Which of the following can organizations use to identify actual and potential IROs during Step B of the double materiality assessment process? Select…

During Step B of the double materiality assessment process, organizations must identify 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) 16 provides a comprehensive reference list of sustainability

matters to consider when identifying IROs.

This list includes environmental, social, and governance topics aligned with EU sustainability

objectives​.

C . Due diligence processes ✅

ESRS requires organizations to use due diligence processes to identify negative sustainability impacts.

Due diligence aligns with frameworks such as the OECD Guidelines for Multinational Enterprises and

the UN Guiding Principles on Business and Human Rights​.

This ensures that potential risks and opportunities are assessed based on international sustainability

standards.

D . Feedback from stakeholders ✅

Stakeholders, including employees, suppliers, customers, and affected communities, provide crucial

insights into sustainability impacts.

ESRS mandates engagement with affected stakeholders as part of the IRO identification process​.

Why is B. Financial materiality thresholds ❌ incorrect?

Financial materiality thresholds apply later in the process (Step C) when evaluating the financial

impact of sustainability matters.

Step B focuses only on identifying IROs, making financial thresholds irrelevant at this stage​.

Conclusion:

Organizations should use the ESRS 1 AR 16 sustainability matters list, due diligence processes, and

stakeholder feedback to identify IROs in 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

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 that due diligence and

stakeholder input are part of IRO identification​.