Two sides of the same risk: double materiality in a region under pressure

When the Strait of Hormuz effectively shut down in late February 2026, GCC boardrooms went straight into firefighting mode. Rerouting shipments. Renegotiating contracts. Bracing for the hit to margins. Understandably so.

But here's what tends to happen in a crisis: sustainability gets quietly moved to the "we'll come back to that" pile. Budgets tighten, priorities shift, and the thinking becomes short-term. It's a natural reaction. It's also the wrong one. Because the very disruptions companies are scrambling to manage right now are sustainability issues, they just don't always get labelled that way. Energy shocks, supply chain fractures, workforce displacement, rising emissions from rerouted shipping. This isn't separate from your ESG strategy. It is your ESG strategy.

The framework that makes this connection explicit has a name: double materiality.

Both sides of the same problem

Traditional materiality looks outward: what impact does your business have on people and the environment? Double materiality adds the inward view: how do those same sustainability issues come back to affect your financial performance? Two directions, one picture.

So what happens when you actually apply that lens to the current crisis?

Take a local GCC construction company. Through a single materiality lens, the Hormuz crisis looks like a procurement cost problem: steel prices spike, project timelines slip. That's real, but it's only half the picture. Apply the second lens and things get more interesting. Shipping reroutes have doubled transit emissions. Labour supply from South and Southeast Asia is disrupted, raising workforce welfare questions, and materials like aluminium and cement now face EU Carbon Border Adjustment Mechanism scrutiny.

These aren't separate problems. They're the same problem, viewed from two directions. A materiality assessment that only captures one side isn't just incomplete. It's increasingly non-compliant.

And yet that's exactly what's happening. The Allianz Trade Global Survey 2026 found that geopolitical risk now tops the corporate risk register for 65% of firms, up 11 percentage points in a year. At the same time, global ESG commitment dropped 22 percentage points. Companies are narrowing their view at the precise moment they need to widen it.

Three things worth doing now

Map your value chain under stress. Look at where conflict-driven disruptions (energy volatility, shipping reroutes, labour restrictions) intersect with your sustainability impacts. That’s where your most material topics actually live.

Ditch the generic survey. We’ve seen the shift across our client base: targeted workshops with operational leaders and procurement teams consistently produce better, more actionable insight than broad-brush stakeholder questionnaires. If you’re still relying on a survey alone, it’s worth rethinking.

Show both lenses to your leadership tea,. Present financial exposure and outward impact side by side. This is what double materiality looks like in practice, and it’s what regulators and investors are starting to expect.

The Strait will reopen. Supply chains will find new routes. But the underlying lesson, that sustainability risk and business risk are really the same risk viewed from different angles, is only going to sharpen. For companies in the Middle East, there hasn’t been a more urgent moment to start looking through both lenses.

To discuss how Emperor can support your double materiality assessment, ESG strategy or sustainability reporting, get in touch at mena@emperor.works