Disclosure focus
This disclosure asks an organisation to explain how it goes about finding and assessing the impacts, risks and opportunities that matter for sustainability reporting. In practice, that means describing the process it uses to identify what is material, how it judges significance, and how it keeps that process up to date. The focus is on the method, not just the final list of topics: readers should be able to understand how the organisation reached its conclusions.
The practical emphasis is on whether the process is broad and systematic enough to cover the organisation’s real footprint, rather than only a few well-known or flagship sites. A useful explanation would show how the organisation looks across its own operations and, where relevant, its wider value chain, and how it makes sure important issues are not missed because they sit outside the most visible parts of the business.
This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official EFRAG source.
Before you start
A quick mental checklist before you prepare this disclosure — tick each as you settle it.
Preparation
Key datapoints to prepare
＋ Show IRO-1 sub-elements (LRA working checklist)
State the assumptions used.
Set out the decision steps followed.
List the inputs relied on.
Describe the method applied.
Explain the thresholds used.
Identify the areas with higher risk.
Set the criteria used to judge likelihood.
Explain how priorities were ranked.
Set the criteria used to judge severity.
Say whether due diligence information was used.
Name any outside specialists consulted.
Explain how that input informed the work.
Name the stakeholders consulted.
Identify the changes found.
Explain why each change was made.
How to prepare it
1Set the boundary first: state which parts of the business, value chain, time period, and reporting population your process covers, so the reader can see what was in scope for the assessment.
2Define your working rules: explain the method you used, the decision path you followed, the cut-offs or trigger points you applied, the assumptions you relied on, and the information sources you drew on.
3Explain how you judged importance: set out the criteria you used for seriousness and for chance of occurrence, then describe how those criteria fed into your ranking or sorting of matters, including any areas you treated as especially sensitive or exposed.
4Record who informed the process: note whether the assessment drew on due diligence work, identify the internal or external parties you consulted, and explain how their input shaped the outcome.
5Compile the output in the form needed: bring together the figures, narrative explanations, or both, using the evidence and working papers that support the conclusions and the way the assessment was carried out.
6Document what changed and why, then check the final wording against the official source so any exclusions, updates, or methodological shifts are clear and the disclosure stays aligned with the underlying requirement.
Request the data
Request the impact-and-risk assessment process evidence
Translate the disclosure into an internal business question — then adapt it to your organisation's own language.
How do we currently identify, screen, prioritise and update the sustainability topics that matter most to the business?
Use your organisation’s own names for the process, committees, scorecards and review cycles first, then map them to the reporting disclosure. Keep the request in the language people actually use internally, and check the source material before sign-off.
Weak request
Please provide the ESRS 2:IRO-1 materiality assessment methodology, decision steps, thresholds, assumptions, inputs, severity criteria, likelihood criteria, prioritisation approach, heightened-risk areas, due diligence input, stakeholders consulted, external experts consulted, how input was used, changes identified and reason for change.
Why it fails: It uses framework language only, which can be hard for the business owner to recognise. It also bundles many concepts into one long ask, so the recipient may not know which internal documents or systems to check. That makes it slower to answer and easier to miss evidence.
Better request
Please share the documents and notes that show how your team reviews and ranks the sustainability topics that matter most for [period]. I need the process steps, the rules used to separate higher-priority items, the main inputs, the criteria used to judge seriousness and chance of occurrence, any higher-risk areas, who was consulted, how their input changed the outcome, and what changed since the last cycle. A short table plus source files or links is fine.
Industry examples
Draft your disclosure
Notes that turn data into a disclosure
LRA training templates — adapt them to your organisation, and check the official source before sign-off.
Method note
We can describe the basis of the assessment by setting out the method used, the steps followed to reach decisions, the cut-offs applied, the assumptions made, and the main inputs relied on.
Context note
This section can explain what the figures mean in practice by linking the assessment criteria, the ranking approach, any outside input, and the areas identified as needing closer attention.
Fluctuation statement
If the numbers moved during the period, we can explain that by pointing to the changes identified, the reasons behind them where known, and any shift in the inputs, thresholds, or external input used.
Content index entry
IRO-1 Description of the Processes to Identify and Assess Material Impacts, Risks and Opportunities — [location / page] / [notes]
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Preparation tools & forms
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Assurance readiness
For each claim, check the evidence
Evidence pack to prepare
Common reporting gaps
The information is presented without a date or as-at point.The scope or boundary of the statement is left undefined.Key terms are used inconsistently across the report.Material changes since the previous period are not disclosed.Assertions are made without supporting detail or a source record.Boilerplate is used that does not actually answer what is asked.
Common gaps
Mistakes to avoid when collecting the data
Wrong owner
The team asks the sustainability lead for process details that sit with operations, risk, legal, or procurement, so the evidence comes from the wrong part of the business.
Framework language only
People ask for answers in ESRS-style terms instead of the organisation’s own working language, which produces vague responses that staff cannot verify against source records.
Scope left unclear
The data request does not state which business units, sites, or activities are in scope, so different teams send mixed coverage that cannot be reconciled.
Wrong time basis
One team uses the reporting year while another uses a later cut-off or an earlier snapshot, so the collected evidence does not line up to the same period.
Counting bases mixed
Headcount, incidents, and spend are gathered using different counting rules without being separated, which makes the underlying figures impossible to compare cleanly.
Source labels lost
Original file names, system codes, case IDs, or document titles are stripped out during collection, so the trail back to the first record is broken.
Separate groups merged
Data from different populations that should stay apart, such as sites, functions, or issue types, is combined too early and the detail needed for review disappears.
No evidence trail
The pack is assembled without notes on where each input came from, who checked it, and who approved it, so there is no clear sign-off history.
Where judgement is often needed
Setting the group boundary after a buy-in or sale
Use the reporting perimeter that matches the period you are explaining, and if a purchase or disposal changes what sits inside the business, say when that change was brought into the assessment and how it affected the process steps and any updated findings.
Reconciling different local definitions across countries
Where local rules or operating labels differ by country, choose one internal basis for the assessment, explain the mapping from local terms to that basis, and note any places where the comparison is not exact.
Deciding how to treat people or sites near the edge of scope
If a worker group, supplier tier, site, customer segment, or community sits close to the boundary, state the rule used to include or exclude it and explain why that rule was applied consistently.
Choosing the cut-off date for the assessment
If the process uses a year-end snapshot, an average over the period, or another timing point, disclose that choice and make clear how it affects what was seen as significant in the period.
Using estimates where direct measurement is not available
When the assessment relies on estimates, proxies, or modelled inputs rather than direct records, identify the main assumptions, explain why they were needed, and distinguish them from information taken straight from source data.
Setting the level at which small items are grouped or rounded
If you group low-value items, combine similar cases, or round figures, explain the rule used, show that the simplification does not change the overall picture, and keep the method consistent across the disclosure.
Handling sensitive people data through aggregation
When privacy or confidentiality means you cannot show detailed people data, present it in grouped form, explain the aggregation rule, and make clear how that still supports the assessment of significance.
Applying one scoring method when evidence quality varies
If some parts of the business have strong records and others rely on weaker evidence, describe the scoring approach used, note where judgement filled gaps, and explain how you kept the comparison fair across the whole assessment.
Updating the process after a major business change
If a restructuring, acquisition, disposal, or new operating model changes how the business is reviewed, say what changed, why the process was adjusted, and whether the latest assessment was run on the old or revised basis.
Examples
Illustrative examples
Synthetic, written by LRA — not from a company report, not text from any standard.
Illustrative (synthetic) example — Food processing
*Illustrative only.* We first mapped the issues most likely to affect our business model and supply chain, then screened them using a simple scoring method that combined scale of effect, how hard it would be to put right, and how likely it was to happen. We treated matters as higher priority where the score crossed our internal cut-off, where our assumptions were more conservative, or where the issue sat in a known higher-risk part of the business; for this exercise, we used 18 internal and external data inputs, consulted 12 people from operations, procurement, HR and worker representatives, and brought in 2 outside specialists, whose views helped us refine the ranking and confirm 4 areas for closer due diligence. - Our method used a three-step review: identify, score, then rank; the cut-off for escalation was a combined score of 12 or more out of 20. - We assumed stable production volumes, unchanged supplier mix, and no major acquisition during the period. - We found 3 changes in the period: 1 new issue added, 1 issue moved up in priority, and 1 issue removed after further review.
Synthetic illustration for training only; not legal, assurance, or filing advice.
Illustrative (synthetic) example — Apparel manufacturing
*Illustrative only.* We assessed our impacts by starting with a longlist of topics, then testing each one against agreed severity and chance criteria before deciding what to focus on first. In practice, we gave more weight to issues with larger potential effect, longer recovery time, wider reach, and stronger likelihood signals; we also paid special attention to labour-intensive sites and water-stressed locations, which we treated as heightened-risk areas. For this review, we drew on 15 information sources, spoke with 10 internal and external stakeholders, involved 3 independent advisers, and used their input to adjust the scoring, confirm that due diligence was needed for 5 topics, and record 2 material changes from the prior cycle. - Our decision path was: gather evidence, test against the criteria, then prioritise the most significant matters. - The working assumptions were steady demand, no major regulatory shock, and no sudden loss of a key supplier. - The period brought 2 changes: one topic became more significant and one dropped below our threshold.
Synthetic illustration for training only; not legal, assurance, or filing advice.
How companies report IRO-1 in practice
Real reports where this topic is disclosed. These are report practice, not exact disclosure templates to copy.
Abertis
Ground Transportation — Highways and Railtracks · Spain · 2024
Abertis’ 2024 Annual Report provides a description of the processes used to identify and assess material impacts, risks, and opportunities, with specific references to a materiality assessment detailed on pages 169 and 197. The report also notes stakeholder involvement in the double materiality assessment as part of formulating the Sustainability Policy on page 75. However, several datapoints remain unclear or not found, including detailed methodologies, specific impacts on affected communities, and some aspects of risk integration, with related context but no clear disclosures on pages 87, 89, 93, and 174.
Assicurazioni Generali S.p.A.
Banks / Diverse Financials / Insurance · Italy · 2024
Assicurazioni Generali S.p.A.'s 2024 Annual Integrated Report provides some context on processes to identify and assess material impacts, risks, and opportunities, with references to stakeholder involvement on page 91 and materiality considerations on pages 78, 88, and 89. However, the report lacks clear, quotable disclosures for many specific datapoints related to identifying and assessing adverse impacts, with several marked as not found or unclear, including key elements such as detailed methodologies and comprehensive descriptions. Overall, while some related context is present, the report does not clearly disclose many of the required datapoints for this disclosure.
Aena S.M.E., S.A.
Air Transportation — Airport Services · Spain · 2025
Aena S.M.E., S.A.'s 2025 sustainability report includes a description of the processes to identify and assess material pollution-related impacts, risks, and opportunities, as noted on page 69. There is related context on materiality assessments and identification of impacts and risks on pages 61 and 237, though these do not clearly disclose specific datapoints. Several expected disclosures, including detailed methodologies and certain impact assessments, are not found or remain unclear in the report.
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Scenarios to work through
A group is drafting its materiality process note. The team has a workshop map and a spreadsheet of site, supplier and customer inputs, but the write-up only says the board reviewed the outcome.
QWhat extra process detail should be captured so a reader can see how the assessment was actually carried out?
Reveal model answer →Hide answer ↑The note should explain the practical method used to identify and judge the matters in scope, the steps followed to reach the conclusion, the cut-offs or filters applied, the assumptions made, and the main inputs relied on. A board review alone does not show the process behind the result.
Why this matters · Describe the working method, not just the final sign-off.
A preparer has ranked several issues using a scorecard. One issue was placed above the rest because it could cause serious harm even though the team thought it was less likely than others, and the draft does not explain why that issue came first.
QHow should the team explain its ranking approach so the ordering is understandable?
Reveal model answer →Hide answer ↑The explanation should set out the criteria used to judge seriousness and the criteria used to judge chance of occurrence, then show how those criteria were combined to decide which matters were treated as more important. If some areas were given extra weight because they carried greater exposure, that should also be stated.
Why this matters · Show how seriousness, chance and priority were linked in practice.
The sustainability team consulted worker representatives and an external environmental adviser. Their draft mentions the meetings, but it does not say what parts of the assessment were shaped by that input.
QWhat should the preparer add about the use of outside and stakeholder input?
Reveal model answer →Hide answer ↑The draft should say whether the assessment drew on due-diligence work, who was consulted, which outside specialists were involved, and how their views changed or confirmed the conclusions. The point is to show how the input fed into the judgement, not just that meetings happened.
Why this matters · List the contributors and explain how their input affected the assessment.
Last year’s process focused mainly on operational sites. This year the team added a new supplier-screening step and changed the threshold for escalating climate-related issues after a severe weather review.
QWhat should the preparer disclose about changes in the process from one reporting cycle to the next?
Reveal model answer →Hide answer ↑The disclosure should identify what changed in the way the assessment was done and explain why the change was made. In this case, the team should note the new supplier-screening step and the revised escalation threshold, together with the reason for each change.
Why this matters · When the process changes, say what changed and why it changed.
Framework references
Related framework references
How this disclosure maps across the major reporting frameworks.
Primary
Related & explore
General Basis for Preparation of Sustainability Statements → Guide ✓Disclosures in Relation to Specific Circumstances → Guide ✓Actions and Resources in Relation to Material Sustainability Matters →Metrics in Relation to Material Sustainability Matters → Guide ✓Policies Adopted to Manage Material Sustainability Matters → Guide ✓Targets in Relation to Material Sustainability Matters → Guide ✓Show all 14 related disclosures →
FAQ
Questions this page answers
IRO-1 ESRS 2: what should I collect before drafting the disclosure narrative?+−
Start with the page’s datapoints to prepare: assessment method, steps, cut-offs, assumptions, inputs, severity and likelihood bases, priority setting, high-risk focus areas, due diligence input, stakeholder and specialist input, how that input was used, and any changes identified and explained. The page also has a step-by-step preparation section you can use to turn those inputs into a draft.
How do I use the IRO-1 page to set the scope and methodology for the assessment?+−
Use the page to capture the assessment method, the steps taken, the decision cut-offs, the working assumptions, and the inputs used. That gives you a practical basis for explaining how the assessment was done without relying on a one-line summary.
What evidence should I gather for IRO-1 ESRS 2 to make the disclosure assurance-ready?+−
The page points you to an evidence pack with five items and six assurance claims to verify, each framed as claim, risk and evidence. In practice, that means keeping the underlying support for the assessment process, the inputs, and the reported changes together in one pack.
Who should own the IRO-1 disclosure inputs, and how do I assign responsibilities?+−
The page is designed for sustainability/ESG managers, HR or data owners, and assurance reviewers, so ownership should sit with the people who can evidence the assessment method, inputs, and changes. Use the step-by-step preparation section and workbook to allocate tasks and track who provides each input.
How do I turn the IRO-1 workbook into a draft disclosure?+−
Use the Prep & Assurance workbook to organise the datapoints, then use the draft-output section for visualisation ideas, narrative starters, and a content-index line. The page is set up to move you from raw inputs to a draft narrative in a structured way.
What are the common mistakes to avoid when preparing IRO-1 ESRS 2?+−
The page includes a list of common reporting gaps and mistakes, so it is meant to help you check for missing method detail, weak evidence, or unclear explanations of change. Use that list as a final review before you lock the draft.
How should I document stakeholder consultation for the IRO-1 disclosure?+−
The datapoints to prepare include consulted stakeholders, outside specialists consulted, and how their input was used. Keep those three elements linked so the disclosure shows not just who was consulted, but what influence the input had on the assessment.
What does the IRO-1 page say about explaining changes from one reporting period to the next?+−
It asks you to capture identified changes and the explanation for those changes. That means you should be able to show what changed, why it changed, and how that affects the current disclosure.
Can I use the synthetic example on the IRO-1 page as a template for my own disclosure?+−
Yes, as a drafting aid only. The page includes synthetic illustrative example disclosures, including a quantitative table, so you can see how the information may be presented, but you should replace it with your own company data.
Where can I find supporting materials for IRO-1 ESRS 2 disclosure preparation?+−
The Download Centre provides a Prep & Assurance workbook in .xlsx format and a printable Library Card in .pdf format. The page also links to a 'From company reports' table with real published reports for reference.
More questions this page can help with
IRO-1 ESRS 2 checklist for assessment method, steps, cut-offs and assumptionsIRO-1 evidence pack for assurance readiness: what should be included?IRO-1 disclosure ownership: who should provide the inputs and sign off the draft?IRO-1 common mistakes and reporting gaps to check before submissionHow to use the IRO-1 Prep & Assurance workbook and Library CardIRO-1 narrative starters and content-index line examplesIRO-1 stakeholder consultation and specialist input: how to record itIRO-1 change explanation: how to describe changes in the current periodIRO-1 high-risk focus areas and priority setting approach: what data do I need?IRO-1 due diligence input: how to capture it in the disclosure packIRO-1 from company reports examples for disclosure draftingIRO-1 assurance claims to verify: claim, risk and evidence
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