Double Materiality encompasses both financial materiality (outside-in: how climate change, social issues, or governance failures affect enterprise value) and impact materiality (inside-out: how company operations affect stakeholders and ecosystems). The European Sustainability Reporting Standards mandate this dual perspective, distinguishing it from US approaches focused primarily on financial materiality. For example, a manufacturer must report both its carbon emissions' contribution to climate change (impact) and how carbon pricing might affect profitability (financial). This framework acknowledges that companies have responsibilities beyond shareholder returns and that societal impacts can eventually become financial risks. The approach requires different data systems, stakeholder engagement, and expertise than traditional financial reporting.