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NEW QUESTION # 17
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 # 18
Which activities are part of Step A: Understanding the Context in the double materiality assessment process?
Select all options that apply.
- A. Analyzing the legal and regulatory landscape
- B. Engaging with affected stakeholders to gather input
- C. Mapping the organization's value chain
- D. Developing a list of material risks and opportunities
Answer: A,B,C
Explanation:
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:
NEW QUESTION # 19
Which department is primarily responsible for providing employee-related data such as headcount, turnover, and health and safety statistics?
- A. Marketing
- B. Health and Safety
- C. Compliance
- D. Human Resources
Answer: D
NEW QUESTION # 20
What are the two categories of stakeholders identified in the ESRS?
- A. Primary and secondary stakeholders.
- B. Affected stakeholders and users of sustainability statements.
- C. Internal and external stakeholders.
Answer: B
Explanation:
The European Sustainability Reporting Standards (ESRS) categorize stakeholders intotwo main groups:
* Affected Stakeholders:
* These are individuals or groups whose interests are affected (positively or negatively) by the undertaking's activities and business relationships across its value chain.
* Examples include workers (own workforce and those in the value chain), affected communities, consumers, and end-users.
* The identification of affected stakeholders plays a crucial role in an organization's sustainability due diligence and materiality assessment processes.
* Users of Sustainability Statements:
* These are primary users of sustainability disclosures, including investors, lenders, and other creditors.
* Additional users include business partners, trade unions, civil society organizations, non- governmental organizations (NGOs), governments, analysts, and academics.
The ESRS framework emphasizes the importance ofengagement with affected stakeholdersas part of an undertaking's due diligence and materiality assessment process, ensuring that material impacts, risks, and opportunities are adequately identified and reported.
Official References:
* Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 3.1- Defines the two main groups of stakeholders.
* ESRS 2 SBM-2 (Interests and Views of Stakeholders)- Covers how affected stakeholders' views inform an undertaking's strategy.
* EFRAG Guidance on Stakeholder Engagement and Double Materiality- Reinforces the role of affected stakeholders in sustainability assessments.
NEW QUESTION # 21
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. False
- B. True
Answer: A
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 # 22
Which of the following are key steps in preparing to develop an ESRS report?
Select all that apply.
- A. Benchmarking and gap analysis.
- B. Setting up internal controls and stakeholder engagement processes.
- C. Preparing for materiality assessment.
- D. Disregarding stakeholder opinions.
- E. Planning for external assurance.
- F. Focusing solely on financial data collection.
Answer: A,B,C,E
Explanation:
Preparing anESRS reportinvolves multiple key steps to ensure compliance with CSRD requirements. Below is an evaluation of each option:
* A. True-Internal controlsandstakeholder engagementare critical for ensuring accurate sustainability reporting. Stakeholders play a role inmateriality assessmentsand governance structures.
* B. True-Materiality assessmentis essential to determinewhich sustainability matters are most relevantfor disclosure. The ESRS framework requires organizations to report only onmaterial sustainability topics.
* C. False-Stakeholder opinions are crucialin sustainability reporting. Organizations must engage with employees, customers, investors, and affected communitiesto identify material sustainability matters.
* D. True-Benchmarking and gap analysishelp companies compare their sustainability performance againstESRS requirements, industry best practices, and peer organizations.
* E. False-Sustainability reporting goes beyond financial data collection.The ESRS requires environmental, social, and governance (ESG) disclosures, which include qualitative and quantitative indicators.
* F. True-Planning for external assuranceis critical under the CSRD mandate, aslimited assurance is required initially, progressing toreasonable assurance by 2028.
Key Steps in ESRS Report PreparationStep
Purpose
Internal Controls & Stakeholder Engagement
Ensure accuracy and transparency in reporting
Materiality Assessment
Identify key sustainability topics for disclosure
Benchmarking & Gap Analysis
Compare with industry standards and ESRS requirements
External Assurance Planning
Prepare for third-party validation of sustainability data
* Commission Delegated Regulation (EU) 2023/2772, Sections onMateriality Assessment, Internal Controls, and Assurance.
Official References:
NEW QUESTION # 23
How do the ESRS define stakeholders?
- A. Those who can support or benefit from the undertaking.
- B. Those who can influence or contribute to the undertaking.
- C. Those who can affect or be affected by the undertaking.
Answer: C
Explanation:
According to the European Sustainability Reporting Standards (ESRS) under the Commission Delegated Regulation (EU) 2023/2772, stakeholders are defined as individuals or groups who can affect or be affected by the undertaking. The ESRS distinguishes between two main groups of stakeholders:
* Affected stakeholders: These are individuals or groups whose interests are affected or could be affected - positively or negatively - by the undertaking's activities and its direct and indirect business relationships across its value chain.
* Users of sustainability statements: These include primary users of general-purpose financial reporting (e.g., existing and potential investors, lenders, and other creditors such as asset managers, credit institutions, and insurance undertakings) and other users, including the undertaking's business partners, trade unions, social partners, civil society and non-governmental organizations, governments, analysts, and academics.
Furthermore, engagement with affected stakeholders is a crucial aspect of the undertaking's ongoing due diligence process and sustainability materiality assessment. This involves identifying and assessing actual and potential negative impacts to inform the materiality assessment process for sustainability reporting.
Official References:
* Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34
/EU on sustainability reporting standards.
* ESRS 1: General Requirements, Section 3.1 (Stakeholders and their relevance to the materiality assessment process).
NEW QUESTION # 24
Which statements about Inline XBRL are TRUE?
Select all that apply.
- A. It is required under the CSRD for sustainability reporting
- B. It ensures that tags are embedded within a visually clear format
- C. It makes reports both human-readable and machine-readable
- D. It only applies to narrative disclosures, not numerical data
Answer: A,B,C
Explanation:
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, ensuring both 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:
NEW QUESTION # 25
Which of the following is true about setting thresholds for financial materiality under the ESRS?
- A. Reputational risks cannot be considered financially material.
- B. Thresholds should focus exclusively on the short-term time horizon.
- C. Financial materiality thresholds are based on the likelihood of occurrence and the potential magnitude of financial effects.
- D. Organizations should only use monetary thresholds, such as revenue or costs.
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 # 26
What is the PRIMARY purpose of creating a cross-departmental taskforce for CSRD compliance?
- A. To reduce the overall workload by assigning all tasks to a single department
- B. To create a hierarchical structure that limits communication between departments
- C. To minimize interaction between different organizational departments
- D. To ensure coordinated efforts, meet reporting timelines, and manage sustainability reporting responsibilities across the organization
Answer: D
Explanation:
Across-departmental taskforceis crucial forCorporate Sustainability Reporting Directive (CSRD) complianceas it enables an organization tocoordinate sustainability reporting efforts effectively.
Key responsibilities of the taskforce include:
* Ensuring alignment across departments(e.g., Finance, Compliance, Legal, ESG, and Operations) to gather accurate sustainability data.
* Meeting reporting timelinesrequired underESRS and CSRD regulations.
* Managing responsibilities across teamsto ensure sustainability disclosures are consistent with financial reporting controls.
* Enhancing cross-functional collaborationfordouble materiality assessmentand ensuring compliance withassurance and audit requirements.
NEW QUESTION # 27
Indicate whether the following statement is true or false.
The goal of assurance is to confirm the reliability of information related to an organization's sustainability risks, how these risks are managed and reduced, and the organization's performance data.
- A. False
- B. True
Answer: B
Explanation:
Thegoal of assurancein sustainability reporting is toconfirm the reliabilityof sustainability disclosures, ensuring that reported information onrisks, management strategies, and performance dataisaccurate and verifiable.
Key aspects ofsustainability assuranceinclude:
* Evaluating the credibility of reported sustainability risksand how organizations manage them.
* Assessing compliance with CSRD and ESRS assurance requirements.
* Ensuring data integrity and alignmentwith financial and sustainability disclosures.
* Enhancing investor confidencein an organization's sustainability reporting.
* 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.
Official References:
NEW QUESTION # 28
EcoFurniture Inc., an organization producing eco-friendly furniture, is conducting Step B of its double materiality assessment. During this step it identifies potential deforestation impacts in its upstream value chain due to its timber sourcing and reputational risks related to environmental standards compliance. Which of the following actions should EcoFurniture take during Step B to ensure a comprehensive assessment of its actual and potential IROs? Select all that apply.
- A. Conduct stakeholder engagement with local communities near timber supply locations.
- B. Ignore potential risks in the downstream value chain, as they are less material.
- C. Use scientific research to validate sustainability trends and risks in the forestry sector.
- D. Screen sustainability matters listed in ESRS 1 AR 16 and compare them to its entity-specific sustainability matters.
Answer: A,C,D
Explanation:
EcoFurniture Inc. is performingStep B of its double materiality assessmentunder ESRS, which involves identifying and assessingimpacts, risks, and opportunities (IROs)from both animpact materialityand financial 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:
NEW QUESTION # 29
Indicate whether the following statement is true or false.
Entity-specific disclosures are required if a material sustainability matter is not covered or sufficiently detailed in the ESRS.
- A. False
- B. True
Answer: B
Explanation:
Entity-specific disclosures are required if a material sustainability matter is not covered or sufficiently detailed in the ESRS. According toESRS 1, paragraph 11, if an undertaking identifies an impact, risk, or opportunity that isnot adequately coveredby an ESRS but ismaterial due to itsspecific facts and circumstances, it must provideadditional entity-specific disclosures. This ensures that users of sustainability reports receive relevant and complete information.
* ESRS 1, paragraph 11:
* Requires entity-specific disclosures when material sustainability matters are missing or not sufficiently covered in the ESRS.
* ESRS 1, paragraph 30:
* Mandates that companiesmustdisclose additional entity-specific disclosures if material matters are not covered with sufficient granularity in ESRS.
* ESRS 1, Appendix A (Application Requirements):
* Provides further guidance on entity-specific disclosures, ensuring consistency and comparability while allowing companies to disclose material matters not addressed by ESRS.
* ESRS 2, Disclosure Requirements (SBM-3, IRO-1, GOV-1 to GOV-5):
* Outlines theminimum disclosure requirementsthat apply when companies make entity-specific disclosures related to governance, strategy, impacts, risks, and opportunity management.
Key Provisions from ESRS:Thus, if a sustainability matter is deemedmaterialand is not sufficiently addressed by ESRS,entity-specific disclosures are mandatory.
Official References:
* Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Paragraphs 11 and 30.
* ESRS Implementation Q&A Platform - Compilation of Explanations January - November 2024.
NEW QUESTION # 30
Which of the following are key characteristics of an internal control for assurance purposes? Select all that apply.
- A. The activity can be carried out by the same staff who collected, calculated, or consolidated the information.
- B. The activity must be able to be 'tested' by the external assurance provider.
- C. The results of the activity do not need to be documented each time it is performed.
- D. The activity must be documented and implemented according to the agreed timing.
Answer: B,D
Explanation:
2023/2772, various EFRAG guidance documents, and reports related to CSRD, ESRS, stakeholder engagement, double materiality, external assurance, and digital reporting Study guide References at the end of each question Under the ESRS framework, effectiveinternal controlsfor assurance purposes must meet key characteristics to ensure reliability, traceability, and auditability.
* (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.
* (B) Same Staff Performing & Assuring the Control:A fundamental principle of internal control is the separation of dutiesto avoid conflicts of interest. The control must be performed by one team and assured independently.
* (D) No Need for Documentation:Proper documentation ismandatoryfor internal controls to enable traceability, testing, and regulatory compliance.
* 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.
Correct Options Explained:Incorrect Options Explained:ESRS References:
NEW QUESTION # 31
Which of the following correctly fills the gaps in the paragraph below?
The first set of the ESRS consist of several standards: The first group includes __________ General requirements and __________ General disclosures. These standards apply regardless of the specific sustainability topic being reported.
The next group includes ten __________ that cover various topics across the three dimensions of sustainable development. For example, ESRS E1 focuses on the environmental dimension, particularly climate change.
Finally, the last group includes the __________ which are currently under development.
- A. ESRS 2; ESRS 1; topical standards; sector-specific standards
- B. topical standards; ESRS 2; ESRS 1; sector-specific standards
- C. ESRS 1; ESRS 2; topical standards; sector-specific standards
- D. ESRS 2; topical standards; sector-specific standards; ESRS 1
Answer: C
Explanation:
The ESRS (European Sustainability Reporting Standards) framework consists of three primary categories of standards:
* ESRS 1 (General Requirements):
* ESRS 1 sets out thefundamental principlesand requirements for sustainability reporting.
* It provides an overview of the structure and drafting conventions of the ESRS framework, defining the categories of ESRS standards: cross-cutting, topical, and sector-specific.
* It also establishes thedouble materiality principleas the basis for sustainability disclosures.
* ESRS 2 (General Disclosures):
* ESRS 2 outlines thecore disclosure requirementsapplicable to all sustainability topics, ensuring comparability and completeness.
* It includes general governance, strategy, impact, risk, and opportunity management disclosures applicable to all sustainability topics.
* These disclosure requirements apply to all undertakingsregardless of the specific sustainability topics being reported.
* Topical Standards:
* The ESRS framework includes tentopical standardscovering the three key dimensions of sustainability:
* Environmental (E): ESRS E1 (Climate Change), ESRS E2 (Pollution), ESRS E3 (Water & Marine Resources), ESRS E4 (Biodiversity & Ecosystems), and ESRS E5 (Resource Use
& Circular Economy).
* Social (S): ESRS S1 (Own Workforce), ESRS S2 (Workers in the Value Chain), ESRS S3 (Affected Communities), and ESRS S4 (Consumers & End-users).
* Governance (G): ESRS G1 (Business Conduct).
* These standards providespecific requirementson sustainability matters, complementing the general disclosure requirements in ESRS 2.
* Sector-Specific Standards:
* Sector-specific ESRS arecurrently under development.
* These will address sustainability mattersspecific to different industries, ensuring that sectoral nuances are properly considered.
* They aim tofill gaps not sufficiently coveredby the topical standards by defining industry- specific impacts, risks, and opportunities.
* ESRS 1 (General Requirements) comes first, setting the foundation.
* ESRS 2 (General Disclosures) follows, providing cross-cutting disclosure requirements.
* Topical standards are next, covering specific sustainability topics.
* Sector-specific standards are the final category, though they are still in development.
Why is C. ESRS 1; ESRS 2; topical standards; sector-specific standards the correct answer?Thus, the correct order aligns with theofficial structureof the ESRS framework as mandated inCommission Delegated Regulation (EU) 2023/2772.
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
* Commission Delegated Regulation (EU) 2023/2772, Annex I: Structure of the ESRS framework.
* EFRAG Compilation of Explanations (January - November 2024): Explanation of ESRS categories.
* EFRAG Mapping of Sustainability Matters to Topical Disclosures (Q&A ID 177): Confirmation of ESRS 1, ESRS 2, and the ten topical standards.
NEW QUESTION # 32
What disclosures must be included in the sustainability statement? Select all that apply.
- A. Environmental objectives under the EU Taxonomy Regulation
- B. General Disclosure Requirements from ESRS 2
- C. Financial performance metrics from IFRS reports
- D. Governance-related information determined by the materiality assessment
Answer: A,B,D
Explanation:
Thesustainability statementunder ESRS is structured according toESRS 1 and ESRS 2, outlining specific disclosure requirements. The required disclosures include:
* General Disclosure Requirements from ESRS 2
* ESRS 2 outlinesgeneral disclosure requirements, including governance, strategy, and impact, risk, and opportunity management (IROs). These disclosures are mandatory for all undertakings, providing the foundation of the sustainability statement.
* #(A) is correct
* Environmental Objectives under the EU Taxonomy Regulation
* Companies must disclose theiralignment with the EU Taxonomy Regulation, particularly under Article 8 of Regulation (EU) 2020/852, which includes financial and non-financial companies' obligations regarding taxonomy-aligned activities.
* #(B) is correct
* Financial Performance Metrics from IFRS Reports
* Financial metrics from IFRS are NOT a required disclosure under ESRS. The sustainability statement focuses on non-financial reporting, whilefinancial performance remains under IFRS standards in financial statements.
* #(C) is incorrect
* Governance-Related Information Determined by the Materiality Assessment
* Governance disclosures (ESRS G1 Business Conduct)include transparency about policies, risk management, and ethical business practices. Themateriality assessment determines the necessary governance disclosuresbased on entity-specific risks and opportunities.
* #(D) is correct
Conclusion:Thesustainability statement must include general disclosure requirements (A), environmental objectives under the EU Taxonomy (B), and governance-related information based on materiality (D). Financial performance metrics from IFRS reports (C) are not required.
* Commission Delegated Regulation (EU) 2023/2772
* Compilation Explanations January - July 2024
Official References:
NEW QUESTION # 33
Which of the following elements is recommended for inclusion in the sustainability statement under ESRS 2, based on Appendix F of ESRS 1?
- A. A specific structure prescribed by the ESRS
- B. Only sector-specific Disclosure Requirements
- C. A table summarizing financial performance
- D. A list of Disclosure Requirements that have been complied with
Answer: D
Explanation:
UnderESRS 2 (Appendix F of ESRS 1), sustainability statements must follow astructured disclosure approach. The appendix provides guidance on the recommended format and elements to be included in the sustainability statement to ensureconsistency, comparability, and transparency.
* (C) A list of Disclosure Requirements that have been complied with:
* Organizations must provide aclear list of all ESRS disclosure requirementsthat they have reported on. This ensures that stakeholders can assess whether the company has complied with its materiality-based reporting obligations.
* The list must includepage numbers or referencesto the exact location of disclosures within the report.
* (A) A specific structure prescribed by the ESRS:
* While ESRS 1 provides arecommended structure, it isnot mandatory. Instead, companies are given flexibility to adapt the format to their reporting needs.
* (B) Only sector-specific Disclosure Requirements:
* The sustainability statement should coverboth general ESRS disclosures and sector-specific disclosures, not just sector-specific ones.
* (D) A table summarizing financial performance:
* Financial performance isnota core requirement of thesustainability statement. Instead, ESRS focuses onsustainability-related disclosuresthat impact financial performance but does not mandate a direct financial summary within the sustainability statement.
* Commission Delegated Regulation (EU) 2023/2772, ESRS 2 (Appendix F of ESRS 1)- Outlines the format and elements of the sustainability statement.
* EFRAG Compilation Explanations (January - November 2024)- Provides insights into structuring sustainability statements under ESRS.
Key Requirements for ESRS 2 Sustainability StatementIncorrect OptionsOfficial References:Thus, the correct answer isC. A list of Disclosure Requirements that have been complied with.
NEW QUESTION # 34
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