GRI ESRS-Professional Exam Dumps

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 . The list of sustainability matters in ESRS 1 AR 16

ESRS 1 Application Requirement (AR) 16 provides a comprehensive reference list of sustainability matters to consider when identifying IROs.

This list includes environmental, social, and governance topics aligned with EU sustainability objectives.

C . Due diligence processes

ESRS requires organizations to use due diligence processes to identify negative sustainability impacts.

Due diligence aligns with frameworks such as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

This ensures that potential risks and opportunities are assessed based on international sustainability standards.

D . Feedback from stakeholders

Stakeholders, including employees, suppliers, customers, and affected communities, provide crucial insights into sustainability impacts.

ESRS mandates engagement with affected stakeholders as part of the IRO identification process.

Why is B. Financial materiality thresholds incorrect?

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

Step B focuses only on identifying IROs, making financial thresholds irrelevant at this stage.

Conclusion:

Organizations should use the ESRS 1 AR 16 sustainability matters list, due diligence processes, and stakeholder feedback to identify IROs in 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 that due diligence and stakeholder input are part of IRO identification.

The statement that 'Policymakers and regulators worldwide are increasingly mandating limited assurance for sustainability reporting in Europe and mandatory assurance in all Asian and African countries' is false for the following reasons:

Limited Assurance in Europe

Under the Corporate Sustainability Reporting Directive (CSRD), the European Union (EU) is progressively implementing mandatory assurance for sustainability reporting, but it is starting with limited assurance before transitioning to reasonable assurance by 2028.

The Committee of European Auditing Oversight Bodies (CEAOB) has issued non-binding guidelines on limited assurance to harmonize the approach across EU member states.

No Universal Mandatory Assurance in Asia and Africa

Sustainability assurance varies by country in Asia and Africa, with some jurisdictions adopting voluntary or limited requirements rather than mandatory assurance.

The EU approach is influencing global discussions, but there is no blanket requirement for full mandatory assurance across all Asian and African countries.

While certain Asian countries (e.g., Japan, Singapore, China, and India) are enhancing their sustainability reporting frameworks, assurance requirements remain diverse and sector-dependent.

In Africa, sustainability reporting is growing, especially in South Africa under King IV principles, but assurance is not uniformly mandatory across the continent.

Conclusion:

Limited assurance is currently being phased in across the EU, but not yet fully mandated at the reasonable assurance level.

There is no global requirement for mandatory assurance across all Asian and African countries.

Therefore, the statement is false.

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

EU CSRD Recital 60: Roadmap for assurance from limited to reasonable.

CEAOB Limited Assurance Guidelines (September 2024).

The goal of assurance in sustainability reporting is to confirm the reliability of sustainability disclosures, ensuring that reported information on risks, management strategies, and performance data is accurate and verifiable.

Key aspects of sustainability assurance include:

Evaluating the credibility of reported sustainability risks and how organizations manage them.

Assessing compliance with CSRD and ESRS assurance requirements.

Ensuring data integrity and alignment with financial and sustainability disclosures.

Enhancing investor confidence in an organization's sustainability reporting.

Official Reference:

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.

Organizations should report on sustainability for several reasons, including transparency, stakeholder expectations, and competitive advantage. Below is the evaluation of each option:

A . True -- Reporting on sustainability demonstrates transparency and accountability, allowing companies to disclose their environmental, social, and governance (ESG) impacts.

B . True -- Stakeholders, including investors, customers, and regulators, increasingly demand sustainability reporting to assess the long-term viability of a company.

C . False -- While sustainability reporting may contribute to long-term financial gains, it does not guarantee immediate financial benefits.

D . True -- Companies with strong sustainability performance often enjoy enhanced brand value and competitive advantage, attracting investors and customers who prefer sustainable businesses.

Why Sustainability Reporting Matters

Benefit

Impact on Organization

Transparency & Accountability

Builds trust with investors, regulators, and the public

Stakeholder Expectations

Meets regulatory and customer expectations for ESG disclosures

Brand & Competitive Advantage

Companies with strong ESG performance are more attractive to investors

Regulatory Compliance

Helps meet CSRD and ESRS disclosure obligations

Official Reference:

CSRD & ESRS Guidance (2024) -- Key Sustainability Reporting Benefits.

EU Platform on Sustainable Finance Report (2025) -- Stakeholder Expectations & Competitive Advantage.

Not all EU Member States have decided that only statutory financial auditors are allowed to conduct the assurance of the sustainability statement. The Corporate Sustainability Reporting Directive (CSRD) mandates that sustainability reports be assured by an external party, but it allows Member States to decide whether assurance engagements can be performed by firms other than statutory financial auditors.

Key Provisions:

Limited Assurance Requirement:

The CSRD introduces a phased approach to assurance, starting with limited assurance and transitioning to reasonable assurance over time (expected by 2028).

Initially, limited assurance is required across all Member States.

Flexibility for Member States:

EU Member States have discretion to allow other independent assurance service providers to conduct the sustainability assurance, in addition to statutory auditors.

Some countries may restrict sustainability assurance to statutory auditors, but this is not an EU-wide rule.

Upcoming EU Assurance Standards:

The European Commission is working on developing a common EU assurance standard for sustainability reporting.

The Committee of European Auditing Oversight Bodies (CEAOB) has issued non-binding guidelines on limited assurance for sustainability reporting.

Thus, the statement is false because not all EU Member States have restricted sustainability assurance to statutory financial auditors. Some allow other independent assurance providers to conduct the engagements.

Official Reference:

CSRD (Directive (EU) 2022/2464) Assurance Provisions.

EU Platform on Sustainable Finance Report (February 2025) -- Assurance Standards and Guidelines.

CEAOB Guidelines on Limited Assurance for Sustainability Reporting (September 2024).