Free Access to GRI.ESRS-Professional.v2025-12-25.q15 with Valid Practice Test (Page 2)

Question 1

Which activities are part of Step A: Understanding the Context in the double materiality assessment process?
Select all options that apply.

A.Engaging with affected stakeholders to gather input
B.Analyzing the legal and regulatory landscape
C.Developing a list of material risks and opportunities
D.Mapping the organization's value chain

Correct Answer: A,B,D

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:

Question 2

Which of the following correctly fills the gaps in the sentences below?
The ESRS Taxonomy acts as a __________ for tagging sustainability disclosures, ensuring data is structured, consistent, and comparable across organizations.
The CSRD requires sustainability information to be reported in a __________ format, making it accessible to both people and machines.
Under the CSRD, sustainability reports will eventually be uploaded to the __________ platform, centralizing public financial and non-financial information across the EU.

A.European Single Access Point (ESAP); digitally accessible; framework
B.framework; digitally accessible; European Single Access Point (ESAP)
C.digitally accessible; framework; European Single Access Point (ESAP)

Question 3

What must organizations disclose under the ESRS regarding their material impacts, risks, and opportunities?
Select all that apply.

A.The outcomes of their double materiality assessment
B.Information outlined in the topical ESRS and sector-specific standards
C.Minimum Disclosure Requirements on policies, actions, and targets
D.A general overview of their sustainability policies, even if unrelated to specific material matters

Correct Answer: A,B,C

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:

Question 4

Which of the following statements about ESRS 2 are correct? Select all that apply.

A.ESRS 2 is a sector-agnostic, cross-cutting standard applicable to all organizations.
B.Reporting organizations don't have to address all disclosure requirements in ESRS 2.
C.Certain disclosure requirements in ESRS 2 are subject to a phase-in period.

Question 5

Which of the following can organizations use to identify actual and potential IROs during Step B of the double materiality assessment process? Select all options that apply.

A.The list of sustainability matters in ESRS 1 AR 16
B.Financial materiality thresholds
C.Due diligence processes
D.Feedback from stakeholders

Correct Answer: A,C,D

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, provide crucial 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.

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