GRI ESRS-Professional ESRS Professional Certification Exam Practice Test

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Question 1

Which of the following are key steps in preparing to develop an ESRS report?

Select all that apply.

ASetting up internal controls and stakeholder engagement processes.

BPreparing for materiality assessment.

CDisregarding stakeholder opinions.

DBenchmarking and gap analysis.

EFocusing solely on financial data collection.

FPlanning for external assurance.

Answer : A, B, D, F

Preparing an ESRS report involves multiple key steps to ensure compliance with CSRD requirements. Below is an evaluation of each option:

A . True -- Internal controls and stakeholder engagement are critical for ensuring accurate sustainability reporting. Stakeholders play a role in materiality assessments and governance structures.

B . True -- Materiality assessment is essential to determine which sustainability matters are most relevant for disclosure. The ESRS framework requires organizations to report only on material sustainability topics.

C . False -- Stakeholder opinions are crucial in sustainability reporting. Organizations must engage with employees, customers, investors, and affected communities to identify material sustainability matters.

D . True -- Benchmarking and gap analysis help companies compare their sustainability performance against ESRS requirements, industry best practices, and peer organizations.

E . False -- Sustainability reporting goes beyond financial data collection. The ESRS requires environmental, social, and governance (ESG) disclosures, which include qualitative and quantitative indicators.

F . True -- Planning for external assurance is critical under the CSRD mandate, as limited assurance is required initially, progressing to reasonable assurance by 2028.

Key Steps in ESRS Report Preparation

Step

Purpose

Internal Controls & Stakeholder Engagement

Ensure accuracy and transparency in reporting

Materiality Assessment

Identify key sustainability topics for disclosure

Benchmarking & Gap Analysis

Compare with industry standards and ESRS requirements

External Assurance Planning

Prepare for third-party validation of sustainability data

Official Reference:

Commission Delegated Regulation (EU) 2023/2772, Sections on Materiality Assessment, Internal Controls, and Assurance.

Question 2

Which of the following statements about the CSRD reporting mandate are correct? Select all that apply.

AThe CSRD requires a double materiality assessment to be conducted for sustainability reporting.

BThe organizations reporting under the CSRD need to follow a specific reporting format.

CThe CSRD only applies to companies headquartered in the EU.

DThe CSRD is tied to other EU legislation which companies subject to the CSRD may need to comply with.

EThe organizations reporting under the CSRD do not need to report value chain information.

FThe CSRD mandate does not require external assurance for sustainability reporting.

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.

Question 3

Select all the correct steps for conducting a double materiality assessment based on the ESRS.

ACompare the identified material topics with the list in ESRS 1 Application Requirement 16.

BEntity-specific disclosures must be developed only for impacts covered by ESRS.

CESRS 2 requires the use of IRO-1 to report on the organization's process for identifying impacts, risks, and opportunities.

DSBM-3 outlines disclosure requirements on the material impacts, risks, and opportunities resulting from the materiality assessment.

EOnly financial materiality should be considered when conducting the assessment.

FDouble materiality assessments are not required for organizations following the ESRS.

Answer : A, C, D

The double materiality assessment involves identifying sustainability matters that are material either from:

An impact perspective (the organization's effects on people and the environment).

A financial perspective (how sustainability matters affect the organization financially).

The correct steps in conducting this assessment include:

(A) Comparing identified material topics with ESRS 1 AR 16 -- This ensures alignment with predefined sustainability matters in ESRS.

(C) Using ESRS 2 IRO-1 -- This disclosure requirement mandates companies to report on their methodology for identifying impacts, risks, and opportunities.

(D) Following SBM-3 of ESRS 2 -- This section provides requirements for disclosing the material impacts, risks, and opportunities identified through the materiality assessment.

Why the other options are incorrect:

(B) False: Entity-specific disclosures must cover all material sustainability topics, even those not explicitly covered in ESRS.

(E) False: Both financial and impact materiality must be considered (double materiality), not just financial materiality.

(F) False: Double materiality assessments are mandatory for all organizations reporting under ESRS.

Commission Delegated Regulation (EU) 2023/2772, Section 3.3 on Double Materiality

EFRAG Compilation on Double Materiality Assessments, providing step-by-step guidance on ESRS compliance

Question 4

Which of the following are true about impact materiality and financial materiality under the ESRS? Select all that apply.

AA sustainability topic is considered material only if it affects the organization's financial performance.

BImpact materiality refers to the organization's potential positive or negative impacts on people or the environment.

CFinancial materiality refers to topics that could affect the organization's risks, opportunities, and financial outcomes.

DImpact materiality assessments are less important than financial materiality assessments and should be prioritized last.

EThe ESRS suggest starting with financial materiality, as it directly influences sustainability reporting.

Answer : B, C

Understanding Impact and Financial Materiality under ESRS

The ESRS framework is based on double materiality, which comprises:

Impact Materiality -- This relates to the organization's potential positive or negative impacts on people or the environment, irrespective of whether these impacts translate into financial effects.

Financial Materiality -- This refers to sustainability matters that affect the company's financial position, including risks and opportunities that influence financial outcomes over the short, medium, or long term.

Why the other options are incorrect:

(A) False: A sustainability topic can be material even if it does not directly affect financial performance; it may still be impact material.

(D) False: Impact and financial materiality are equally important under ESRS. Neither is prioritized over the other.

(E) False: The ESRS process generally begins with impact materiality, not financial materiality.

Commission Delegated Regulation (EU) 2023/2772, Section 3.3 on Double Materiality

EFRAG Materiality Guidance on ESRS, which provides methodologies for assessing impact and financial materiality

Question 5

Why should organizations consider reporting on sustainability? Select all options that apply.

AReporting demonstrates transparency and accountability by disclosing environmental, social, and economic impacts.

BStakeholders increasingly expect organizations to report on their sustainability performance.

CReporting guarantees immediate financial gains for the organization.

DDemonstrating sustainability performance can enhance brand value and provide a competitive advantage.

Answer : A, B, D

Organizations should report on sustainability for several reasons, including transparency, stakeholder expectations, and competitive advantage. Below is the evaluation of each option:

A . True -- Reporting on sustainability demonstrates transparency and accountability, allowing companies to disclose their environmental, social, and governance (ESG) impacts.

B . True -- Stakeholders, including investors, customers, and regulators, increasingly demand sustainability reporting to assess the long-term viability of a company.

C . False -- While sustainability reporting may contribute to long-term financial gains, it does not guarantee immediate financial benefits.

D . True -- Companies with strong sustainability performance often enjoy enhanced brand value and competitive advantage, attracting investors and customers who prefer sustainable businesses.

Why Sustainability Reporting Matters

Benefit

Impact on Organization

Transparency & Accountability

Builds trust with investors, regulators, and the public

Stakeholder Expectations

Meets regulatory and customer expectations for ESG disclosures

Brand & Competitive Advantage

Companies with strong ESG performance are more attractive to investors

Regulatory Compliance

Helps meet CSRD and ESRS disclosure obligations

Official Reference:

CSRD & ESRS Guidance (2024) -- Key Sustainability Reporting Benefits.

EU Platform on Sustainable Finance Report (2025) -- Stakeholder Expectations & Competitive Advantage.

Question 6

Which of the following statements about the EU's Corporate Sustainability Reporting Directive (CSRD) and its predecessor, the Non-Financial Reporting Directive (NFRD), are correct? Select all options that apply.

AThe NFRD required all companies in the EU to include a non-financial statement in their annual reports.

BThe NFRD applied to large public-interest entities with 500 or more employees, such as listed companies, credit institutions, and insurance undertakings.

CThe NFRD mandated external assurance for sustainability information in all Member States.

DThe NFRD replaced the CSRD to expand reporting requirements and organization coverage.

EThe CSRD was introduced to address the limitations of the NFRD in scope and reporting requirements.

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.

Question 7

Which of the following correctly fills the gaps in the sentences below?

The ESRS Taxonomy acts as a __________ for tagging sustainability disclosures, ensuring data is structured, consistent, and comparable across organizations.

The CSRD requires sustainability information to be reported in a __________ format, making it accessible to both people and machines.

Under the CSRD, sustainability reports will eventually be uploaded to the __________ platform, centralizing public financial and non-financial information across the EU.

AEuropean Single Access Point (ESAP); digitally accessible; framework

Bframework; digitally accessible; European Single Access Point (ESAP)

Cdigitally accessible; framework; European Single Access Point (ESAP)

Answer : B

Correct Sentence Completion:

The ESRS Taxonomy acts as a framework for tagging sustainability disclosures, ensuring data is structured, consistent, and comparable across organizations.

The CSRD requires sustainability information to be reported in a digitally accessible format, making it available for both people and machines.

Under the CSRD, sustainability reports will eventually be uploaded to the European Single Access Point (ESAP), centralizing public financial and non-financial information across the EU.

Explanation of the Selected Answer:

ESRS as a 'framework' -- The ESRS taxonomy defines a structure that allows sustainability data to be categorized and tagged effectively.

'Digitally accessible format' -- The CSRD mandates reporting in machine-readable formats such as XBRL to improve transparency and comparability.

European Single Access Point (ESAP) -- ESAP will serve as the centralized EU platform for sustainability and financial disclosures.

EU Taxonomy Regulation and CSRD Reporting Structure

EFRAG Explanation on ESRS Digital Reporting