Sustainable finance frameworks require organizations to evaluate environmental risks from two distinct perspectives, a discipline known as Double Materiality.

[Double Materiality Framework]
  |- Financial Materiality ------> Outside-In Impact (How climate risks affect the firm's balance sheet)
  |- Impact Materiality ---------> Inside-Out Impact (How corporate operations affect the environment)

Financial materiality tracks how environmental shifts impact the firm’s performance and asset values, while impact materiality measures how the company’s daily operations affect the surrounding ecosystem, providing a comprehensive view of sustainability risks.