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.
Incorrect Answer:
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.
Official Reference:
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.
