GRI ESRS-Professional ESRS Professional Certification Exam Exam Practice Test

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:

Impact materiality is indeed considered thestarting pointfor thedouble materiality assessmentin the ESRS. The reason is that material impacts on sustainability matters cangenerate financial risks and opportunitiesin the future. TheESRS frameworkfollows this structure because:

Interrelation Between Impact and Financial Materiality

Double materiality includestwo 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 oftenprecedefinancial materiality because many sustainability issues initially manifest asexternal environmental and social impactsbefore affecting the company’sfinancial results​.

Regulatory Confirmation of Impact as the Starting Point

According toESRS 1, section 3.3, impact materiality is typically assessedfirst, unless afinancial risk or opportunity exists independentlyof an impact​.

A sustainability mattermay become financially materialover time due to regulatory changes, evolving market expectations, or direct financial consequences.

Illustration of the Double Materiality Process

Example: A company engaged inhigh carbon emissionsmight initially consider this animpact materiality issue(environmental harm). However,increased carbon pricing, regulatory changes, and shifting investor preferencescan latertransform this into a financial materiality issue.

Conclusion:Sinceimpact materiality serves as a precursorto financial materiality in most cases, the statement istrue.

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 typicalentry point​.

TheEU Taxonomyand theESRS digital taxonomyserve different purposes in sustainability reporting:

EU Taxonomyis a classification system that identifiesenvironmentally sustainable economic activitiesand establishes criteria for determining their contribution to environmental objectives. It is primarily used to guide investment decisions and financial disclosures​.

ESRS Digital Taxonomyis a structureddigital frameworkthat ensures sustainability disclosures aremachine-readable, standardized, and comparableunder theCorporate Sustainability Reporting Directive (CSRD)​.

Key Differences:Aspect

EU Taxonomy

ESRS Digital Taxonomy

Purpose

Classifies sustainable economic activities

Enables structured digital sustainability reporting

Scope

Environmental focus on investments & economic activities

Comprehensive reporting across environmental, social, and governance (ESG) areas

Users

Financial institutions, investors

Reporting entities, auditors, regulators

Regulation

UnderEU Taxonomy Regulation (2020/852)

UnderCSRD (Directive 2022/2464/EU)

References:

EU Platform on Sustainable Finance Report: Simplifying the EU Taxonomy​

Commission Delegated Regulation (EU) 2023/2772​

Thegoal of assurancein sustainability reporting is toconfirm the reliabilityof sustainability disclosures, ensuring that reported information onrisks, management strategies, and performance dataisaccurate and verifiable.

Key aspects ofsustainability assuranceinclude:

Evaluating the credibility of reported sustainability risksand how organizations manage them.

Assessing compliance with CSRD and ESRS assurance requirements.

Ensuring data integrity and alignmentwith financial and sustainability disclosures.

Enhancing investor confidencein an organization’s sustainability reporting​.

CSRD and ESRS Assurance Requirements (Commission Delegated Regulation (EU) 2023/2772, Section 5.2)- Specifies assurance requirements for sustainability reporting​.

EU Sustainable Finance Platform Report (2025)- Confirms assurance processes are necessary to enhance trust in sustainability data​.

Official References:

Entity-specific disclosures are required if a material sustainability matter is not covered or sufficiently detailed in the ESRS. According toESRS 1, paragraph 11, if an undertaking identifies an impact, risk, or opportunity that isnot adequately coveredby an ESRS but ismaterial due to itsspecific facts and circumstances, it must provideadditional entity-specific disclosures. This ensures that users of sustainability reports receive relevant and complete information​.

ESRS 1, paragraph 11:

Requires entity-specific disclosures when material sustainability matters are missing or not sufficiently covered in the ESRS.

ESRS 1, paragraph 30:

Mandates that companiesmustdisclose additional entity-specific disclosures if material matters are not covered with sufficient granularity in ESRS​.

ESRS 1, Appendix A (Application Requirements):

Provides further guidance on entity-specific disclosures, ensuring consistency and comparability while allowing companies to disclose material matters not addressed by ESRS​.

ESRS 2, Disclosure Requirements (SBM-3, IRO-1, GOV-1 to GOV-5):

Outlines theminimum disclosure requirementsthat apply when companies make entity-specific disclosures related to governance, strategy, impacts, risks, and opportunity management​.

Key Provisions from ESRS:Thus, if a sustainability matter is deemedmaterialand is not sufficiently addressed by ESRS,entity-specific disclosures are mandatory.

Official References:

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Paragraphs 11 and 30​.

ESRS Implementation Q&A Platform – Compilation of Explanations January – November 2024​.

DuringStep Bof thedouble materiality assessment process, organizations mustidentify actual and potential impacts, risks, and opportunities (IROs). The ESRS framework recommends the following methods:

A. The list of sustainability matters in ESRS 1 AR 16✅

ESRS 1 Application Requirement (AR) 16provides acomprehensive reference listof sustainability matters to consider when identifying IROs.

This list includesenvironmental, social, and governance topicsaligned withEU sustainability objectives​.

C. Due diligence processes✅

ESRS requires organizations touse due diligence processesto identifynegative sustainability impacts.

Due diligence aligns with frameworks such as theOECD Guidelines for Multinational Enterprisesand theUN Guiding Principles on Business and Human Rights​.

This ensures that potentialrisks and opportunitiesare assessed based oninternational sustainability standards.

D. Feedback from stakeholders✅

Stakeholders, includingemployees, suppliers, customers, and affected communities, providecrucial insightsinto sustainability impacts.

ESRSmandates engagement with affected stakeholdersas part of theIRO identification process​.

Financial materiality thresholds apply later in the process (Step C)when evaluating thefinancial impact of sustainability matters.

Step Bfocuses only on identifying IROs, makingfinancial thresholds irrelevant at this stage​.

Why is B. Financial materiality thresholds❌incorrect?Conclusion:Organizations should usethe ESRS 1 AR 16 sustainability matters list, due diligence processes, and stakeholder feedbacktoidentify IROsin Step B of the double materiality assessment.Financial materiality thresholds do not apply in this step.

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

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, AR 16:List of Sustainability Matters for Identifying IROs​.

EFRAG Compilation of Explanations (January - July 2024): Confirmation thatdue diligence and stakeholder inputare part ofIRO identification​.

Thedouble materiality assessment processconsists of multiple steps, withStep A: Understanding the Contextfocusing on setting the groundwork for identifying material impacts, risks, and opportunities (IROs).

Step A includes:

Mapping the organization's value chain (Option A)

This step involves identifying all elements of the organization's value chain, including suppliers, distributors, and business partners, to understand where sustainability impacts occur.

It helps in pinpointing potential sustainability matters, risks, and opportunities related to both impact and financial materiality​.

Engaging with affected stakeholders to gather input (Option B)

Stakeholder engagement is a critical part of the materiality assessment as it informs the organization about direct and indirect sustainability impacts.

The ESRS guidance stresses that businesses must engage with affected stakeholders (e.g., employees, communities, consumers) and sustainability experts as part of the due diligence process​.

Analyzing the legal and regulatory landscape (Option C)

Organizations must review applicable laws, regulatory frameworks, and international sustainability commitments that may affect their sustainability reporting obligations.

This ensures compliance withEU regulations (CSRD, ESRS, Taxonomy Regulation, SFDR)and other relevant legal requirements​.

D. Developing a list of material risks and opportunities

This step belongs toStep B: Identifying Material Sustainability Matters, where the organization formally identifies and assesses material IROs. Step A is only about gathering contextual information to inform this process​.

Commission Delegated Regulation (EU) 2023/2772, Section 3.3- Double materiality and materiality assessment process​.

EFRAG IG 1: Materiality Assessment, Chapter 2.2- Understanding the context and engagement with affected stakeholders​.

EFRAG Compilation of Explanations January–November 2024- Provides clarifications on stakeholder engagement and legal context review in Step A​.

Incorrect Answer:Official References:

TheEnvironmental Sectionof the topical ESRS includes disclosure requirements covering environmental sustainability matters. This section specifically relates toenvironmental objectives as defined in the EU Taxonomy, ensuring alignment with broader European sustainability goals.

Thetopical ESRS environmental standards (ESRS E1 - E5)cover:

ESRS E1– Climate Change (Mitigation & Adaptation)

ESRS E2– Pollution

ESRS E3– Water and Marine Resources

ESRS E4– Biodiversity and Ecosystems

ESRS E5– Resource Use and Circular Economy

These standardsalign with the environmental objectives of the EU Taxonomy Regulation(Regulation (EU) 2020/852) andrequire organizations to report on their material environmental impacts, risks, and opportunities (IROs)​.

A. Social impact and labor rights:→Incorrect, as this belongs to theSocial (S) section(ESRS S1 - S4).

B. Financial performance information:→Incorrect, as this is part offinancial reporting, not ESRS environmental disclosures.

D. Corporate governance and board diversity:→Incorrect, as governance matters are covered underESRS G1 Business Conduct​.

Commission Delegated Regulation (EU) 2023/2772​

Compilation Explanations January - November 2024​

Why Other Options Are Incorrect:Official References:

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​.

TheFacilities Management (FM) departmentis primarily responsible for providing information on building energy use and the environmental performance of physical infrastructure.

Key responsibilities include:

Energy management: Tracking energy consumption and implementing efficiency measures.

Sustainability initiatives: Managing green building certifications, renewable energy installations, and environmental compliance.

Infrastructure monitoring: Overseeing heating, ventilation, and air conditioning (HVAC) systems, lighting efficiency, and water usage.

While theOperationsdepartment may use energy-related data for broader business functions, Facilities Management specializes inmonitoring and improving building performancefrom an environmental perspective​.

ESRS E1 – Climate Change, Disclosure Requirement E1-5- Specifies requirements for energy consumption and environmental impacts of buildings​.

EFRAG Guidance on Environmental Performance and Building Energy Use- Confirms that FM is responsible for infrastructure sustainability monitoring​.

Official References:

Understanding Impact and Financial Materiality under ESRSTheESRS frameworkis based ondouble materiality, which comprises:

Impact Materiality– This relates to the organization’s potentialpositive or negative impactson people or the environment, irrespective of whether these impacts translate into financial effects​.

Financial Materiality– This refers to sustainability matters thataffect the company's financial position, including risks and opportunities that influence financial outcomes over theshort, medium, or long term​.

(A) False:A sustainability topic can be materialeven if it does not directly affect financial performance; it may still beimpact material​.

(D) False:Impact and financial materiality are equally importantunder ESRS. Neither is prioritized over the other​.

(E) False:TheESRS process generally begins with impact materiality, not financial materiality​.

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​

Why the other options are incorrect:References:

ACSRD assurance engagementprimarily focuses onensuring compliance with the ESRSand theproper 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 CSRDverify whether sustainability reports comply with the European Sustainability Reporting Standards (ESRS).

Theassurance provider reviews disclosuresto ensure alignment withESRS requirements, includingdouble materiality assessments and mandatory data points​.

C. Compliance with the requirement to tag the sustainability reporting✅

CSRD requires that sustainability information bedigitally taggedusing theEuropean Single Electronic Format (ESEF)to ensuremachine readability and comparability​.

Assurance providers verify the correct application of this tagging requirement, ensuring consistency withXBRL (eXtensible Business Reporting Language) standards.

ACSRD assurance engagement does not cover financial statements.

Financial audits are conducted separately, under theInternational Financial Reporting Standards (IFRS) or local GAAP requirements.

Sustainability assurance only applies tonon-financial sustainability disclosuresunderESRS​.

Why is A. Verification of the company's financial statements❌incorrect?Conclusion:Thescope of a CSRD assurance engagementincludes:✅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 ofdigital tagging as part of CSRD assurance​.