Free GRI ESRS-Professional Exam Dumps

Impact materiality is indeed considered the starting point for the double materiality assessment in the ESRS. The reason is that material impacts on sustainability matters can generate financial risks and opportunities in the future. The ESRS framework follows this structure because:

Interrelation Between Impact and Financial Materiality

Double materiality includes two dimensions: a) Impact materiality (how the company affects people and the environment). b) Financial materiality (how sustainability matters affect the company's financial performance).

Impact materiality assessments often precede financial materiality because many sustainability issues initially manifest as external environmental and social impacts before affecting the company's financial results.

Regulatory Confirmation of Impact as the Starting Point

According to ESRS 1, section 3.3, impact materiality is typically assessed first, unless a financial risk or opportunity exists independently of an impact.

A sustainability matter may become financially material over time due to regulatory changes, evolving market expectations, or direct financial consequences.

Illustration of the Double Materiality Process

Example: A company engaged in high carbon emissions might initially consider this an impact materiality issue (environmental harm). However, increased carbon pricing, regulatory changes, and shifting investor preferences can later transform this into a financial materiality issue.

Conclusion:

Since impact materiality serves as a precursor to financial materiality in most cases, the statement is true.

Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Section 3.3: Double Materiality Framework.

EFRAG Compilation of Explanations (January - July 2024): Confirmation that impact materiality assessment is the typical entry point.