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What disclosures must be included in the sustainability statement? Select all that apply.
General Disclosure Requirements from ESRS 2
Environmental objectives under the EU Taxonomy Regulation
Financial performance metrics from IFRS reports
Governance-related information determined by the materiality assessment
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:
Which of the following are key characteristics of an internal control for assurance purposes? Select all that apply.
The activity must be documented and implemented according to the agreed timing.
The activity can be carried out by the same staff who collected, calculated, or consolidated the information.
The activity must be able to be 'tested' by the external assurance provider.
The results of the activity do not need to be documented each time it is performed.
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 theseparation 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:
What are the two categories of stakeholders identified in the ESRS?
Affected stakeholders and users of sustainability statements.
Primary and secondary stakeholders.
Internal and external stakeholders.
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.
Which of the following elements are included in the scope of a CSRD assurance engagement? Select all that apply.
Verification of the company's financial statements
Compliance of the reporting with the relevant ESRS
Compliance with the requirement to tag the sustainability reporting
ACSRD assurance engagementprimarily focuses onensuring compliance with the ESRSand theproper digital tagging of sustainability information. The elements included in the assurance scope are:
B. Compliance of the reporting with the relevant ESRS✅
Assurance engagements under the CSRDverify whether sustainability reports comply with the European Sustainability Reporting Standards (ESRS).
Theassurance provider reviews disclosuresto ensure alignment withESRS requirements, includingdouble materiality assessments and mandatory data points.
C. Compliance with the requirement to tag the sustainability reporting✅
CSRD requires that sustainability information bedigitally taggedusing theEuropean Single Electronic Format (ESEF)to ensuremachine readability and comparability.
Assurance providers verify the correct application of this tagging requirement, ensuring consistency withXBRL (eXtensible Business Reporting Language) standards.
ACSRD assurance engagement does not cover financial statements.
Financial audits are conducted separately, under theInternational Financial Reporting Standards (IFRS) or local GAAP requirements.
Sustainability assurance only applies tonon-financial sustainability disclosuresunderESRS.
Why is A. Verification of the company's financial statements❌incorrect?Conclusion:Thescope of a CSRD assurance engagementincludes:✅Compliance with ESRS(B)✅Verification of digital tagging(C)❌Not financial statement audits(A)
Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:
Commission Delegated Regulation (EU) 2023/2772, ESRS assurance scope.
EU Sustainable Finance Platform Report (2025): Confirmation ofdigital tagging as part of CSRD assurance.
Which of the following statements about the CSRD reporting mandate are correct? Select all that apply.
The CSRD requires a double materiality assessment to be conducted for sustainability reporting.
The organizations reporting under the CSRD need to follow a specific reporting format.
The CSRD only applies to companies headquartered in the EU.
The CSRD is tied to other EU legislation which companies subject to the CSRD may need to comply with.
The organizations reporting under the CSRD do not need to report value chain information.
The CSRD mandate does not require external assurance for sustainability reporting.
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:
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.
The list of sustainability matters in ESRS 1 AR 16
Financial materiality thresholds
Due diligence processes
Feedback from stakeholders
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.
Which of the following is true about setting thresholds for financial materiality under the ESRS?
Organizations should only use monetary thresholds, such as revenue or costs.
Financial materiality thresholds are based on the likelihood of occurrence and the potential magnitude of financial effects.
Reputational risks cannot be considered financially material.
Thresholds should focus exclusively on the short-term time horizon.
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
Which of the following elements is recommended for inclusion in the sustainability statement under ESRS 2, based on Appendix F of ESRS 1?
A specific structure prescribed by the ESRS
Only sector-specific Disclosure Requirements
A list of Disclosure Requirements that have been complied with
A table summarizing financial performance
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 itsmateriality-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.
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.
True
False
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.
TESTED 16 Jul 2026