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GRI ESRS Professional Certification Exam Sample Questions (Q34-Q39):

NEW QUESTION # 34
Indicate whether the following statement is true or false.
Under the ESRS, organizations cannot leverage on their ongoing dialogue with stakeholdersfor the materiality assessment.

A. True
B. False

Answer: B

Explanation:
Under the European Sustainability Reporting Standards (ESRS), organizationscan leverage their ongoing dialogue with stakeholders for the materiality assessment.The ESRS explicitly acknowledges that stakeholder engagement plays a fundamental role in assessing material impacts, risks, and opportunities.
* Stakeholder Engagement is Central to Materiality Assessment
* ESRS 1 and ESRS 2 emphasize that organizations should integrate stakeholder perspectives into their materiality assessments.Engagement with affected stakeholders is central to the undertaking's ongoing due diligence process and sustainability materiality assessment.This includes processes to identify and assess actual and potential negative impacts, which inform the identification of material sustainability topics.
* ESRS Does Not Mandate a Specific Stakeholder Engagement Approach
* While stakeholder input is considered valuable, the ESRS doesnot prescribe a mandatory format or behavior for engagement. Companies have flexibility in determining how they engage with stakeholders.
* IG 1 Materiality Assessment FAQ 15states:"The ESRS require disclosure on the materiality assessment and its outcomes but do not mandate specific behavior on stakeholder engagement or the due diligence process.".
* Stakeholders Can Provide Objective Evidence
* The materiality assessment should be based as much as possible onobjective data and evidence, butstakeholder perspectives can be a source of supporting evidencefor impact materiality.
* The relevance of stakeholder input depends onhow much they are affectedby an organization's activities (severity and likelihood of impacts).
* Due Diligence and Materiality Assessment
* Thedue diligence process includes stakeholder engagement, which informs the materiality assessment. Organizations must report how they integrate stakeholder feedback into identifying and assessing material issues.
* Nature as a Silent Stakeholder
* The ESRS even recognizes thatecological data and conservation indicatorsshould be considered as proxy indicators for stakeholder engagement where human stakeholders are absent (e.g., in cases of biodiversity impact assessments).
Thus, the statement in the question isfalse. Organizationsare encouragedto utilize their existing stakeholder engagement mechanisms to inform their materiality assessments under ESRS.
Official References:
* Commission Delegated Regulation (EU) 2023/2772.
* Compilation Explanations January - November 2024.
* ESRS 1 & 2 Guidelines on Double Materiality.

NEW QUESTION # 35
Select all the correct steps for conducting a double materiality assessment based on the ESRS.

A. SBM-3 outlines disclosure requirements on the material impacts, risks, and opportunities resulting from the materiality assessment.
B. Compare the identified material topics with the list in ESRS 1 Application Requirement 16.
C. Entity-specific disclosures must be developed only for impacts covered by ESRS.
D. ESRS 2 requires the use of IRO-1 to report on the organization's process for identifying impacts, risks, and opportunities.
E. Only financial materiality should be considered when conducting the assessment.
F. Double materiality assessments are not required for organizations following the ESRS.

Answer: A,B,D

Explanation:
Thedouble materiality assessmentinvolves identifying sustainability matters that are material either from:
* An impact perspective(the organization's effects on people and the environment).
* A financial perspective(how sustainability matters affect the organization financially).
Thecorrect stepsin conducting this assessment include:
* (A) Comparing identified material topics with ESRS 1 AR 16- This ensures alignment with predefined sustainability mattersin ESRS.
* (C) Using ESRS 2 IRO-1- This disclosure requirement mandates companies toreport on their methodology for identifying impacts, risks, and opportunities.
* (D) Following SBM-3 of ESRS 2- This section provides requirements fordisclosing the material impacts, risks, and opportunities identified through the materiality assessment.
* (B) False:Entity-specific disclosures must coverall material sustainability topics, even those not explicitly covered in ESRS.
* (E) False:Both financial and impact materiality must be considered(double materiality), not just financial materiality.
* (F) False:Double materiality assessments are mandatoryfor all organizations reporting under ESRS.
* Commission Delegated Regulation (EU) 2023/2772, Section 3.3 on Double Materiality
* EFRAG Compilation on Double Materiality Assessments, providing step-by-step guidance on ESRS compliance Why the other options are incorrect:References:==============

NEW QUESTION # 36
Indicate whether the following statement is true or false.
All EU Member States decided that only statutory financial auditors are allowed to conduct the assurance of the sustainability statement, excluding other audit firms or Independent Assurance Service Providers.

A. True
B. False

Answer: B

Explanation:
Not all EU Member States have decided that only statutory financial auditors are allowed to conduct the assurance of the sustainability statement. TheCorporate Sustainability ReportingDirective (CSRD) mandates that sustainability reports beassuredby an external party, but it allows Member States to decide whether assurance engagements can be performed by firms other than statutory financial auditors.
* Limited Assurance Requirement:
* TheCSRD introduces a phased approachtoassurance, starting withlimited assuranceand transitioning toreasonable assuranceover time (expected by 2028).
* Initially,limited assuranceis required across all Member States.
* Flexibility for Member States:
* EU Member Stateshave discretionto allowother independent assurance service providersto conduct the sustainability assurance, in addition to statutory auditors.
* Some countries mayrestrictsustainability assurance to statutory auditors, butthis is not an EU- wide rule.
* Upcoming EU Assurance Standards:
* TheEuropean Commissionis working on developing acommon EU assurance standardfor sustainability reporting.
* TheCommittee of European Auditing Oversight Bodies (CEAOB)has issued non-binding guidelinesonlimited assurancefor sustainability reporting.
Key Provisions:Thus,the statement is falsebecausenot all EU Member States have restricted sustainability assurance to statutory financial auditors. Some allowother independent assurance providersto conduct the engagements.
Official References:
* 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).

NEW QUESTION # 37
Indicate whether the following statement is true or false.
Nature is recognized as a "silent stakeholder" in the ESRS because it cannot voice concerns directly but is essential to sustainability contexts.

A. False
B. True

Answer: B

Explanation:
Nature is indeed recognized as a "silent stakeholder" in the European Sustainability Reporting Standards (ESRS). This term implies that, although nature cannot actively voice its concerns, it remains a critical component of sustainability reporting due to its fundamental role in sustaining life and economic activity.
ESRS emphasizes that organizations must consider their impacts on nature, ecosystems, and biodiversity as part of their sustainability disclosures.
This recognition aligns with the concept ofdouble materialityembedded in the ESRS framework, which considers both the financial impact on an organization and the organization's impact on environmental and social matters. The ESRS explicitly integratesbiodiversity and ecosystems (ESRS E4)as a key topic, reflecting the need to account for the effects of business activities on nature, even if nature itself cannot actively advocate for protection.
Thesilent stakeholderconcept reinforces theduty of carethat organizations hold in assessing and mitigating their impacts on biodiversity, land use, pollution, and natural resources. This aligns with theUnited Nations Sustainable Development Goals (SDGs)and theEU Biodiversity Strategy for 2030, both of which emphasize the protection and restoration of natural ecosystems.
* Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023(ESRS E4 - Biodiversity and Ecosystems).
* EFRAG Guidance on Stakeholder Engagement- Highlights nature as an affected stakeholder in sustainability matters.
* EU Biodiversity Strategy for 2030- Emphasizes that economic activities must integrate ecosystem preservation and restoration.
Official References:This confirms that the statement istrueunder ESRS standards.

NEW QUESTION # 38
Which of the following is true about setting thresholds for financial materiality under the ESRS?

A. Thresholds should focus exclusively on the short-term time horizon.
B. Organizations should only use monetary thresholds, such as revenue or costs.
C. Financial materiality thresholds are based on the likelihood of occurrence and the potential magnitude of financial effects.
D. Reputational risks cannot be considered financially material.

Answer: C

Explanation:
Under the ESRS framework, financial materiality is assessed based on a combination of:
* Likelihood of occurrence- The probability that a sustainability matter will have a financial impact.
* Potential magnitude of financial effects- The scale of the impact on financial position, performance, cash flows, access to finance, or cost of capital over short-, medium-, or long-term periods.
This is outlined in ESRS 1, which states that a sustainability matter isfinancially materialif it could reasonably be expected totrigger material financial effectson an undertaking. Financial materiality is not limited to issues under the direct control of the company; it includesdependencies on natural, human, and social resourcesthat could create risks or opportunities.
* Option A:The ESRS framework allows for bothqualitative and quantitative thresholds, not just monetary ones (e.g., revenue or costs).
* Option C:Reputational risks can be financially material, as they may affect access to finance, cost of capital, or customer trust, ultimately influencing the company's financial performance.
* Option D:Thefinancial materiality assessmentis conducted for theshort-, medium-, and long-term, not just the short term.
Why the other options are incorrect:References:
* Commission Delegated Regulation (EU) 2023/2772
* Compilation Explanations January - July 2024, ESRS 1 on Financial Materiality
* EFRAG Guidance on Double Materiality and Risk Assessments

NEW QUESTION # 39
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