The double materiality assessment process consists of multiple steps, with Step A: Understanding the Context focusing on setting the groundwork for identifying material impacts, risks, and opportunities (IROs).

Step A includes:

Mapping the organization's value chain (Option A)

This step involves identifying all elements of the organization's value chain, including suppliers, distributors, and business partners, to understand where sustainability impacts occur.

It helps in pinpointing potential sustainability matters, risks, and opportunities related to both impact and financial materiality​.

Engaging with affected stakeholders to gather input (Option B)

Stakeholder engagement is a critical part of the materiality assessment as it informs the organization about direct and indirect sustainability impacts.

The ESRS guidance stresses that businesses must engage with affected stakeholders (e.g., employees, communities, consumers) and sustainability experts as part of the due diligence process​.

Analyzing the legal and regulatory landscape (Option C)

Organizations must review applicable laws, regulatory frameworks, and international sustainability commitments that may affect their sustainability reporting obligations.

This ensures compliance with EU regulations (CSRD, ESRS, Taxonomy Regulation, SFDR) and other relevant legal requirements​.

D. Developing a list of material risks and opportunities

This step belongs to Step B: Identifying Material Sustainability Matters , where the organization formally identifies and assesses material IROs. Step A is only about gathering contextual information to inform this process​.

Commission Delegated Regulation (EU) 2023/2772, Section 3.3 - Double materiality and materiality assessment process​.

EFRAG IG 1: Materiality Assessment, Chapter 2.2 - Understanding the context and engagement with affected stakeholders​.

EFRAG Compilation of Explanations January–November 2024 - Provides clarifications on stakeholder engagement and legal context review in Step A​.

Incorrect Answer: Official References:

The sustainability statement under ESRS is structured according to ESRS 1 and ESRS 2 , outlining specific disclosure requirements. The required disclosures include:

General Disclosure Requirements from ESRS 2

ESRS 2 outlines general disclosure requirements , including governance, strategy, and impact, risk, and opportunity management (IROs). These disclosures are mandatory for all undertakings, providing the foundation of the sustainability statement​.

✅ (A) is correct

Environmental Objectives under the EU Taxonomy Regulation

Companies must disclose their alignment with the EU Taxonomy Regulation , particularly under Article 8 of Regulation (EU) 2020/852 , which includes financial and non-financial companies' obligations regarding taxonomy-aligned activities​.

✅ (B) is correct

Financial Performance Metrics from IFRS Reports

Financial metrics from IFRS are NOT a required disclosure under ESRS . The sustainability statement focuses on non-financial reporting, while financial performance remains under IFRS standards in financial statements .

❌ (C) is incorrect

Governance-Related Information Determined by the Materiality Assessment

Governance disclosures (ESRS G1 Business Conduct) include transparency about policies, risk management, and ethical business practices. The materiality assessment determines the necessary governance disclosures based on entity-specific risks and opportunities​.

✅ (D) is correct

Conclusion: The sustainability statement must include general disclosure requirements (A), environmental objectives under the EU Taxonomy (B), and governance-related information based on materiality (D). Financial performance metrics from IFRS reports (C) are not required.

Commission Delegated Regulation (EU) 2023/2772​

Compilation Explanations January - July 2024​

Official References: