GRI ESRS Professional Certification ESRS-Professional Exam Practice Test

Answer : B

Not all EU Member States have decided that only statutory financial auditors are allowed to conduct the assurance of the sustainability statement. The Corporate Sustainability Reporting Directive (CSRD) mandates that sustainability reports be assured by an external party, but it allows Member States to decide whether assurance engagements can be performed by firms other than statutory financial auditors.

Key Provisions:

Limited Assurance Requirement:

The CSRD introduces a phased approach to assurance, starting with limited assurance and transitioning to reasonable assurance over time (expected by 2028).

Initially, limited assurance is required across all Member States.

Flexibility for Member States:

EU Member States have discretion to allow other independent assurance service providers to conduct the sustainability assurance, in addition to statutory auditors.

Some countries may restrict sustainability assurance to statutory auditors, but this is not an EU-wide rule.

Upcoming EU Assurance Standards:

The European Commission is working on developing a common EU assurance standard for sustainability reporting.

The Committee of European Auditing Oversight Bodies (CEAOB) has issued non-binding guidelines on limited assurance for sustainability reporting.

Thus, the statement is false because not all EU Member States have restricted sustainability assurance to statutory financial auditors. Some allow other independent assurance providers to conduct the engagements.

Official Reference:

CSRD (Directive (EU) 2022/2464) Assurance Provisions.

EU Platform on Sustainable Finance Report (February 2025) -- Assurance Standards and Guidelines.

CEAOB Guidelines on Limited Assurance for Sustainability Reporting (September 2024).

Answer : A, C

ESRS 2 is a cross-cutting, sector-agnostic standard (Option A)

ESRS 2 applies to all undertakings, regardless of sector or industry.

It establishes general disclosures that cover governance, strategy, materiality, risks, and sustainability metrics.

Certain ESRS 2 disclosure requirements are subject to a phase-in period (Option C)

Some disclosure requirements have been phased in for companies with fewer than 750 employees, allowing gradual adoption.

For instance, disclosures related to biodiversity (ESRS E4), workforce (ESRS S1-S4), and pollution (ESRS E2) can be omitted for the first 1-2 years, depending on company size.

Incorrect Answer:

B . Reporting organizations don't have to address all disclosure requirements in ESRS 2

This is incorrect because ESRS 2 disclosures are mandatory for all reporting organizations. Only topical ESRS requirements depend on materiality assessments.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772, ESRS 2 - Defines ESRS 2 as a sector-agnostic, cross-cutting standard.

EFRAG Compilation Explanations (January--July 2024), Appendix C - Lists ESRS 2 disclosures with phase-in provisions.

Answer : A

Under ESRS 2 and topical ESRS, external assurance is not required for all information reported. Instead, assurance requirements depend on specific regulatory obligations and the phase-in periods set by the Corporate Sustainability Reporting Directive (CSRD).

Limited Assurance Requirement Initially

CSRD mandates limited assurance over sustainability information at first, with reasonable assurance (more stringent) to follow in later years.

However, not all data points require assurance---only those specifically outlined in the European Commission's assurance framework.

Mandatory Assurance for Some Disclosures

ESRS 2 covers general disclosures, but only certain metrics and targets under specific topical ESRS require external assurance.

Appendix C of ESRS 2 outlines which disclosures require assurance.

Entity-Specific Exemptions & Phase-in Rules

Some disclosures do not require assurance if they are deemed immaterial based on the materiality assessment.

SMEs and first-time reporters have phased-in assurance requirements.

Thus, external assurance is not required for all ESRS 2 and topical ESRS disclosures, making the statement True.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772

Compilation Explanations January - November 2024

Answer : B, E

The Corporate Sustainability Reporting Directive (CSRD) replaced the Non-Financial Reporting Directive (NFRD) to address its limitations in scope and reporting requirements. Below are the explanations for each option:

A . False -- The NFRD did not require all companies in the EU to include a non-financial statement. Instead, it applied only to large public-interest entities with 500 or more employees.

B . True -- The NFRD applied to large public-interest entities, including listed companies, banks, and insurance firms with more than 500 employees.

C . False -- The NFRD did not mandate external assurance for sustainability information. The CSRD introduced mandatory assurance at the EU level.

D . False -- The CSRD did not replace the NFRD; rather, it expanded and strengthened reporting requirements. The NFRD was replaced by the CSRD, but not the other way around.

E . True -- The CSRD was introduced to improve the scope and depth of sustainability reporting compared to the NFRD. It expanded the number of entities required to report, standardized disclosures via ESRS, and introduced third-party assurance requirements.

Key Differences Between CSRD and NFRD

Feature

NFRD (Old Directive)

CSRD (New Directive)

Scope

Large public-interest entities (500+ employees)

All large companies + listed SMEs

Assurance

Not required

Mandatory external assurance

Disclosure Requirements

Limited sustainability disclosures

Comprehensive ESRS-based reporting

Reporting Standards

No standardized framework

ESRS-based mandatory framework

Application Date

In force since 2018

Applies from 2024 onwards

Official Reference:

CSRD Directive (EU) 2022/2464 -- Assurance & Reporting Provisions.

ESRS Compilation Explanations January - November 2024.

Answer : A

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.

Answer : A, B, D

The Corporate Sustainability Reporting Directive (CSRD) includes specific reporting mandates that organizations must comply with. Below is an evaluation of each option:

A . True -- The CSRD requires organizations to conduct a double materiality assessment, considering both financial materiality (impact on the company's financial position) and impact materiality (the company's impact on the environment and society).

B . True -- Organizations reporting under the CSRD must follow a specific reporting format, which includes structured disclosures using European Sustainability Reporting Standards (ESRS).

C . False -- The CSRD applies to both EU and non-EU companies that have operations in the EU and meet the reporting threshold criteria. Non-EU companies generating more than 150 million in annual turnover in the EU and having at least one EU-based subsidiary or branch are subject to CSRD requirements.

D . True -- The CSRD is interlinked with other EU legislation, including the EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR), ensuring companies align with broader EU sustainability goals.

E . False -- Organizations must report on value chain information as part of the impact, risk, and opportunity (IRO) management process within the ESRS framework.

F . False -- The CSRD mandates external assurance for sustainability reports, starting with limited assurance and progressing toward reasonable assurance in the coming years.

Official Reference:

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

EU Taxonomy Regulation & SFDR -- Linkages with CSRD.

Answer : A, B, C

Under ESRS, organizations are required to disclose material impacts, risks, and opportunities (IRO) in accordance with double materiality principles. The ESRS framework emphasizes transparency and structured reporting of sustainability matters that are material from both impact and financial perspectives.

Key Disclosure Requirements for Material IROs

According to ESRS 2, organizations must disclose:

(A) The outcomes of their double materiality assessment: Organizations need to explain how they determined material sustainability matters, covering both impact and financial materiality.

(B) Information outlined in the topical ESRS and sector-specific standards: The disclosure of IROs must align with specific ESRS topical standards (e.g., ESRS E1 for climate change, ESRS S1 for own workforce) and sector-specific standards, ensuring comprehensive reporting.

(C) Minimum Disclosure Requirements on policies, actions, and targets: Organizations must disclose policies, strategies, action plans, and progress tracking mechanisms related to managing material sustainability risks and opportunities. ESRS mandates these disclosures to provide transparency on an entity's approach to risk mitigation and opportunity realization.

Incorrect Option

(D) A general overview of their sustainability policies, even if unrelated to specific material matters:

ESRS does not require companies to provide general sustainability policy overviews unless they relate to material sustainability matters. The focus is on material disclosures that affect business operations or external stakeholders.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772, ESRS 2, Section 4.1 & IRO-1 -- Covers disclosure requirements for identifying and assessing material impacts, risks, and opportunities.

EFRAG Compilation Explanations (January -- November 2024) -- Details about ESRS 1 and ESRS 2 disclosure requirements on materiality.