EcoFurniture Inc.

EcoFurniture Inc. is performingStep B of its double materiality assessmentunder ESRS, which involves identifying and assessingimpacts, risks, and opportunities (IROs)from both animpact materialityandfinancial materialityperspective​.

During Step B, the organization must:

Compare entity-specific sustainability matters to ESRS 1 AR 16

Screening sustainability matters listed in ESRS 1 AR 16ensures that EcoFurniture Inc. identifies allpotential material topicsand aligns them with itsspecific sustainability context​.

Action:✅(A) is correct

Engage with affected stakeholders

Stakeholder engagementis a key requirement in the ESRSdouble materiality process, especially for industries with environmental and social impacts, such as deforestation risks in EcoFurniture's timber sourcing.

ESRS 2 IRO-1 explicitly states that stakeholder engagement is necessary tovalidate materiality assessments​.

Action:✅(B) is correct

Consider downstream impacts

ESRS mandates assessingboth upstream and downstreamsustainability impacts.Ignoring potential risks in the downstream value chain is not aligned with ESRS requirements.

Action:❌(C) is incorrect

Use scientific research to validate sustainability trends and risks

Theuse of scientific evidenceis an essential part of assessing sustainability matters.ESRS encourages leveraging research and external data to confirm industry-specific sustainability risks​.

Action:✅(D) is correct

Conclusion:EcoFurniture Inc. must integratestakeholder engagement, scientific research, and systematic comparison of sustainability matters to ESRS requirementsto ensure a robust Step B materiality assessment.Ignoring the downstream value chain is not permissibleunder ESRS.

Commission Delegated Regulation (EU) 2023/2772​

Compilation Explanations January - November 2024​

Official References: