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

ESRS 2 IRO-1 requires organizations to disclose their process for identifyingimpacts, risks, and opportunitiesand assess theirmateriality. This includes detailing whether and howaffected stakeholderswere consulted during the process. Sincerisks and opportunitiestypically stem fromimpacts, the process ofimpact materiality assessmentserves as a natural starting point before evaluating theirfinancial materiality.

Identification of Impacts, Risks, and Opportunities (IROs):

Organizations must disclose their methodology for identifying materialimpacts, risks, and opportunities.

These include bothactual and potential impactson 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 theconsultation with affected stakeholdersinfluenced 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 assessmentprecedes the evaluation of risks and opportunities.

Since mostrisks and opportunitiesoriginate fromimpacts, impact materiality serves as thestarting pointfor assessing theirfinancial materiality​.

Financial Materiality Evaluation:

Financial materiality pertains to the extent that a sustainability matteraffects 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 amaterial financial effecton the organization​.

"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.

Why is B the Correct Answer?Thus, the correct sequence isB: 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​.

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, effectiveinternal controlsfor assurance purposes must meet key characteristics to ensure reliability, traceability, and auditability.

(A) Documentation & Implementation:Internal controls must be formally documented, implemented as per the designated schedule, and consistently applied​.

(C) Testability by External Assurance Providers:Assurance providers must be able to verify the controls, test their effectiveness, and ensure compliance with CSRD assurance requirements​.

(B) Same Staff Performing & Assuring the Control:A fundamental principle of internal control is theseparation of dutiesto avoid conflicts of interest. The control must be performed by one team and assured independently​.

(D) No Need for Documentation:Proper documentation ismandatoryfor internal controls to enable traceability, testing, and regulatory compliance​.

Commission Delegated Regulation (EU) 2023/2772, GOV-5:Risk management and internal controls over sustainability reporting, highlighting the necessity of internal control mechanisms​.

EFRAG Assurance Guidelines:Stipulating that documented controls must be verifiable and tested for external assurance​.

Correct Options Explained:Incorrect Options Explained:ESRS References: