ESRS-Professional ESRS Professional Certification Exam Questions and Answers

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 onmaterialsustainability topics​.

C. False–Stakeholder opinions are crucialin sustainability reporting. Organizations must engage withemployees, 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 requiresenvironmental, 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:

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:

TheCorporate Sustainability Reporting Directive (CSRD)includes specificreporting mandatesthat organizations must comply with. Below is an evaluation of each option:

A. True– The CSRD requires organizations to conduct adouble materiality assessment, considering bothfinancial materiality(impact on the company’s financial position) andimpact materiality(the company’s impact on the environment and society)​.

B. True– Organizations reporting under the CSRD mustfollow a specific reporting format, which includes structured disclosures usingEuropean Sustainability Reporting Standards (ESRS)​.

C. False– The CSRDapplies to both EU and non-EU companiesthat have operations in the EU and meet the reporting threshold criteria. Non-EU companies generatingmore than €150 millionin annual turnover in the EU and having at leastone EU-based subsidiary or branchare subject to CSRD requirements​.

D. True– The CSRD isinterlinked with other EU legislation, including theEU Taxonomy Regulationand theSustainable Finance Disclosure Regulation (SFDR), ensuring companies align with broader EU sustainability goals​.

E. False– Organizations must report onvalue chain informationas part of theimpact, risk, and opportunity (IRO) management processwithin the ESRS framework​.

F. False– The CSRD mandatesexternal assurancefor sustainability reports, starting withlimited assuranceand progressing towardreasonable assurancein the coming years​.

Commission Delegated Regulation (EU) 2023/2772, Sections onDouble Materiality, Reporting Format, and Value Chain Information​.

EU Taxonomy Regulation & SFDR– Linkages with CSRD​.

Official References:

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 underArticle 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:

Incorporation by reference in sustainability statements under ESRS must adhere to specific principles to ensure transparency, accessibility, and alignment with financial and regulatory reporting. The key principles are:

(A) The referenced information must be clearly identified in the original document.

ESRS mandates that referenced disclosures must beexplicitly identifiedin the original document to prevent ambiguity and ensure clear linkage to the sustainability statement​.

(C) It must comply with digitalization requirements.

The referenced data must meetthe same technical digitalization standardsas the sustainability statement to ensure consistency and usability across digital platforms​.

(D) It must meet the same level of assurance as the sustainability statement.

Any information incorporated by reference must be subject to at least thesame level of assuranceas the sustainability statement itself, ensuring reliability and accuracy​.

(B) It can be published later than the management report.

ESRSdoes not allowreferenced information to be published after the management report. It must be available at the same time or earlier to maintain the coherence of disclosures​.

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 9.1– Defines the principles of incorporation by reference​.

EFRAG Compilation Explanations (January - July 2024)– Provides guidance on referenced information's role in digital and assurance compliance​.

Incorrect Option:Official References:Thus, the correct answers areA, C, and 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, providecrucial 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​.

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) togather 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​.

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:

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 astarting 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.

References:

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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