

• Community representatives

• Consumer organisations

• Civil society organisations

• Vulnerable groups affected by the company’s activity

Consultation and meaningful engagement are different things. A survey or a formal meeting has its uses. Meaningful engagement changes how the company understands, prioritises and responds to impacts, and it reaches past management and investor views. 

4. Assess severity and likelihood

This is the analytical core of the assessment. The revised ESRS Delegated Act requires companies to assess negative impacts against these criteria:

A few points of regulatory precision:

• Severity rests on scale, scope and irremediable character. For actual negative impacts, assess the seriousness of the impact itself. Remediation carried out during the reporting period doesn’t lower the assessed severity.

• For potential human rights impacts, severity takes precedence over likelihood. A severe potential impact is material whether or not it has ever occurred. Scoring templates that weigh the two equally by default will push material human rights impacts down into non-material territory.

• For financial materiality, assess potential implications for revenue, costs, access to capital, regulatory exposure, operations and market access.

You can use scoring criteria to keep decisions consistent, provided the method reflects the business context and is documented clearly enough for review. Presenting an arbitrary numerical model as a regulatory requirement is a common mistake.

5. Determine materiality and prioritise the issues

Materiality is a judgement. An issue can be material because of severe harm to a smaller group, even where the number of affected individuals is limited. The assessment should make clear why some issues were prioritised and others were not.

3 distinctions matter at this stage:

• Material: the issue carries enough weight to require disclosure.

• Requires further assessment: initial evidence is incomplete, and you can’t reach a firm conclusion yet.

• Not material: the issue was considered and assessed, with a documented rationale.

The third category needs care. A company can’t conclude that S2, S3 or S4 are non-material simply because it has limited data. An absence of evidence is not evidence of an absence of impact. Where data is weak, the answer is further assessment or engagement.

The assessment also gives you a practical foundation for due diligence, though reporting obligations under CSRD and action obligations under CSDDD are separate things. See how the two frameworks can share the same evidence base in our guide to CSRD and CSDDD: building a joined-up approach to human rights.

6. Document the decision and turn it into reporting

The record should let an auditor or an informed reader see what the company decided and why it decided it. For each potentially material issue, capture:

• The affected group and reporting boundary

• The impact, risk or opportunity identified

• Evidence reviewed

• Stakeholders consulted

• Severity and likelihood rationale

• Materiality conclusion

• Data limitations and planned improvements

• Links to governance, policies, actions, targets and metrics

Documentation runs through the whole process rather than sitting at the end of it. Notes from stakeholder engagement, risk mapping and scoring all form part of the audit trail.

What evidence makes a human rights assessment credible?

The most common weakness in human rights assessments is treating policies as evidence. A policy explains intent. Evidence shows what the company has found, done and changed.

Credible assessments draw on 4 categories of evidence:

Operational evidence

• Workforce and health and safety data

• Supplier and purchasing data

• Audits, findings and corrective action records

• Grievance and remedy information

External risk evidence

• Country, sector and commodity risk assessments

• Credible trade union and civil society reporting

• Regulatory and legal information

• Independent research and academic sources

Stakeholder evidence

• Worker engagement findings

• Community consultation records

• Supplier worker feedback

• Customer and end-user complaints

Decision evidence

• Materiality criteria used

• Assessment notes and working documents

• Scoring or prioritisation rationale

• Governance review and sign-off records

The quality of evidence matters as much as the volume. One credible worker testimony or a well-documented grievance case can tell you more than a stack of supplier questionnaire responses. External risk intelligence from recognised sources carries weight when internal data is thin, provided you have worked out how it applies to your specific business model and relationships.

The assessment record is the primary evidence that your materiality conclusions are defensible. Treat it accordingly.

Common mistakes to avoid

These are the most frequent failures in human rights materiality assessments, based on how companies approach CSRD social disclosures in practice.

1. Looking only at direct employees

Limiting the assessment to the own workforce misses most of the potential human rights exposure for most companies. Value chain workers, affected communities and consumers can face more severe and less visible impacts than direct employees.

2. Starting with datapoints rather than affected people

Working backwards from ESRS disclosure requirements to decide what to assess produces a narrow and often circular result. Start with the question: who can this business affect, and how?

3. Treating supplier questionnaires as the full risk assessment

Questionnaires reveal what suppliers are willing to disclose. That makes them a starting point. High-risk sourcing regions and commodity categories need deeper investigation.

4. Judging issues non-material because data is incomplete

Incomplete data signals that more work is needed. Where evidence is weak and potential impacts are severe, the answer is further engagement or assessment.

5. Failing to record the rationale for decisions

A materiality conclusion without documented reasoning won’t survive an audit. The record should explain why some issues were prioritised and others were not, with reference to the evidence reviewed.

6. Mis-scoring human rights impacts

Most scoring methodologies weigh severity and likelihood equally. Human rights impacts don't work that way under the ESRS: severity takes priority. A single documented instance of forced labour carries more weight than a frequent but minor supply chain disruption, and a high-severity impact that has never occurred in the company's history is still material. If your template treats the two as equal, fix it before the assessment starts.

7. Conflating CSRD reporting with CSDDD due diligence duties

CSRD requires disclosure of material impacts, risks and opportunities. CSDDD imposes action obligations in respect of adverse impacts. The 2 frameworks overlap without being interchangeable, and treating them as one leaves holes in both.

Want to avoid these and the process mistakes that undo a DMA before scoring even begins? Our DMA mistakes guide covers 8 of them, and how to get each one right.

How do assessment findings translate into ESRS reporting?

Once a human rights matter is material, the assessment findings become the foundation for the Sustainability Statement. The disclosure is the assessment, structured for reporting.

For each material human rights topic, you need to show:

• The group affected and the reporting boundary

• The impact, risk or opportunity identified

• Governance and accountability arrangements

• Relevant policies and commitments

• Actions taken to prevent, mitigate or remediate impacts

• Targets and metrics where appropriate

• Evidence of progress and an honest account of limitations

The assessment record should map directly onto these disclosure elements. Where the assessment identified something the company can’t yet report on, that shortfall is itself disclosable, along with the plan to close it. 

What companies should do next

A practical starting point for companies refreshing or completing a human rights double materiality assessment:

1. Review whether the DMA covers people across the full business and value chain, well beyond direct employees.

2. Identify which human rights topics are currently supported by evidence, and which need deeper work.

3. Create an assessment record for each potentially material issue, capturing evidence, stakeholder input and the rationale for the materiality decision.

4. Plan stakeholder engagement where evidence is weak or potential impacts may be severe.

5. Connect material findings to disclosure owners, actions and metrics, so the Sustainability Statement reflects the assessment rather than running parallel to it.

How Kōan supports human rights materiality assessments

Human rights is where the evidence is hardest to gather and the consequences of getting it wrong show up fastest. Getting the assessment right takes sustainability expertise and a clear read on what the revised ESRS requires. That’s what our end-to-end reporting services are built for.

We work with companies to turn that into clear, defensible reporting decisions. For human rights in a DMA, we can support:

• CSRD and ESRS interpretation and scoping for social topics.

• Impact mapping across own operations, the value chain and affected communities.

• Stakeholder engagement design with workers, unions and community representatives.

• Severity and likelihood assessment, with documented scoring criteria.

• Assessment records built to survive audit.

• Drafting the human rights disclosures for your Sustainability Statement.

If you’re working through a human rights assessment or want a second opinion on an existing DMA, get in touch, we’re happy to discuss where you are in the process.