Title page 1

Contents 4

Acknowledgements 2

Abstract 3

1. Introduction 5

2. Overview of Double Materiality 5

2.1. Official Sector Perspectives 5

2.2. Academic and Industry Perspectives 7

2.2.1. Rationale 7

2.2.2. Costs and Benefits 7

2.2.3. Practical Applications 8

3. Double Materiality Framework 8

3.1. Defining Materiality Linkages 8

3.2. Detailed Description of Linkages 11

3.2.1. Arrow (1): Exogenous Physical and Transition Risks to a Bank 12

3.2.2. Arrow (2): Impact of a Bank's Activities on Climate Change and Resulting Physical and Transition Risk Drivers 13

3.2.3. Arrow (3): Feedback Effects from a Bank's Climate-Impacting Activities on Its Own Physical and Transition Risks 14

3.2.4. Arrow (4): Financial Spillover Effects from a Bank's Climate-Impacting Activities on the Physical and Transition Risk of Other Financial Institutions 15

3.2.5. Arrow (5): Non-Financial Spillover Effects from a Bank's Climate-Impacting Activities on the Broader Economy and Society 16

3.3. Defining the Components of Double Materiality 16

3.4. Defining Double Materiality from a Policy Perspective 18

3.5. Challenges 20

4. Conclusions 22

References 23

Table 1. Summary of Potential Linkages in Detailed Double Materiality Perspective 11

Table 2. Summary of Potential Linkages in Detailed Double Materiality Perspective 18

Figure 1. European Commission Double Materiality Perspective 8

Figure 2. Detailed Double Materiality Perspective for a Particular Bank 9

Figure 3. Impact Materiality 17

Figure 4. Financial Materiality 17