GRI ESRS-Professional Exam Dumps

A digital reporting platform under ESRS is designed to enhance the efficiency and accuracy of sustainability disclosures. It must enable seamless reporting and compliance monitoring through advanced digital features. The defining elements include:

(A) Structured data formats

Digital platforms must support structured formats like XBRL (eXtensible Business Reporting Language), ensuring machine-readability and interoperability with financial reporting standards.

(C) Interactive dashboards

Platforms often provide visualization tools and dashboards to facilitate analysis and comparison of sustainability data across different periods and entities.

(D) Real-time updates and compliance tools

Digital reporting solutions should offer real-time data integration to enable ongoing compliance tracking and alignment with evolving regulatory requirements.

Incorrect Option:

(B) Manual data entry processes

Manual entry is not a characteristic of a digital reporting platform. Instead, digital platforms prioritize automation, integration, and structured data processing to improve efficiency and reduce errors.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 8.1 & 9.2 -- Establishes digitalization and connectivity requirements for sustainability reporting.

EFRAG Digital Reporting Guidelines (2024) -- Defines structured data standards and compliance automation in ESRS reporting.

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.

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

ESRS 2 applies to all undertakings, regardless of sector or industry.

It establishes general disclosures that 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 in for companies with fewer than 750 employees, allowing gradual adoption.

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

Incorrect Answer:

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

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

Official Reference:

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.

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.

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

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

Under the ESRS framework, effective internal controls for assurance purposes must meet key characteristics to ensure reliability, traceability, and auditability.

Correct Options Explained:

(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.

Incorrect Options Explained:

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

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

ESRS Reference:

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.