Pass the GRI GRI Sustainability Professionals ESRS-Professional Questions and answers with CertsForce

Thesustainability statementunder ESRS is structured according toESRS 1 and ESRS 2, outlining specific disclosure requirements. The required disclosures include:

General Disclosure Requirements from ESRS 2

ESRS 2 outlinesgeneral disclosure requirements, including governance, strategy, and impact, risk, and opportunity management (IROs). These disclosures are mandatory for all undertakings, providing the foundation of the sustainability statement​.

✅(A) is correct

Environmental Objectives under the EU Taxonomy Regulation

Companies must disclose theiralignment with the EU Taxonomy Regulation, particularly underArticle 8 of Regulation (EU) 2020/852, which includes financial and non-financial companies' obligations regarding taxonomy-aligned activities​.

✅(B) is correct

Financial Performance Metrics from IFRS Reports

Financial metrics from IFRS are NOT a required disclosure under ESRS. The sustainability statement focuses on non-financial reporting, whilefinancial performance remains under IFRS standards in financial statements.

❌(C) is incorrect

Governance-Related Information Determined by the Materiality Assessment

Governance disclosures (ESRS G1 Business Conduct)include transparency about policies, risk management, and ethical business practices. Themateriality assessment determines the necessary governance disclosuresbased on entity-specific risks and opportunities​.

✅(D) is correct

Conclusion:Thesustainability statement must include general disclosure requirements (A), environmental objectives under the EU Taxonomy (B), and governance-related information based on materiality (D). Financial performance metrics from IFRS reports (C) are not required.

Commission Delegated Regulation (EU) 2023/2772​

Compilation Explanations January - July 2024​

Official References:

TheESRS Taxonomyacts as aframeworkfor tagging sustainability disclosures, ensuring data is structured, consistent, and comparable across organizations.

TheCSRD requires sustainability information to be reported in a digitally accessible format, making it available for both people and machines.

Under the CSRD, sustainability reports will eventually be uploaded to theEuropean Single Access Point (ESAP), centralizing public financial and non-financial information across the EU​.

ESRS as a "framework"– The ESRS taxonomy defines a structure that allows sustainability data to be categorized and tagged effectively​.

"Digitally accessible format"– The CSRD mandates reporting inmachine-readable formatssuch asXBRLto improve transparency and comparability​.

European Single Access Point (ESAP)– ESAP will serve as thecentralized EU platformfor sustainability and financial disclosures​.

Correct Sentence Completion:Explanation of the Selected Answer:References:

EU Taxonomy Regulation and CSRD Reporting Structure​

EFRAG Explanation on ESRS Digital Reporting​

2023/2772, various EFRAG guidance documents, and reports related to CSRD, ESRS, stakeholder engagement, double materiality, external assurance, and digital reporting Study guide References at the end of each question

Under the ESRS framework,employee-related datasuch asheadcount, turnover, and health and safety statisticsare typically the responsibility of theHuman Resources (HR) department. HR is responsible for managing workforce metrics, diversity, inclusion, hiring, terminations, and employee well-being, including health and safety programs.

WhileHealth and Safety (H&S) teamsmay contribute data related to occupational safety and health incidents, the responsibility foraggregating and reportingon overall workforce statistics lies with HR. TheCompliance departmentensures legal and regulatory adherence but does not maintain core employee records, whileMarketinghas no role in employee-related data reporting.

ESRS S1-6:Characteristics of the undertaking’s employees, requiring disclosure of total headcount and workforce breakdown​.

ESRS S1-14:Health and Safety Metrics, detailing occupational safety measures, incidents, and employee well-being programs​.

EFRAG Implementation Guidance on Workforce Reporting, which confirms HR as the responsible entity for employee data aggregation​.

ESRS References:

According to the European Sustainability Reporting Standards (ESRS) under the Commission Delegated Regulation (EU) 2023/2772, stakeholders are defined as individuals or groups who can affect or be affected by the undertaking. The ESRS distinguishes between two main groups of stakeholders:

Affected stakeholders: These are individuals or groups whose interests are affected or could be affected – positively or negatively – by the undertaking’s activities and its direct and indirect business relationships across its value chain.

Users of sustainability statements: These include primary users of general-purpose financial reporting (e.g., existing and potential investors, lenders, and other creditors such as asset managers, credit institutions, and insurance undertakings) and other users, including the undertaking’s business partners, trade unions, social partners, civil society and non-governmental organizations, governments, analysts, and academics​.

Furthermore, engagement with affected stakeholders is a crucial aspect of the undertaking’s ongoing due diligence process and sustainability materiality assessment. This involves identifying and assessing actual and potential negative impacts to inform the materiality assessment process for sustainability reporting​.

Official References:

Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU on sustainability reporting standards​.

ESRS 1: General Requirements, Section 3.1 (Stakeholders and their relevance to the materiality assessment process).

The ESRS (European Sustainability Reporting Standards) framework consists of three primary categories of standards:

ESRS 1 (General Requirements):

ESRS 1 sets out thefundamental principlesand requirements for sustainability reporting.

It provides an overview of the structure and drafting conventions of the ESRS framework, defining the categories of ESRS standards: cross-cutting, topical, and sector-specific.

It also establishes thedouble materiality principleas the basis for sustainability disclosures.

ESRS 2 (General Disclosures):

ESRS 2 outlines thecore disclosure requirementsapplicable to all sustainability topics, ensuring comparability and completeness.

It includes general governance, strategy, impact, risk, and opportunity management disclosures applicable to all sustainability topics.

These disclosure requirements apply to all undertakingsregardless of the specific sustainability topics being reported.

Topical Standards:

The ESRS framework includes tentopical standardscovering the three key dimensions of sustainability:

Environmental (E): ESRS E1 (Climate Change), ESRS E2 (Pollution), ESRS E3 (Water & Marine Resources), ESRS E4 (Biodiversity & Ecosystems), and ESRS E5 (Resource Use & Circular Economy).

Social (S): ESRS S1 (Own Workforce), ESRS S2 (Workers in the Value Chain), ESRS S3 (Affected Communities), and ESRS S4 (Consumers & End-users).

Governance (G): ESRS G1 (Business Conduct).

These standards providespecific requirementson sustainability matters, complementing the general disclosure requirements in ESRS 2.

Sector-Specific Standards:

Sector-specific ESRS arecurrently under development.

These will address sustainability mattersspecific to different industries, ensuring that sectoral nuances are properly considered.

They aim tofill gaps not sufficiently coveredby the topical standards by defining industry-specific impacts, risks, and opportunities.

ESRS 1 (General Requirements) comes first, setting the foundation.

ESRS 2 (General Disclosures) follows, providing cross-cutting disclosure requirements.

Topical standards are next, covering specific sustainability topics.

Sector-specific standards are the final category, though they are still in development.

Why is C. ESRS 1; ESRS 2; topical standards; sector-specific standards the correct answer?Thus, the correct order aligns with theofficial structureof the ESRS framework as mandated inCommission Delegated Regulation (EU) 2023/2772​.

Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:

Commission Delegated Regulation (EU) 2023/2772, Annex I: Structure of the ESRS framework​.

EFRAG Compilation of Explanations (January - November 2024): Explanation of ESRS categories​.

EFRAG Mapping of Sustainability Matters to Topical Disclosures (Q&A ID 177): Confirmation of ESRS 1, ESRS 2, and the ten topical standards​.

ESRS 2 is a cross-cutting, sector-agnostic standard (Option A)

ESRS 2 appliesto all undertakings, regardless of sector or industry.

It establishesgeneral disclosuresthat cover governance, strategy, materiality, risks, and sustainability metrics​.

Certain ESRS 2 disclosure requirements are subject to a phase-in period (Option C)

Some disclosure requirements have been phased infor companies with fewer than 750 employees, allowing gradual adoption​.

For instance, disclosures related tobiodiversity (ESRS E4), workforce (ESRS S1-S4), and pollution (ESRS E2)can beomitted for the first 1-2 years, depending on company size​.

B. Reporting organizations don’t have to address all disclosure requirements in ESRS 2

This is incorrect becauseESRS 2 disclosures are mandatory for all reporting organizations. Only topical ESRS requirements depend on materiality assessments​.

Commission Delegated Regulation (EU) 2023/2772, ESRS 2- Defines ESRS 2 as a sector-agnostic, cross-cutting standard​.

EFRAG Compilation Explanations (January–July 2024), Appendix C- Lists ESRS 2 disclosures with phase-in provisions​.

Incorrect Answer:Official References:

UnderESRS 2 and topical ESRS,external assurance is not required for all information reported. Instead, assurance requirements depend onspecific regulatory obligations and the phase-in periods set by the Corporate Sustainability Reporting Directive (CSRD).

Limited Assurance Requirement Initially

CSRDmandates limited assuranceover sustainability information at first, withreasonable assurance (more stringent) to follow in later years​.

However,not all data points require assurance—only those specifically outlined in theEuropean Commission's assurance framework.

Mandatory Assurance for Some Disclosures

ESRS 2 covers general disclosures, but only certainmetrics and targets under specific topical ESRS require external assurance.

Appendix C of ESRS 2 outlines which disclosures require assurance​.

Entity-Specific Exemptions & Phase-in Rules

Some disclosuresdo not require assurance if they are deemed immaterialbased on themateriality assessment​.

SMEs and first-time reportershavephased-in assurance requirements.

Thus,external assurance is not required for all ESRS 2 and topical ESRS disclosures, making the statementTrue.

Commission Delegated Regulation (EU) 2023/2772​

Compilation Explanations January - November 2024​

Official References:

Under ESRS, organizations are required to disclose material impacts, risks, and opportunities (IRO) in accordance withdouble materiality principles. The ESRS framework emphasizes transparency and structured reporting of sustainability matters that arematerial from both impact and financial perspectives.

Key Disclosure Requirements for Material IROsAccording to ESRS 2, organizations must disclose:

(A) The outcomes of their double materiality assessment: Organizations need to explain how they determined material sustainability matters, covering both impact and financial materiality​.

(B) Information outlined in the topical ESRS and sector-specific standards: The disclosure of IROs must align withspecific ESRS topical standards(e.g., ESRS E1 for climate change, ESRS S1 for own workforce) andsector-specific standards, ensuring comprehensive reporting​.

(C) Minimum Disclosure Requirements on policies, actions, and targets: Organizations must disclosepolicies, strategies, action plans, and progress tracking mechanismsrelated to managing material sustainability risks and opportunities. ESRS mandates these disclosures to provide transparency on an entity’s approach torisk mitigation and opportunity realization​.

(D) A general overview of their sustainability policies, even if unrelated to specific material matters:

ESRS doesnotrequire companies to provide general sustainability policy overviewsunlessthey relate to material sustainability matters. The focus is on material disclosures that affect business operations or external stakeholders​.

Commission Delegated Regulation (EU) 2023/2772, ESRS 2, Section 4.1 & IRO-1– Covers disclosure requirements for identifying and assessing material impacts, risks, and opportunities​.

EFRAG Compilation Explanations (January – November 2024)– Details about ESRS 1 and ESRS 2 disclosure requirements on materiality​.

Incorrect OptionOfficial References:

Step A in thedouble materiality assessment processis theinitial stagewhere an organization establishes a foundational understanding of itsbusiness context, activities, and stakeholder relationships. This step is critical in identifying how the entity interacts with environmental, social, and governance (ESG) matters and lays the groundwork for further impact and financial materiality assessments.

Thedouble materiality conceptin the ESRS framework requires organizations to evaluate both:

Impact materiality– How an organization’s activities impact people and the environment.

Financial materiality– How sustainability matters influence the organization's financial position, performance, and cash flows.

Identifying the business environment:Understanding industry-specific sustainability challenges, regulatory requirements, and stakeholder expectations.

Recognizing affected stakeholders:Engaging internal and external stakeholders to determine which sustainability matters are relevant.

Defining dependencies and risks:Evaluating the organization’s dependencies on natural, social, and human capital, and how these can influence business outcomes.

Understanding sector and geographical relevance:Assessing which sustainability issues are most significant based on where the company operates.

Key Aspects of Step A in Double Materiality Assessment:Step A does not yet involve selecting specific disclosure requirements (Step B) or conducting a financial materiality assessment (Step C). Instead, it provides thecontextual frameworknecessary for subsequent steps in the materiality process​.

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 3.1– Defines stakeholders' role in materiality assessment​.

EFRAG Compilation Explanations January - November 2024– Provides guidance on applying double materiality and the importance of Step A​.

EFRAG IG 1 Materiality Assessment, Chapter 2.2– Outlines Step A as the process of understanding business activities, stakeholders, and sustainability context​.

Official References:Thus, the correct answer isC. Understand the organization's context, activities, and stakeholders.

Under the European Sustainability Reporting Standards (ESRS), organizationscan leverage their ongoing dialogue with stakeholders for the materiality assessment.The ESRS explicitly acknowledges that stakeholder engagement plays a fundamental role in assessing material impacts, risks, and opportunities.

Stakeholder Engagement is Central to Materiality Assessment

ESRS 1 and ESRS 2 emphasize that organizations should integrate stakeholder perspectives into their materiality assessments.Engagement with affected stakeholders is central to the undertaking’s ongoing due diligence process and sustainability materiality assessment.This includes processes to identify and assess actual and potential negative impacts, which inform the identification of material sustainability topics​.

ESRS Does Not Mandate a Specific Stakeholder Engagement Approach

While stakeholder input is considered valuable, the ESRS doesnot prescribe a mandatory format or behavior for engagement. Companies have flexibility in determining how they engage with stakeholders.

IG 1 Materiality Assessment FAQ 15states:"The ESRS require disclosure on the materiality assessment and its outcomes but do not mandate specific behavior on stakeholder engagement or the due diligence process."​.

Stakeholders Can Provide Objective Evidence

The materiality assessment should be based as much as possible onobjective data and evidence, butstakeholder perspectives can be a source of supporting evidencefor impact materiality.

The relevance of stakeholder input depends onhow much they are affectedby an organization’s activities (severity and likelihood of impacts)​.

Due Diligence and Materiality Assessment

Thedue diligence process includes stakeholder engagement, which informs the materiality assessment. Organizations must report how they integrate stakeholder feedback into identifying and assessing material issues​.

Nature as a Silent Stakeholder

The ESRS even recognizes thatecological data and conservation indicatorsshould be considered as proxy indicators for stakeholder engagement where human stakeholders are absent (e.g., in cases of biodiversity impact assessments)​.

Thus, the statement in the question isfalse. Organizationsare encouragedto utilize their existing stakeholder engagement mechanisms to inform their materiality assessments under ESRS.

Official References:

Commission Delegated Regulation (EU) 2023/2772​.

Compilation Explanations January - November 2024​.

ESRS 1 & 2 Guidelines on Double Materiality​.