Materiality Assessment in Pharmaceuticals: Navigating CSRD's Double Materiality for the Sector

The double materiality assessment for pharmaceutical companies must navigate a distinctive challenge: the sector's most significant material issues are largely determined by its core business model — developing, manufacturing, and distributing medicines. Access to medicine is not a peripheral social issue for a pharmaceutical company; it is inseparable from what the company does. Antimicrobial resistance is not a generic environmental topic; it is partly caused by the products a pharma company sells. Any materiality process that fails to grapple with these sector-specific dynamics will produce a compliance document, not a strategic tool.

Priority Material Topics for Pharmaceutical Companies

Based on the sector's ESG profile, the following topics are typically material for most pharmaceutical companies and should feature prominently in any double materiality assessment. ESRS S4 (Consumers and End-Users) is material for virtually all pharma companies because of access to medicine and product safety obligations. ESRS E2 (Pollution) is material because of pharmaceutical discharge to water. ESRS G1 (Business Conduct) is material because of anti-bribery risks in healthcare systems and clinical trial ethics. ESRS E1 (Climate Change) is increasingly material for large manufacturers with significant energy-intensive synthesis and fermentation operations.

Assessing Access to Medicine as a Material Impact

Access to medicine sits squarely within ESRS S4 — the standard addressing impacts on consumers and end-users. For the DMA, pharmaceutical companies must assess: the scale of impact (how many patients worldwide lack access to their essential medicines?), the scope (which geographies and income groups face access barriers?), the irremediability (for patients with life-threatening conditions, lack of access is irreversible), and the company's contribution (through pricing policies, registration decisions, or licensing choices). Companies that engage with the Access to Medicine Foundation's methodology for assessing their access practices will find this directly applicable to ESRS S4 impact materiality.

Pharmaceutical Pollution and Antimicrobial Resistance

ESRS E2 (Pollution) covers emissions of substances of concern to water, air, and soil. For pharmaceutical manufacturers, API discharge from manufacturing facilities into waterways is a documented contributor to antimicrobial resistance — a systemic environmental and public health risk. The impact materiality of pharmaceutical pollution is high: the scale is global (AMR kills an estimated 700,000 people annually worldwide), the contribution of pharmaceutical manufacturing is established, and the irremediability is significant. Companies that have not yet joined the AMR Industry Alliance or committed to the Responsible Antibiotics Manufacturing Platform should treat this as a material gap requiring immediate action.

Running the DMA Process in Practice

1. Compile a long list of all ESRS topics and sub-topics relevant to the pharmaceutical sector
2. Conduct an internal impact assessment across all 12 topical areas, scoring each on scale, scope, irremediability, and company contribution
3. Conduct a financial materiality assessment, identifying ESG risks and opportunities affecting the company's financial performance
4. Engage external stakeholders: patient advocacy groups, global health NGOs, environmental organisations, healthcare procurement agencies
5. Consolidate assessment and apply materiality thresholds — document reasoning for all material and non-material determinations
6. Review with the sustainability committee and board for approval
7. Publish the materiality statement as part of the CSRD report with clear disclosure on process methodology