Double materiality in sustainability reporting: Revealing ESG-SDGs connections for businesses' awareness

Lungu, Camelia Iuliana; Caraiani, Chirata; Bojan, Andreea Mădălina; Dascălu, Cornelia; Achim, Raluca Andreea Article Double materiality in sustainability reporting: Revealing ESG-SDGs connections for businesses' awareness Amfiteatru Economic Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Lungu, Camelia Iuliana; Caraiani, Chirata; Bojan, Andreea Mădălina; Dascălu, Cornelia; Achim, Raluca Andreea (2025) : Double materiality in sustainability reporting: Revealing ESG-SDGs connections for businesses' awareness, Amfiteatru Economic, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 27, Iss. 70, pp. 939-956, https://doi.org/10.24818/EA/2025/70/939 This Version is available at: https://hdl.handle.net/10419/328029 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Sustainability Reporting: Catalyst for Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 939 DOUBLE MATERIALITY IN SUSTAINABILITY REPORTING: REVEALING ESG-SDGs CONNECTIONS FOR BUSINESSES’ AWARENESS Camelia Iuliana Lungu1 * , Chirața Caraiani2, Andreea Mădălina Bojan3 Cornelia Dascălu4 and Raluca Andreea Achim5 1)2)3)4)5) Bucharest University of Economic Studies, Bucharest, Romania Please cite this article as: Lungu, C.I., Caraiani, C., Bojan, A.M., Dascălu, C. and Achim, R.A., 2025. Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness. Amfiteatru Economic, 27(70), pp. 939-956. DOI: https://doi.org/10.24818/EA/2025/70/939 Article History Received: 29 March 2025 Revised: 14 May 2025 Accepted: 16 June 2025 Abstract The aim of this research is to investigate the concept of double materiality embedded in sustainability reporting requirements that address both business and society perspectives. In light of stakeholder, legitimacy, and institutional theories, this document explores how environmental, social, and governance (ESG) policies and practices (financial materiality) included in a business strategy may be related to incentives for companies to prioritise Sustainable Development Goals (SDGs) (impact materiality). The data are collected from the Refinitiv Eikon database for nonfinancial international companies, over the 2015-2024 period. Parametric and nonparametric tests for differences in means, correlation analysis, and fixed effects robust regressions are employed to validate three research hypotheses. The results illustrate significant differences on financial and impact perspectives of materiality in European Union (EU) companies, as compared to non-EU companies. Strong associations between ESG scores and SDGs are identified and discussed using the double materiality approach. SDGs prioritisation in general, but also mapped for environmental, social, and governance, is found to have mixed impacts on ESG policies and practices. The findings support the hypothesis that prioritisation of the SDGs may ensure a balance among divergent interests of managers, investors, and other stakeholders. The study has academic and practical contributions to management decisions that integrate sustainable development goals to expand businesses' awareness of sustainability reporting requirements. Keywords: double materiality, sustainability reporting, Environmental, Social, and Governance (ESG) policies and practices, Sustainable Development Goals (SDGs) prioritisation. JEL Classification: M41, Q01, Q56 * Corresponding author, Camelia Iuliana Lungu – e-mail: camelia.[email protected] This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2025 The Author(s). AE Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness 940 Amfiteatru Economic Introduction An exponential increase, especially in the context of “multifaceted landscape of different international reporting standards” (Fiandrino, Tonelli, and Devalle, 2022, p.684), is highlighted by recently published research on materiality discussed from a sustainability perspective (Adams and Abhayawansa, 2022; Correa-Mejia, Correa-Garcia, and GarciaBenau, 2024; Lungu, Caraiani, and Bojan, 2024). The growing interest of policymakers, researchers, and investors in sustainable businesses (Monteiro et al., 2024; Hoang, Pham and Nguen, 2023) is reified in a notable growth of environmental, social, and governance (ESG) disclosure. By opening businesses to their stakeholders, companies can address global issues and help create a more sustainable and equitable future (Monteiro et al., 2024). To meet the needs of stakeholders, ESG policies and practices can be related to the 17 Sustainable Development Goals (SDGs), included in the United Nations (UN) 2030 Agenda (UN, 2015), that address the most pressing sustainability issues in the world (Pizzi, Rosati, and Venturelli, 2021; Delgado-Ceballos et al., 2023; Tyan, Liu and Fu, 2023; Nicolo et al., 2024). Developed from the millennium sustainability goals established in 2000, the SDGs included in the 2030 Agenda for Sustainable Development are the result of long-standing efforts by the UN to advance global sustainability (Delgado-Ceballos et al., 2023). Furthermore, the gradual changes in the focus of the shareholders model towards an integrated stakeholders model to adjust the business strategy are mirrored in the activity of standard makers. The Climate Disclosure Project (CDP), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) worked together to establish the basis for guidelines for comprehensive corporate reporting (CDP, CDSB, GRI, IIRC, and SASB, 2020). They decided to join the efforts of the European Commission (EC) and the International Financial Reporting Standards (IFRS) Foundation in developing a general setting for sustainability reporting (Krivogorsky, 2024). From an institutional perspective, standard makers focus on shareholders and other stakeholders as the main users of sustainability-related information, exposing two materiality concepts. First, the materiality of the information disclosed is related to economic decisionmaking orientated toward institutional providers of financial capital and to the creation of enterprise value. Second, sustainability reporting should include information that is material in terms of the significant impacts of the organisation on the economy, environment, and people, and their importance to its stakeholders (CDP, CDSB, GRI, IIRC, and SASB, 2020). Recently, the Corporate Sustainability Reporting Directive (CSRD) has been adopted in the EU (EC, 2022), establishing the double materiality principle. This requires companies to report how sustainability matters affect them (financial materiality) as well as their external impacts, on society and the environment (impact materiality). Pizzi, Rosati, and Venturelli (2021) highlight the limited contributions of accounting scholars to the current academic debate on the SDGs. In addition, Delgado-Ceballos et al. (2023), or Correa-Mejia, Correa-Garcia, and Garcia-Benau (2024) underscore the need for future research conducted on environmental, social, and governance dimensions of corporate sustainability policies and practices in relation with sustainable development goals. The aim of this research is to highlight whether prioritisation of the SDGs along with ESG policies and practices may help companies to better respond to the needs of their stakeholders Sustainability Reporting: Catalyst for Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 941 and shareholders. The double materiality concept is approached under the light of stakeholders, legitimacy, and institutional theories in order to contribute to a balance among divergent interests of managers, investors, and other stakeholders. ESG policies and practices, considered the foundation of a sustainable business, are used to conceptualise the financial materiality. SDGs references included in corporate reporting are used to measure the level of prioritisations of the UN 2030 Agenda goals, as a proxy for impact materiality. Significant differences between companies, based on institutional characteristics, may point to the selection of priorities and critical gaps for engaging with globally addressed sustainability goals. To address the aim of this research, the objectives are formulated in order to investigate the differences between EU and non-EU companies, but also to relate the two perspectives of materiality (financial and impact). Company-year data collected from the Refinitiv Eikon database for the 2015-2024 period are examined using parametric and nonparametric tests for differences in means, correlation, and regression analyses. Endogeneity and multicollinearity are addressed using fixed effects of year, industry, and country included in robust regressions to provide a better fit to the data, while alternative measures are used to validate the results. This empirical approach contributes to the academic and practical understanding of an evolving business model that incorporates the decision to engage in current sustainability frameworks and policies. First, this paper extends the research and knowledge about the relationship between ESG policies and practices and SDGs prioritisation at the corporate level, adding to previous studies of Delgado-Ceballos et al. (2023), Hoang, Pham, and Nguen (2023), Soni (2023), Nicolo et al. (2024). or Tyan, Liu, and Fu (2024). Consequently, the research contributes to a deeper understanding of how sustainability reporting aligns with global sustainable development goals. Second, it advances the double materiality research field through an original contribution by offering comprehensive and extensive empirical evidence on ESG policies and practices and SDGs prioritisation for companies with headquarters in EU countries, as well as in non-EU countries. Thereby, it facilitates a comparative analysis within different institutional settings, emphasising the integration of mandatory requirements regarding double materiality into the most recent European regulations. Third, the practical implications of the participation of companies in the SDGs are highlighted and discussed, differentiated according to the three distinct dimensions of corporate sustainability: environmental, social, and governance. The structure of the remainder of the paper is as follows. In Section 1, the relevant literature, the underlying theories, and the research hypotheses are outlined. Section 2 describes the research methodology, including data and sample, variables, statistical tests, and econometric models. Section 3 discusses the results and additional robustness tests. Conclusions summarise the main findings and present the final remarks, as well as limitations and future research proposals. 1. Literature review - Double materiality, theories, and research hypotheses 1.1. The concept of double materiality Today, there is an increased awareness of finding responsible ways to design sustainable businesses that integrate the non-accomplished objectives in areas of critical importance for humanity and planet (people, planet, prosperity, peace, and partnership) in order to achieve AE Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness 942 Amfiteatru Economic global sustainability (Delgado-Ceballos et al., 2023). Research on the participation of companies in addressing the 17 SDGs included in the 2030 Agenda of the UN has gained increased attention in the literature (Hummel and Szekely, 2021; Khaled, Ali, and Mohamed, 2021; Pizzi, Rosati, and Venturelli, 2021; Delgado-Ceballos et al., 2023; Whittingham et al., 2023). Furthermore, the multidisciplinary characteristic of the topic of the SDGs is highlighted by relating it to various areas such as accounting or corporate sustainability performance, further related to ESG policies and practices (Khaled, Ali and Mohamed, 2021; Hoang, Pham and Nguen, 2023; Monteiro et al., 2024). ESG policies and practices incorporated in sustainable business and publicly communicated respond to shareholder pressure and underlie the accountability of companies and their legitimacy to operate. They illustrate the financial perspective of the materiality pursued by companies when establishing the significant information to be disclosed in their corporate reports. Complementary to their societal-orientated goal, the SDGs are also relevant for companies in providing a framework to identify challenges and opportunities and to contribute to long-term advantages (Delgado-Ceballos et al., 2023). This may guide companies in selecting the material information that shows its impact on society and the environment. The institutional perspective may explain how the normative pressure of society’s need for sustainability drives changes in businesses (Whittingham et al., 2023). The concept of materiality was used prior in financial reporting to identify relevant information that can influence users’ decisions or change their judgment when omitted or misrepresented. This approach is identified as the economic or financial perspective of materiality (Fiandrino, Tonelli, and Devalle, 2022). However, the evolving definition and implementation of the materiality concept integrates current outward and inward concerns about sustainable businesses, stakeholder engagement, or how sustainability is assessed and reported (Correa-Mejia, Correa-Garcia, and Garcia-Benau, 2024). The European Commission (EC) was the first to include the concept of double materiality, which encompasses both financial and environmental and social issues. To illuminate the concept of materiality, Raith (2023) analyses corporate responsibility policies in the EU and presents the business perspective and the ‘social case’ of material issues. The business perspective concentrates on business risks (EC, 2022), responds to shareholders and other investors claims, underscores internal impacts of ESG matters being financially material for a company that is affected outside-in (Aras, Furtuna, and Kazak, 2024). The ‘social case’ focusses on business impacts on the environment and its stakeholders, and highlights the influence of the company's inside material (Aras, Furtuna, and Kazak, 2024; Correa-Mejia, Correa-Garcia, and Garcia-Benau, 2024). In a company that assumes its social role, stakeholders help identify material social and environmental aspects (Fiandrino, Tonelli and Devalle, 2022) that can be affected by business operations. The concept was extended in the CSRD, requiring companies to disclose information on both the business perspective (financial materiality) and the society perspective (impact materiality) applicable from the 2024 reporting year. Correa-Mejia, Correa-Garcia, and Garcia-Benau (2024) outline that early commitment to double materiality shows a company’s readiness for the time of mandatory implementation of CSRD. Additionally, early adopters may have a competitive advantage over late adopters, which may be reflected in better sustainability performance. Therefore, early adopters play a key role, since they are the first to embrace new sustainability policies and practices and relating them to the incorporation of SDGs into business strategy. Pizzi, Rosati, and Sustainability Reporting: Catalyst for Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 943 Venturelli (2021) highlight the collaborative effort in applying the UN 2030 Agenda, while Aras, Furtuna, and Kazak (2024) claim for a direct interplay of public and international institutional factors, private businesses, academia, and societies to achieve the SDGs. The new standards in sustainability reporting, released internationally and across industries, ensure high-quality ESG information (Fiandrino, Tonelli, and Devalle, 2022), along with the financial one. Corporate reporting may be a driver for sustainable businesses, creating premises to connect the ESG policies and practices with the prioritisation of relevant SDGs. The growing interest in achieving corporate sustainability, along with the recognition by stakeholders of the pursuit of sustainable business outcomes, contributes to the development of double materiality (Delgado-Ceballos et al., 2023), linking financial interests with environmental, social, and governance objectives, ensuring global sustainability achievement. 2.2. Theoretical channels of double materiality in sustainability reporting A sustainable business changes corporate reporting toward sustainability, strengthened by the impact of environmental and social policies on company activities, the focus on company stakeholders, or the newest societal worldwide arrangements claiming for double material information (Adams and Abhayawansa, 2022). Fiandrino, Tonelli, and Devalle (2022) identify a growing body of literature grounded in stakeholder theory, which advocates for double materiality assessment, based on stakeholder engagement strategies, but also aimed at both society and the environment. Furthermore, the awareness of stakeholders about the relationship between financial materiality and impact materiality improves the visibility, legitimacy, and reputation of companies, and therefore the performance through value creation. Considering the complexity of the concept of double materiality, a single-sided conceptual approach is insufficient to capture the heterogeneous character of practices adopted in sustainability reporting (Sepulveda-Alzate, Garcia-Benau, and Gomez-Villegas, 2021; Fiandrino, Tonelli, and Devalle, 2022). Accordingly, stakeholder, legitimacy, and institutional theories should be considered complementary, rather than competing, when trying to explain the relationship between an organisation and the society within which it operates (Fiandrino, Tonelli, and Devalle, 2022). The selection of these theories is aligned with the research objective of presenting two perspectives on the concept of double materiality (financial and impact) supported by the idea that the existence and function of companies depend on the interests of both stakeholders, whose legitimacy is ensured by a legislative framework and a system of social norms and principles (Beske, Haustein, and Lorson, 2020; Chouaibi and Zouari, 2021; Hoang, Pham, and Nguyen, 2023). According to stakeholder theory, companies must consider the interests of their stakeholders when making decisions and setting performance and reporting objectives. Therefore, one of their main goals is to demonstrate their social involvement to satisfy the needs of its different stakeholders (Khaled, Ali, and Mohamed, 2021). In a normative context, stakeholder theory explains how relationships between companies and stakeholders create long-term value, suggesting the impact materiality perspective. Companies should consider the expectations of various key stakeholders, including investors and employees, in order to respond to their interests on sustainability-related practices (Khaled, Ali, and Mohamed, 2021; Fiandrino, Tonelli, and Devalle, 2022; Sepulveda-Alzate, Garcia-Benau, and Gomez-Villegas, 2022; Hoang, Pham and Nguyen, 2023). In addition, companies can focus on addressing the AE Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness 944 Amfiteatru Economic specific needs of stakeholders, including the involvement of the government in the implementation of the SDGs. Legitimacy theory establishes the interconnectivity between organisations and society, promoting the survival of businesses by recommending whether sustainable actions of the company are appropriate and consistent with their integrated set of values and norms (Nicolo et al., 2024). The pressure of social and political expectations acts as a trigger for sustainability disclosure and explains the changes in the general strategy of companies to ensure its legitimacy. Stakeholders from countries focused on ESG policies and practices have a clear understanding of SDG prioritisation, contributing to general efforts to achieve environmental, social, and governance targets (Dimes and Molinari, 2024). Hence, legitimacy theory anticipates that voluntary reporting will reach a wider audience rather than just a few chosen social groups, aspect that could be associated with a strategic behaviour orientated towards enhancing legitimacy (Hoang, Pham, and Nguyen, 2023). Consequently, gains in legitimacy make company actions desirable and motivate sustainable businesses to proactively embrace double materiality (Correa-Mejia, Garcia-Benau, and Correa-Garcia, 2024), supporting their mandatory inclusion in the European legislation. Hummel and Szekely (2021) draw attention to voluntary disclosure of corporate social responsibility, considering the landscape of stakeholder and legitimacy theories. The authors highlight that in order to actively affect their legitimacy, companies disclose nonfinancial information to both capital market actors and other nonfinancial stakeholders. Institutional theory examines organisations from the homogeneous characteristics certified by belonging to the same institutional area, sharing the political, financial, educational, cultural, and economic systems. The baseline idea of the institutional theory states that the operating system of the company affects its overall activity (Hoang, Pham, and Nguyen, 2023). Therefore, companies are considered to be expected to comply with the requirements of the institutional environment, integrating aspects of sustainability reporting (Khaled, Ali and Mohamed, 2021; Fiandrino, Tonelli, and Devalle, 2022). For example, companies internalise ESG policies and practices driven by institutional pressures, such as sustainability reporting requirements shaped in line with the engagement of the SDGs. Long-term value creation and organisational legitimacy are met when entities adjust to these constraints, being able to meet social expectations and improve their standing (Monteiro et al., 2024). Thus, the institutional perspective may explain how the normative pressure drives changes in corporate strategy (Whittingham et al., 2023) towards sustainable businesses. These theories orientated toward an economic environment, but also a social and political environment, are used to highlight the external pressure posited by different types of stakeholders on sustainable practices of companies, highlighting the means by which businesses operate within a complex and dynamic socioeconomic context (Beske, Haustein, and Lorson, 2020). 2.3. Research hypotheses Increased evidence of meaningful normative pressure reflected in more transparent disclosure of ESG policies and practices and a higher level of prioritising the SDGs invite researchers to respond to the wide recognised gap of narrow-focused studies related to SDGs or ESG policies and practices (Correa-Mejia, Garcia-Benau, and Correa-Garcia, 2024; Whittingham et al., 2023). Sustainability Reporting: Catalyst for Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 945 A limited number of studies conduct research on double materiality perspectives included in nonfinancial corporate reports, offering a limited perspective for ESG policies and practices or SDGs prioritisation, including only specific industries and countries, or using crossindustry samples. Furthermore, previous research reflects divergent approaches on the concept of double materiality, emphasising the complexity of its integration in sustainability reporting. Therefore, Delgado-Ceballos et al. (2023) present the relationship between SDG prioritisation and ESG policies and practices in the context of double materiality, through a descriptive approach, with limited empirical evidence on the link between financial materiality and impact materiality. Furthermore, Aras, Furtuna, and Kazak (2024) present empirical evidence on the association of SDGs with ESG policies and practices in the context of double materiality, but only for a sample of financial institutions, an aspect that limits the relevance of the results for other industries. Correa-Mejia, Garcia-Benau and Correa-Garcia (2024) and Sepulveda-Alzate, Garcia-Benau, and Gomez-Villegas (2021) analyse the impact of corporate governance and financial performance on SDGs prioritisation for a sample that includes Latin-American companies.es. However, implications of double materiality in the context of ESG-SDGs connection are not discussed, while the results are limited to specific geographical regions. Through a qualitative research based on content analysis of sustainability reports for European companies, Correa-Mejia, Correa-Garcia, and GarciaBenau (2024) identify differences between the form and the substance of the concept of double materiality in business practice. The sample limitation to a relatively low number of companies from a specific region could affect the robustness of the results and a possible extrapolation. In addition, the estimation of the level of implementation of the double materiality concept is influenced by the subjectivism that characterises the grouping and interpretation of data collected through content analysis. Monteiro et al. (2024) limit their research to investigating the relationship between SDG5 and ESG reporting practices for UE companies, while Nicolo et al. (2024) analyse the impact of ESG performance on SDG score for a sample of international companies, limited to only 2, 402 observations for 635 companies from 45 countries, regionally differentiated. Fiandrino, Tonelli and Devalle (2022) point out a variety of research methods regarding the double materiality concept, underscored by diverse theoretical approach. These contrasts with respect to the methodological and contextual differences could highlight a potential lack of convergence at the level of applicability of double materiality in the context of sustainability reporting. Prior literature (Monteiro et al., 2024; Tyan, Liu, and Fu, 2024) emphasises that to better understand double materiality phenomena, more in-depth analyses of SDG disclosure across companies, countries, and longer reporting horizons should be analysed as associated with ESG policies and practices. The growth of incorporating ESG aspects into the sustainable business and decision making process can be motivated more by its impact on corporate value (financial materiality) than by ethical concerns related to the impact of the company on society and the environment (impact materiality). The two sides of materiality embedded in corporate sustainability data reported by companies around the world following the launch of the Sustainable Development Goals in 2015 are addressed, with the aim of filling the gap identified in previous studies. In light of these considerations, there is a noticeable need to initiate research that explores the relationship between ESG policies and practices (as financial materiality) and prioritisation of SDGs (as impact materiality) for a holistic understanding of business strategy. This research aims to provide significant contributions to existing research gaps regarding the concept of double materiality and is designed to respond to future research AE Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness 946 Amfiteatru Economic directions identified in the existing literature. Hence, three main research hypotheses are formulated: RH1. There is a significant difference in the double materiality perspectives for EU and nonEU companies. RH2. Financial materiality is strongly associated with impact materiality. RH3. An increase in impact materiality has a significant positive influence on financial materiality. 2. Research methodology This research aims to investigate various aspects of sustainability reporting framed within the double materiality approach required by European and international regulations and standards. The study reveals the importance of the concept of double materiality (financial materiality and impact materiality) in addressing the sustainability nexus by connecting the requirements of the 17 SDGs with the ESG policies and practices reported by companies. 2.1. Data and research variables The initial sample considered for this empirical study consists of a total of 58,985 companyyear observations (not tabulated in this paper, but available upon request), collected from Refinitiv Eikon database, for international companies activating in non-financial industries, over the period 2015-2024. The Refinitiv Eikon platform has been selected due to the comprehensive coverage of both ESG scores and SDGs included in corporate reporting, as well as financial indicators. The complex methodology used (LSEG, 2023), with a history dating back to 2002, and covering more than 90% of global market capitalisation for more than 15,500 global public and private companies, ensures the validity of the data used in this study. The use of international listed companies (also studied by Khaled, Ali and Mohamed, 2021 and Nicolo et al., 2024) captures the increased regulations placed on corporate sustainability requirements over the last years, around the world. The 2015-2024 time frame was chosen to explore the evolution of ESG policies and practices reporting along with SDG prioritisation starting immediately after the release of the UN 2030 Agenda, until the current period. Observations with missing data for ESG, SDG scores, and control variables were eliminated, generating an intermediate sample of 43,424 observations. Based on the descriptive statistics related to skewness and kurtosis subsequently analysed, high values have been detected for the variables: Return on assets (ROA), Free cash flow (FCF), and Financial leverage (LEV). Using the drop function from STATA v.18, the extreme values computed for the three variables based on the 1% and 99% percentiles were excluded, resulting in a final sample of 40,867 observations for 10,075 companies from 91 countries around the world, activating in 10 different industries. Additionally, the overall sample was split into two sub-samples: one of 6,316 observations with companies having the headquarters in the EU countries and one of 34,551 observations with companies not established in EU countries. Thus, adding to previous research, this study extends both the analysed period, and the number of sampled companies, taking into consideration the institutional context for the two sub-samples (EU companies and non-EU companies). It directly explains the prevailing specific approaches at Sustainability Reporting: Catalyst for Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 953 Table no. 5. Robustness checks for regression analysis Variables DV: ENV DV: SOC DV: GOV Overall sample N=40,7867 obs. SDG 0.059*** 0.064*** 0.020*** SDG_ENV 0.015*** 0.011** 0.006 SDG_SOC 0.029*** 0.032*** 0.007 SDG_GOV 0.016** 0.021*** 0.007 EU sample N=6,316 obs. SDG 0.035*** 0.030*** 0.017* SDG_ENV 0.022* -0.009 0.008 SDG_SOC -0.004 0.013 0.007 SDG_GOV 0.017 0.025** 0.003 Non-EU sample N=34,551 obs. SDG 0.063*** 0.069*** 0.018*** SDG_ENV 0.014** 0.016** 0.006 SDG_SOC 0.035*** 0.032*** 0.006 SDG_GOV 0.015** 0.021*** 0.006 Notes: Variables are defined in Table no.1. The symbols ***, ** and * indicate significance at the 1%, 5% and 10% levels, respectively. Control variables, year, industry, and country FE and robust t-statistics are included (values not tabulated, available on request). Source: Data collected from Refinitiv Eikon, processed by authors using STATA 18 version. Conclusions This empirical study examines the double materiality perspectives included in sustainability reporting requirements, exploring potential contributions to connecting the SDGs to company-level sustainability to improve ESG policies and practices reporting. Despite the existing research connecting ESG policies and practices to sustainable development goals, most of these studies focus on alignment among various requirements, the connection of the SDGs with corporate performance, or on disclosing the implementation of double materiality requirements. Although extensive conceptual debate has been identified in the literature on double materiality, there remains a lack of empirical research in this emerging field. In order to add to previous research and to fill the gap regarding dimensions less explored thus far, the original contribution of the present study consists in proposing a shift in the research paradigm, with a focus on the complexity of the double materiality concept. Thus, through empirical research conducted on a relevant sample, this research examines the interconnection of the two perspectives, financial materiality and impact materiality. The enactment of the findings into the practices of companies, along with the necessity of differentiated approach for EU versus non-EU companies, represents contributions grounded in scientifically validated results and supports the advancement of informed management decisions. The main findings illustrate differences in ESG policies and practices, as well as in SDG prioritisation for EU compared to non-EU companies, that may be generated by different regulatory frameworks and standards for sustainability reporting. The correlation analysis highlights that environmentally related SDGs are more prioritised by companies with stronger environmental ESG policies and practices. Muchmore, socially-oriented companies seem to prioritise more the SDGs, compared to governance-oriented companies. The results AE Double Materiality in Sustainability Reporting: Revealing ESG-SDGs Connections for Businesses’ Awareness 954 Amfiteatru Economic are further validated by regressions with decomposed and alternative measures, showing that the higher the prioritisation of SDGs, the more ESG policies and practices are reported by companies, both overall, but also for each pillar. The underlying theories are validated by the findings illustrating that reporting of ESG policies and practices may benefit from prioritisation of SDGs. First, stakeholder theory states that companies participate in ESG activities to satisfy the demands and expectations of different stakeholders, creating a long-term relationship between them. Second, in line with the legitimacy theory, in order to ensure a positive impact on society and the environment where they activate, companies became more open towards ESG initiatives. Third, institutional theory provides an understanding of how companies react to institutional frameworks, societal expectations, and external influences. In conclusion, this research validates the statement that double materiality may raise awareness of businesses to improve corporate sustainability policies and practices, reflected in ESG scores, considering stakeholders’ interests, and prioritising SDGs. Thus, investors' interests in sustainability (financial materiality) are reconciled with the external impact of the business on society and the environment (impact materiality). Although this study sheds new light on the research of double materiality in sustainability reporting, limitations related to the unequal distribution of EU companies compared to nonEU countries, the heterogeneity of the sample, the partial reference to the specific ESG categories or to individual SDGs, as well as management inside perspectives are acknowledged. Furthermore, potential limitations of the data extracted from Refinitiv should be highlighted, as well as the generic endogeneity risk that characterises regression-based research. Future research may extend the investigation by including an in-depth analysis of each ESG policy and practice and each SDG. In addition, a sectoral analysis can be performed to establish how various industries prioritise the SDGs. To successfully support the goals of the 2030 Agenda, future research may address the priority ranking of SGDs taking into account characteristics at the country and company level. Furthermore, causality analysis may identify further insightful connections between ESG and SDGs. Acknowledgements This paper was co-financed by The Bucharest University of Economic Studies during the PhD program. References Adams, C.A. and Abhayawansa, S., 2022. 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