GRI ESRS-Professional Practice Exams
Last updated on Oct 21,2026- Exam Code: ESRS-Professional
- Exam Name: ESRS Professional Certification Exam
- Certification Provider: GRI
- Latest update: Oct 21,2026
Question #21
Which of the following correctly fills the gaps in the paragraph below?
ESRS 2 IRO-1 mandates organizations to disclose their process to identify __________ and assess their materiality, including if and how consultation with __________ informed the outcome of the process. Because most __________ arise from impacts, impact materiality is often the starting point for __________.
- A . affected stakeholders; impacts, risks, and opportunities; financial materiality; risks and opportunities.
- B . impacts, risks, and opportunities; affected stakeholders; risks and opportunities; financial materiality.
- C . financial materiality; affected stakeholders; impacts, risks, and opportunities; risks and opportunities.
Correct Answer: B
B
Explanation:
ESRS 2 IRO-1 requires organizations to disclose their process for identifying impacts, risks, and opportunities and assess their materiality. This includes detailing whether and how affected stakeholders were consulted during the process. Since risks and opportunities typically stem from impacts, the process of impact materiality assessment serves as a natural starting point before evaluating their financial materiality.
Identification of Impacts, Risks, and Opportunities (IROs):
Organizations must disclose their methodology for identifying material impacts, risks, and opportunities.
These include both actual and potential impacts on people and the environment, considering short-, medium-, and long-term horizons.
Consultation with Affected Stakeholders:
ESRS 2 IRO-1 requires disclosure of whether and how the consultation with affected stakeholders influenced the identification of material sustainability matters.
Stakeholder engagement is crucial in determining the scope and severity of sustainability impacts.
Role of Impact Materiality:
Impact materiality assessment precedes the evaluation of risks and opportunities.
Since most risks and opportunities originate from impacts, impact materiality serves as the starting
point for assessing their financial materiality.
Financial Materiality Evaluation:
Financial materiality pertains to the extent that a sustainability matter affects the undertaking’s financial position, performance, cash flows, or cost of capital.
It evaluates whether an impact or risk could reasonably be expected to have a material financial
effect on the organization.
Why is B the Correct Answer?
"Impacts, risks, and opportunities" correctly defines the scope of ESRS 2 IRO-1.
"Affected stakeholders" are explicitly referenced as a crucial element in the disclosure process. "Risks and opportunities" emerge from sustainability impacts, making impact materiality the logical starting point.
"Financial materiality" is the final step, determining the financial significance of sustainability risks and opportunities.
Thus, the correct sequence is B: impacts, risks, and opportunities; affected stakeholders; risks and opportunities; financial materiality.
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, Annex I: ESRS 2 IRO-1 materiality assessment requirements.
EFRAG Compilation of Explanations (January – November 2024): Explanation of ESRS 2 IRO-1 and its link to impact materiality.
B
Explanation:
ESRS 2 IRO-1 requires organizations to disclose their process for identifying impacts, risks, and opportunities and assess their materiality. This includes detailing whether and how affected stakeholders were consulted during the process. Since risks and opportunities typically stem from impacts, the process of impact materiality assessment serves as a natural starting point before evaluating their financial materiality.
Identification of Impacts, Risks, and Opportunities (IROs):
Organizations must disclose their methodology for identifying material impacts, risks, and opportunities.
These include both actual and potential impacts on people and the environment, considering short-, medium-, and long-term horizons.
Consultation with Affected Stakeholders:
ESRS 2 IRO-1 requires disclosure of whether and how the consultation with affected stakeholders influenced the identification of material sustainability matters.
Stakeholder engagement is crucial in determining the scope and severity of sustainability impacts.
Role of Impact Materiality:
Impact materiality assessment precedes the evaluation of risks and opportunities.
Since most risks and opportunities originate from impacts, impact materiality serves as the starting
point for assessing their financial materiality.
Financial Materiality Evaluation:
Financial materiality pertains to the extent that a sustainability matter affects the undertaking’s financial position, performance, cash flows, or cost of capital.
It evaluates whether an impact or risk could reasonably be expected to have a material financial
effect on the organization.
Why is B the Correct Answer?
"Impacts, risks, and opportunities" correctly defines the scope of ESRS 2 IRO-1.
"Affected stakeholders" are explicitly referenced as a crucial element in the disclosure process. "Risks and opportunities" emerge from sustainability impacts, making impact materiality the logical starting point.
"Financial materiality" is the final step, determining the financial significance of sustainability risks and opportunities.
Thus, the correct sequence is B: impacts, risks, and opportunities; affected stakeholders; risks and opportunities; financial materiality.
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, Annex I: ESRS 2 IRO-1 materiality assessment requirements.
EFRAG Compilation of Explanations (January – November 2024): Explanation of ESRS 2 IRO-1 and its link to impact materiality.
Question #22
Which principles are essential for incorporating information by reference in the sustainability statement?
- A . The referenced information must be clearly identified in the original document.
- B . It can be published later than the management report.
- C . It must comply with digitalization requirements.
- D . It must meet the same level of assurance as the sustainability statement.
Correct Answer: A, C, D
A, C, D
Explanation:
Incorporation by reference in sustainability statements under ESRS must adhere to specific principles to ensure transparency, accessibility, and alignment with financial and regulatory reporting.
The key principles are:
(A) The referenced information must be clearly identified in the original document.
ESRS mandates that referenced disclosures must be explicitly identified in the original document to prevent ambiguity and ensure clear linkage to the sustainability statement. (C) It must comply with digitalization requirements.
The referenced data must meet the same technical digitalization standards as the sustainability
statement to ensure consistency and usability across digital platforms.
(D) It must meet the same level of assurance as the sustainability statement.
Any information incorporated by reference must be subject to at least the same level of assurance as the sustainability statement itself, ensuring reliability and accuracy.
Incorrect Option:
(B) It can be published later than the management report.
ESRS does not allow referenced information to be published after the management report. It must be available at the same time or earlier to maintain the coherence of disclosures.
Official
Reference: Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 9.1 C Defines the principles of incorporation by reference.
EFRAG Compilation Explanations (January – July 2024) C Provides guidance on referenced information’s role in digital and assurance compliance. Thus, the correct answers are A, C, and D.
A, C, D
Explanation:
Incorporation by reference in sustainability statements under ESRS must adhere to specific principles to ensure transparency, accessibility, and alignment with financial and regulatory reporting.
The key principles are:
(A) The referenced information must be clearly identified in the original document.
ESRS mandates that referenced disclosures must be explicitly identified in the original document to prevent ambiguity and ensure clear linkage to the sustainability statement. (C) It must comply with digitalization requirements.
The referenced data must meet the same technical digitalization standards as the sustainability
statement to ensure consistency and usability across digital platforms.
(D) It must meet the same level of assurance as the sustainability statement.
Any information incorporated by reference must be subject to at least the same level of assurance as the sustainability statement itself, ensuring reliability and accuracy.
Incorrect Option:
(B) It can be published later than the management report.
ESRS does not allow referenced information to be published after the management report. It must be available at the same time or earlier to maintain the coherence of disclosures.
Official
Reference: Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 9.1 C Defines the principles of incorporation by reference.
EFRAG Compilation Explanations (January – July 2024) C Provides guidance on referenced information’s role in digital and assurance compliance. Thus, the correct answers are A, C, and D.
Question #23
Which of the following can organizations use to identify actual and potential IROs during Step B of the double materiality assessment process? Select all options that apply.
- A . The list of sustainability matters in ESRS 1 AR 16
- B . Financial materiality thresholds
- C . Due diligence processes
- D . Feedback from stakeholders
Correct Answer: A, C, D
A, C, D
Explanation:
During Step B of the double materiality assessment process, organizations must identify actual and potential impacts, risks, and opportunities (IROs). The ESRS framework recommends the following methods:
A, C, D
Explanation:
During Step B of the double materiality assessment process, organizations must identify actual and potential impacts, risks, and opportunities (IROs). The ESRS framework recommends the following methods:
Question #24
Which of the following correctly fills the gaps in the paragraph below?
Under the ESRS, engagement with affected stakeholders is a core element of __________. The outcome of the due diligence process informs __________. The ESRS encourage further engagement with stakeholders to collect their input and feedback on the organization’s conclusions regarding __________.
- A . the materiality assessment; the material impacts, risks, and opportunities; due diligence
- B . the materiality assessment; due diligence; the material impacts, risks, and opportunities
- C . due diligence; the materiality assessment; the material impacts, risks, and opportunities
- D . the material impacts, risks, and opportunities; due diligence; the materiality assessment
Correct Answer: C
C
Explanation:
Under the ESRS, engagement with affected stakeholders is a core element of due diligence. The outcome of the due diligence process informs the materiality assessment. The ESRS encourage further engagement with stakeholders to collect their input and feedback on the organization’s conclusions regarding the material impacts, risks, and opportunities.
This sequence is supported by the official text of Commission Delegated Regulation (EU) 2023/2772 and various ESRS-related documents. The standard emphasizes due diligence as a starting point for the materiality assessment process. The assessment then determines the organization’s material impacts, risks, and opportunities, which is crucial for effective stakeholder engagement.
Due Diligence: The ESRS process starts with due diligence, as outlined in the Commission Delegated Regulation (EU) 2023/2772, to identify relevant sustainability matters and affected stakeholders. Materiality Assessment: The findings from the due diligence process are then used to inform the materiality assessment, as discussed in EFRAG’s guidance documents.
Material Impacts, Risks, and Opportunities: Finally, the organization engages with stakeholders to review and refine its conclusions about material impacts, risks, and opportunities, as per the ESRS requirements.
Reference: Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU
EFRAG Guidance on Materiality Assessment in ESRS
ESRS Due Diligence Framework, as outlined in Compilation Explanations and Mapping Sustainability
Matters with Disclosure Requirements
C
Explanation:
Under the ESRS, engagement with affected stakeholders is a core element of due diligence. The outcome of the due diligence process informs the materiality assessment. The ESRS encourage further engagement with stakeholders to collect their input and feedback on the organization’s conclusions regarding the material impacts, risks, and opportunities.
This sequence is supported by the official text of Commission Delegated Regulation (EU) 2023/2772 and various ESRS-related documents. The standard emphasizes due diligence as a starting point for the materiality assessment process. The assessment then determines the organization’s material impacts, risks, and opportunities, which is crucial for effective stakeholder engagement.
Due Diligence: The ESRS process starts with due diligence, as outlined in the Commission Delegated Regulation (EU) 2023/2772, to identify relevant sustainability matters and affected stakeholders. Materiality Assessment: The findings from the due diligence process are then used to inform the materiality assessment, as discussed in EFRAG’s guidance documents.
Material Impacts, Risks, and Opportunities: Finally, the organization engages with stakeholders to review and refine its conclusions about material impacts, risks, and opportunities, as per the ESRS requirements.
Reference: Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU
EFRAG Guidance on Materiality Assessment in ESRS
ESRS Due Diligence Framework, as outlined in Compilation Explanations and Mapping Sustainability
Matters with Disclosure Requirements
Question #25
Indicate whether the following statement is true or false.
Nature is recognized as a "silent stakeholder" in the ESRS because it cannot voice concerns directly but is essential to sustainability contexts.
- A . True
- B . False
Correct Answer: A
A
Explanation:
Nature is indeed recognized as a "silent stakeholder" in the European Sustainability Reporting Standards (ESRS). This term implies that, although nature cannot actively voice its concerns, it remains a critical component of sustainability reporting due to its fundamental role in sustaining life and economic activity. ESRS emphasizes that organizations must consider their impacts on nature, ecosystems, and biodiversity as part of their sustainability disclosures.
This recognition aligns with the concept of double materiality embedded in the ESRS framework, which considers both the financial impact on an organization and the organization’s impact on environmental and social matters. The ESRS explicitly integrates biodiversity and ecosystems (ESRS E4) as a key topic, reflecting the need to account for the effects of business activities on nature, even if nature itself cannot actively advocate for protection.
The silent stakeholder concept reinforces the duty of care that organizations hold in assessing and mitigating their impacts on biodiversity, land use, pollution, and natural resources. This aligns with the United Nations Sustainable Development Goals (SDGs) and the EU Biodiversity Strategy for 2030, both of which emphasize the protection and restoration of natural ecosystems. Official Reference: Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 (ESRS E4 – Biodiversity and Ecosystems).
EFRAG Guidance on Stakeholder Engagement C Highlights nature as an affected stakeholder in sustainability matters.
EU Biodiversity Strategy for 2030 C Emphasizes that economic activities must integrate ecosystem preservation and restoration.
This confirms that the statement is true under ESRS standards.
A
Explanation:
Nature is indeed recognized as a "silent stakeholder" in the European Sustainability Reporting Standards (ESRS). This term implies that, although nature cannot actively voice its concerns, it remains a critical component of sustainability reporting due to its fundamental role in sustaining life and economic activity. ESRS emphasizes that organizations must consider their impacts on nature, ecosystems, and biodiversity as part of their sustainability disclosures.
This recognition aligns with the concept of double materiality embedded in the ESRS framework, which considers both the financial impact on an organization and the organization’s impact on environmental and social matters. The ESRS explicitly integrates biodiversity and ecosystems (ESRS E4) as a key topic, reflecting the need to account for the effects of business activities on nature, even if nature itself cannot actively advocate for protection.
The silent stakeholder concept reinforces the duty of care that organizations hold in assessing and mitigating their impacts on biodiversity, land use, pollution, and natural resources. This aligns with the United Nations Sustainable Development Goals (SDGs) and the EU Biodiversity Strategy for 2030, both of which emphasize the protection and restoration of natural ecosystems. Official Reference: Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 (ESRS E4 – Biodiversity and Ecosystems).
EFRAG Guidance on Stakeholder Engagement C Highlights nature as an affected stakeholder in sustainability matters.
EU Biodiversity Strategy for 2030 C Emphasizes that economic activities must integrate ecosystem preservation and restoration.
This confirms that the statement is true under ESRS standards.
Question #26
Indicate whether the following statement is true or false.
In the ESRS, impact materiality is considered the starting point for the double materiality assessment because material impacts may trigger financial risks and opportunities in the future.
- A . True
- B . False
Correct Answer: A
A
Explanation:
Impact materiality is indeed considered the starting point for the double materiality assessment in the ESRS. The reason is that material impacts on sustainability matters can generate financial risks and opportunities in the future. The ESRS framework follows this structure because: Interrelation Between Impact and Financial Materiality
Double materiality includes two dimensions:
a) Impact materiality (how the company affects people and the environment).
b) Financial materiality (how sustainability matters affect the company’s financial performance). Impact materiality assessments often precede financial materiality because many sustainability issues initially manifest as external environmental and social impacts before affecting the company’s financial results.
Regulatory Confirmation of Impact as the Starting Point
According to ESRS 1, section 3.3, impact materiality is typically assessed first, unless a financial risk or opportunity exists independently of an impact.
A sustainability matter may become financially material over time due to regulatory changes, evolving market expectations, or direct financial consequences.
Illustration of the Double Materiality Process
Example: A company engaged in high carbon emissions might initially consider this an impact materiality issue (environmental harm). However, increased carbon pricing, regulatory changes, and shifting investor preferences can later transform this into a financial materiality issue.
Conclusion:
Since impact materiality serves as a precursor to financial materiality in most cases, the statement is true.
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and
CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 3.3: Double Materiality Framework.
EFRAG Compilation of Explanations (January – July 2024): Confirmation that impact materiality assessment is the typical entry point.
A
Explanation:
Impact materiality is indeed considered the starting point for the double materiality assessment in the ESRS. The reason is that material impacts on sustainability matters can generate financial risks and opportunities in the future. The ESRS framework follows this structure because: Interrelation Between Impact and Financial Materiality
Double materiality includes two dimensions:
a) Impact materiality (how the company affects people and the environment).
b) Financial materiality (how sustainability matters affect the company’s financial performance). Impact materiality assessments often precede financial materiality because many sustainability issues initially manifest as external environmental and social impacts before affecting the company’s financial results.
Regulatory Confirmation of Impact as the Starting Point
According to ESRS 1, section 3.3, impact materiality is typically assessed first, unless a financial risk or opportunity exists independently of an impact.
A sustainability matter may become financially material over time due to regulatory changes, evolving market expectations, or direct financial consequences.
Illustration of the Double Materiality Process
Example: A company engaged in high carbon emissions might initially consider this an impact materiality issue (environmental harm). However, increased carbon pricing, regulatory changes, and shifting investor preferences can later transform this into a financial materiality issue.
Conclusion:
Since impact materiality serves as a precursor to financial materiality in most cases, the statement is true.
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and
CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 3.3: Double Materiality Framework.
EFRAG Compilation of Explanations (January – July 2024): Confirmation that impact materiality assessment is the typical entry point.
Question #27
Which of the following elements are included in the scope of a CSRD assurance engagement? Select all that apply.
- A . Verification of the company’s financial statements
- B . Compliance of the reporting with the relevant ESRS
- C . Compliance with the requirement to tag the sustainability reporting
Correct Answer: B, C
B, C
Explanation:
A CSRD assurance engagement primarily focuses on ensuring compliance with the ESRS and the proper digital tagging of sustainability information. The elements included in the assurance scope are:
B. Compliance of the reporting with the relevant ESRS ✅
Assurance engagements under the CSRD verify whether sustainability reports comply with the European Sustainability Reporting Standards (ESRS).
The assurance provider reviews disclosures to ensure alignment with ESRS requirements, including double materiality assessments and mandatory data points.
C. Compliance with the requirement to tag the sustainability reporting ✅
CSRD requires that sustainability information be digitally tagged using the European Single Electronic Format (ESEF) to ensure machine readability and comparability.
Assurance providers verify the correct application of this tagging requirement, ensuring consistency with XBRL (eXtensible Business Reporting Language) standards.
Why is A. Verification of the company’s financial statements ❌ incorrect?
A CSRD assurance engagement does not cover financial statements.
Financial audits are conducted separately, under the International Financial Reporting Standards (IFRS) or local GAAP requirements.
Sustainability assurance only applies to non-financial sustainability disclosures under ESRS.
Conclusion:
The scope of a CSRD assurance engagement includes:
✅ Compliance with ESRS (B)
✅ Verification of digital tagging (C) ❌ Not financial statement audits (A)
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, ESRS assurance scope.
EU Sustainable Finance Platform Report (2025): Confirmation of digital tagging as part of CSRD assurance.
B, C
Explanation:
A CSRD assurance engagement primarily focuses on ensuring compliance with the ESRS and the proper digital tagging of sustainability information. The elements included in the assurance scope are:
B. Compliance of the reporting with the relevant ESRS ✅
Assurance engagements under the CSRD verify whether sustainability reports comply with the European Sustainability Reporting Standards (ESRS).
The assurance provider reviews disclosures to ensure alignment with ESRS requirements, including double materiality assessments and mandatory data points.
C. Compliance with the requirement to tag the sustainability reporting ✅
CSRD requires that sustainability information be digitally tagged using the European Single Electronic Format (ESEF) to ensure machine readability and comparability.
Assurance providers verify the correct application of this tagging requirement, ensuring consistency with XBRL (eXtensible Business Reporting Language) standards.
Why is A. Verification of the company’s financial statements ❌ incorrect?
A CSRD assurance engagement does not cover financial statements.
Financial audits are conducted separately, under the International Financial Reporting Standards (IFRS) or local GAAP requirements.
Sustainability assurance only applies to non-financial sustainability disclosures under ESRS.
Conclusion:
The scope of a CSRD assurance engagement includes:
✅ Compliance with ESRS (B)
✅ Verification of digital tagging (C) ❌ Not financial statement audits (A)
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, ESRS assurance scope.
EU Sustainable Finance Platform Report (2025): Confirmation of digital tagging as part of CSRD assurance.
Question #28
Which of the following is included in the environmental section of the topical ESRS?
- A . Disclosures relating to social impact and labor rights
- B . Information about the organization’s financial performance
- C . Disclosures relating to environmental objectives defined in the EU Taxonomy
- D . Data about corporate governance and board diversity
Correct Answer: C
C
Explanation:
The Environmental Section of the topical ESRS includes disclosure requirements covering environmental sustainability matters. This section specifically relates to environmental objectives as defined in the EU Taxonomy, ensuring alignment with broader European sustainability goals. The topical ESRS environmental standards (ESRS E1 – E5) cover:
ESRS E1 C Climate Change (Mitigation & Adaptation)
ESRS E2 C Pollution
ESRS E3 C Water and Marine Resources
ESRS E4 C Biodiversity and Ecosystems
ESRS E5 C Resource Use and Circular Economy
These standards align with the environmental objectives of the EU Taxonomy Regulation (Regulation (EU) 2020/852) and require organizations to report on their material environmental impacts, risks, and opportunities (IROs).
Why Other Options Are Incorrect:
C
Explanation:
The Environmental Section of the topical ESRS includes disclosure requirements covering environmental sustainability matters. This section specifically relates to environmental objectives as defined in the EU Taxonomy, ensuring alignment with broader European sustainability goals. The topical ESRS environmental standards (ESRS E1 – E5) cover:
ESRS E1 C Climate Change (Mitigation & Adaptation)
ESRS E2 C Pollution
ESRS E3 C Water and Marine Resources
ESRS E4 C Biodiversity and Ecosystems
ESRS E5 C Resource Use and Circular Economy
These standards align with the environmental objectives of the EU Taxonomy Regulation (Regulation (EU) 2020/852) and require organizations to report on their material environmental impacts, risks, and opportunities (IROs).
Why Other Options Are Incorrect:
Question #29
Which of the following statements about the EU’s Corporate Sustainability Reporting Directive (CSRD) and its predecessor, the Non-Financial Reporting Directive (NFRD), are correct? Select all options that apply.
- A . The NFRD required all companies in the EU to include a non-financial statement in their annual reports.
- B . The NFRD applied to large public-interest entities with 500 or more employees, such as listed companies, credit institutions, and insurance undertakings.
- C . The NFRD mandated external assurance for sustainability information in all Member States.
- D . The NFRD replaced the CSRD to expand reporting requirements and organization coverage.
- E . The CSRD was introduced to address the limitations of the NFRD in scope and reporting requirements.
Correct Answer: B, E
B, E
Explanation:
The Corporate Sustainability Reporting Directive (CSRD) replaced the Non-Financial Reporting Directive (NFRD) to address its limitations in scope and reporting requirements.
Below are the explanations for each option:
B, E
Explanation:
The Corporate Sustainability Reporting Directive (CSRD) replaced the Non-Financial Reporting Directive (NFRD) to address its limitations in scope and reporting requirements.
Below are the explanations for each option:
Question #30
Which of the following are true about impact materiality and financial materiality under the ESRS? Select all that apply.
- A . A sustainability topic is considered material only if it affects the organization’s financial performance.
- B . Impact materiality refers to the organization’s potential positive or negative impacts on people or the environment.
- C . Financial materiality refers to topics that could affect the organization’s risks, opportunities, and financial outcomes.
- D . Impact materiality assessments are less important than financial materiality assessments and should be prioritized last.
- E . The ESRS suggest starting with financial materiality, as it directly influences sustainability reporting.
Correct Answer: B, C
B, C
Explanation:
Understanding Impact and Financial Materiality under ESRS
The ESRS framework is based on double materiality, which comprises:
Impact Materiality C This relates to the organization’s potential positive or negative impacts on people or the environment, irrespective of whether these impacts translate into financial effects. Financial Materiality C This refers to sustainability matters that affect the company’s financial position, including risks and opportunities that influence financial outcomes over the short, medium, or long term.
Why the other options are incorrect:
(A) False: A sustainability topic can be material even if it does not directly affect financial performance; it may still be impact material.
(D) False: Impact and financial materiality are equally important under ESRS. Neither is prioritized over the other.
(E) False: The ESRS process generally begins with impact materiality, not financial materiality.
Reference: Commission Delegated Regulation (EU) 2023/2772, Section 3.3 on Double Materiality EFRAG Materiality Guidance on ESRS, which provides methodologies for assessing impact and financial materiality
B, C
Explanation:
Understanding Impact and Financial Materiality under ESRS
The ESRS framework is based on double materiality, which comprises:
Impact Materiality C This relates to the organization’s potential positive or negative impacts on people or the environment, irrespective of whether these impacts translate into financial effects. Financial Materiality C This refers to sustainability matters that affect the company’s financial position, including risks and opportunities that influence financial outcomes over the short, medium, or long term.
Why the other options are incorrect:
(A) False: A sustainability topic can be material even if it does not directly affect financial performance; it may still be impact material.
(D) False: Impact and financial materiality are equally important under ESRS. Neither is prioritized over the other.
(E) False: The ESRS process generally begins with impact materiality, not financial materiality.
Reference: Commission Delegated Regulation (EU) 2023/2772, Section 3.3 on Double Materiality EFRAG Materiality Guidance on ESRS, which provides methodologies for assessing impact and financial materiality