Score Higher on Verified ESRS-Professional | ESRS Professional Certification Exam Questions with Answers

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:

EcoFurniture Inc. is performingStep B of its double materiality assessmentunder ESRS, which involves identifying and assessingimpacts, risks, and opportunities (IROs)from both animpact materialityandfinancial materialityperspective?.

During Step B, the organization must:

Compare entity-specific sustainability matters to ESRS 1 AR 16

Screening sustainability matters listed in ESRS 1 AR 16ensures that EcoFurniture Inc. identifies allpotential material topicsand aligns them with itsspecific sustainability context?.

Action:?(A) is correct

Engage with affected stakeholders

Stakeholder engagementis a key requirement in the ESRSdouble materiality process, especially for industries with environmental and social impacts, such as deforestation risks in EcoFurniture's timber sourcing.

ESRS 2 IRO-1 explicitly states that stakeholder engagement is necessary tovalidate materiality assessments?.

Action:?(B) is correct

Consider downstream impacts

ESRS mandates assessingboth upstream and downstreamsustainability impacts.Ignoring potential risks in the downstream value chain is not aligned with ESRS requirements.

Action:?(C) is incorrect

Use scientific research to validate sustainability trends and risks

Theuse of scientific evidenceis an essential part of assessing sustainability matters.ESRS encourages leveraging research and external data to confirm industry-specific sustainability risks?.

Action:?(D) is correct

Conclusion:EcoFurniture Inc. must integratestakeholder engagement, scientific research, and systematic comparison of sustainability matters to ESRS requirementsto ensure a robust Step B materiality assessment.Ignoring the downstream value chain is not permissibleunder ESRS.

Commission Delegated Regulation (EU) 2023/2772?

Compilation Explanations January - November 2024?

Official References:

Inline XBRL (iXBRL)is the digital reporting format required under theCorporate Sustainability Reporting Directive (CSRD)to ensure standardized and machine-readable sustainability reporting.

It is required under CSRD for sustainability reporting

TheCSRD mandates the use of Inline XBRLfor sustainability reports, ensuring digital tagging for structured data submission, making informationeasier to analyze by regulators and investors?.

?(A) is correct

It only applies to narrative disclosures, not numerical data

Incorrect.Inline XBRL applies to both numerical data (KPIs, metrics) and narrative disclosures, allowingstructured reporting across qualitative and quantitative sustainability information?.

?(B) is incorrect

It makes reports both human-readable and machine-readable

True. Inline XBRL embeds machine-readable tags into a human-readable document, ensuringboth usability and compliance with digital reporting requirements?.

?(C) is correct

It ensures that tags are embedded within a visually clear format

Correct. TheInline XBRL standard ensures that the digital tags do not alter the visual presentation of the report, maintaining clarity for human readers while allowing structured data extraction?.

?(D) is correct

Conclusion:Inline XBRLis required under CSRD (A), makes reports both human-readable and machine-readable (C), and ensures a visually clear format (D). However, it applies to both narrative and numerical data, making (B) incorrect.

Commission Delegated Regulation (EU) 2023/2772?

Compilation Explanations January - July 2024?

Official References: