Free GRI ESRS-Professional Exam Dumps June 2026

Entity-specific disclosures are required if a material sustainability matter is not covered or sufficiently detailed in the ESRS. According to ESRS 1, paragraph 11, if an undertaking identifies an impact, risk, or opportunity that is not adequately covered by an ESRS but is material due to its specific facts and circumstances, it must provide additional entity-specific disclosures. This ensures that users of sustainability reports receive relevant and complete information.

Key Provisions from ESRS:

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 companies must disclose 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 the minimum disclosure requirements that apply when companies make entity-specific disclosures related to governance, strategy, impacts, risks, and opportunity management.

Thus, if a sustainability matter is deemed material and is not sufficiently addressed by ESRS, entity-specific disclosures are mandatory.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772, ESRS 1, Paragraphs 11 and 30.

ESRS Implementation Q&A Platform -- Compilation of Explanations January -- November 2024.

The European Sustainability Reporting Standards (ESRS) categorize stakeholders into two 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 of engagement with affected stakeholders as part of an undertaking's due diligence and materiality assessment process, ensuring that material impacts, risks, and opportunities are adequately identified and reported.

Official Reference:

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.

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.