how double materiality assessments reveal hidden climate risks
published 4.15.25
Most climate transition plans map out a company’s path to a low-carbon economy — but they rarely account for the unexpected. That’s because standard transition models focus on more well-defined risks: Scope 1 and 2 emissions, known regulatory timelines and current market dynamics.
Double materiality assessments (DMAs) go deeper.
When done well, a DMA doesn’t just identify compliance risks. It uncovers overlooked signals that are more complex and demand nuanced assessments (read: emerging customer preferences, supplier vulnerabilities and shifting policy landscapes that could reshape a company’s transition path). These insights help companies strengthen transition plans before potential risks become actual liabilities.
Here are 3 ways DMAs outcomes make your strategy sharper:
1. Scope 3 Weak Spots
Many companies have a more solid understanding of how to make steady progress on Scope 1 and 2 reductions, but Scope 3 emissions — often 70% or more of a company’s total footprint — remain complex and context-specific. DMAs can reveal critical gaps in how companies are accounting for downstream and upstream risks.
Key Insights Emerging from DMAs:
Supplier Misalignment: DMAs reveal key suppliers who haven’t started their transition planning, introducing unexpected delays and forcing companies to revisit baseline partnership requirements.
Product Lifecycle Gaps: Downstream emissions tied to product use or disposal often go unaccounted for, creating future liabilities and no strategic pathway to mitigating such effects.
Logistics Exposure: Heavy climate risk regions within distribution networks, especially those facing regulatory shifts, are becoming costly weak points.
How to Apply These Insights:
Prioritize supplier partnerships that align with your environmental and climate transition goals. Build Scope 3 reduction targets holistically with procurement policies and meaningful partnerships with key suppliers to drive shared accountability. Invest in product innovation that reduces product, materials and commodities-related emissions, increases resilience of your supply chains and meets evolving consumer expectations.
2. Customer Demand Shifts
Transition plans often assume a gradual shift in customer demand, but DMAs can reveal shifts that are picking up speed.
What DMAs Are Highlighting:
Accelerated Circularity Expectations: Consumers are no longer satisfied with “recyclable.” They’re demanding circular solutions (e.g., reusable, repairable and zero-waste options).
Transparency as a Baseline: B2B and B2C buyers alike are asking for more detailed climate impact disclosures and are ready to switch brands if they don’t get them.
Ethical and Sustainable Sourcing as a Differentiator: Rising scrutiny and global minimum standards around labor practices, biodiversity and deforestation mean ethical supply chains are becoming a competitive advantage, not merely a compliance checkbox.
How to Apply These Insights:
Bring product teams into the DMA process early. Use these insights to future-proof your product roadmap and align innovation pipelines with where customer expectations are moving — not where they’ve been. Strengthen supply chain transparency and build climate disclosure expectations into vendor contracts.
3. Policy Gaps in Emerging Markets: Staying Ahead of Regulatory Acceleration
Climate policies in emerging markets are evolving quickly, and DMAs highlight where companies are underestimating future compliance costs.
Where DMAs Are Uncovering Policy Gaps:
Carbon Pricing and Costs of Energy Transitions in Supply Chains: Markets with evolving carbon pricing schemes, challenges in the predictability of energy costs and supply could introduce unexpected operational costs.
Deforestation Regulations with Teeth: Heightened scrutiny around deforestation-linked supply chains means higher risks in regions that do not yet fall under global safeguarding and compliance.
Extended Producer Responsibility (EPR): Policies shifting the cost of waste management to producers are expanding, and many companies aren’t building these costs into transition models.
How to Apply These Insights:
Incorporate DMA findings into regulatory risk forecasting and global compliance plans. Work with procurement teams to assess supplier readiness for evolving policies and explore ways to shift toward more resilient sourcing practices.
Why These Hidden Risks Matter Now
Transition planning shouldn’t be a linear exercise — and DMAs prove why. By surfacing these overlooked risks early, companies can adapt their transition plans to stay ahead of market, regulatory and operational shifts.
At qb., we use DMAs to uncover these critical insights — and help clients translate them into actionable strategies. Our approach doesn’t stop at compliance. We focus on using materiality insights to strengthen climate transition plans, reduce exposure to unexpected risks, and position companies for long-term resilience.
If you’re ready to uncover the risks your transition plan might be missing, let’s talk.
by Sam Hartsock
Strategy Lead & Cofounder
