IRO examples: Short and sweet
The IRO examples of the ESRS IRO database makes it easier for companies to carry out a double materiality assessment according to the European Sustainability Reporting Standards (ESRS). It saves time, provides sound expert information and enables a structured assessment of impacts, risks and opportunities (IROs). It also ensures that all relevant sustainability topics are systematically recorded and efficiently integrated into the reporting process.
The most important advantages at a glance:
- Structured IRO examples collection according to ESRS specifications - as Excel database
- Time-saving & practical - developed by CSRD experts
- Simple integration with existing materiality assessment template
- Customizable & individually expandable for specific company requirements
1. understanding of IROs
The identification and evaluation of Impacts, Risks & Opportunities (IROs) is a central component of the double materiality assessment (DMA) within the framework of the Corporate Sustainability Reporting Directive (CSRD). Companies must assess their impact on the environment and society as well as the financial risks and opportunities posed by sustainability issues. A sound analysis of IROs is crucial to meet regulatory requirements and enable strategic sustainable corporate governance.
The European Sustainability Reporting Standards (ESRS)which were developed as part of the CSRD, require companies to systematically record and report on sustainability issues. IROs play a key role here, as they serve as the basis for the double materiality assessment and provide companies with a clear structure for reporting.
Definition of IROs
Impacts: Companies have a direct or indirect impact on the environment and society through their business activities, products or services. These impacts can be both positive and negative and affect various interest groups such as employees, people in the value chain, customers or nature.
Risks: Sustainability issues harbor potential risks for companies, which can manifest themselves in financial, legal or operational disadvantages. In addition to traditional risks such as the risk of flooding, stricter environmental legislation or changes in market requirements can lead to financial burdens or reputational damage.
Opportunities: At the same time, sustainability issues also offer opportunities. Companies that implement sustainable strategies at an early stage can secure competitive advantages, promote innovation and tap into new markets. For example, investing in renewable energies can bring long-term cost savings and image benefits.
The role of IROs in the dual materiality assessment
The double materiality assessment looks at two perspectives:
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Inside-out perspective (materiality of impacts): How does the company affect the environment and society? Example: A production company causes CO₂ emissions and thus contributes to the climate crisis.
Positive and negative impacts (the I in IRO) are always assigned to impact materiality. -
Outside-in perspective (financial materiality): How do external sustainability factors affect the company? Example: Rising CO₂ prices can lead to higher operating costs and affect profitability.
Risks and opportunities (the R & O in IRO) are always assigned to financial materiality.
These two perspectives are closely linked and help companies to develop a holistic sustainability strategy.
IROs vs. (sub)themes
The ESRS AR 16 topic list with the ten standards in the areas of environment, society and governance (ESG) and the respective sub-topics and sub-sub-topics forms the basis for sustainability reporting. Within these sub-themes, companies must identify and assess impacts, risks and opportunities (IROs).
IRO examples
Impacts, opportunities and risks should be clear, differentiated, comprehensible and assessable. The following examples of IROs are taken from the DNK‘s “IROs – Impacts, Risks and Opportunities” guidelines:
- Financial risk | E1 Climate change – climate protectionFinancial risk, as working hours have to be changed or shortened due to extreme weather conditions (heat, heavy rain, etc.), thus jeopardizing the smooth running of work processes.
- Financial risk | E1 Climate change – adaptation to climate change: Political decisions due to climate change are tightening regulatory requirements for companies. This is accompanied by rising costs that have to be incurred in order to meet the new requirements (transition risk).
- Potential negative impact | E4 Biodiversity and ecosystems – Impacts on the extent and condition of ecosystems: Raw material extraction and land consumption/sealing can weaken or destroy ecosystems.
- Actual positive impact | E3 Water and marine resources – Water – Water consumption: The use of service water and rainwater contributes to the conservation of water resources.
2. challenges with IROs and how IRO examples can help
The identification and evaluation of IROs presents companies with major challenges, as the process is complex and resource-intensive. Small and medium-sized companies in particular are faced with the difficulty of identifying and meaningfully evaluating the relevant IROs. These are clearly formulated IRO examples that are very helpful.
Complexity of the process
Identifying relevant IROs requires a comprehensive analysis of the entire value chain. Companies need to consider various influencing factors, including regulatory requirements, market trends, stakeholder expectations and internal business processes. This can take a considerable amount of time and effort. The ESRS in particular set clear requirements for the identification and reporting of these aspects, requiring thorough documentation.
Need for specialized knowledge
The precise identification of IROs often requires specialized expertise. Companies need to evaluate different data sources or consider stakeholder perspectives to determine the relevance of individual sustainability issues. Without structured methods or tools, this process can be inefficient and error-prone. The ESRS also require a comprehensible methodology for assessing materiality, which further increases the need for qualified specialists.
Lack of standardized solutions
As each business unit has to identify different IROs, there is no universal solution that standardizes the process unless materiality assessment software or a template is used. Companies are therefore faced with the challenge of developing their own valuation models, which causes additional work.
These challenges show that an efficient solution is needed to make it easier for companies to identify IROs and enable a structured materiality assessment.
Uncertainty about the number of IROs
What is the right number of IROs to identify and assess to meet the auditor ‘s requirements for CSRD implementation?
Unfortunately, there is no clear answer to this question, as it depends heavily on the business model, the industry and other factors. However, the first sustainability reports in the CSRD report list and materiality assessment benchmark studies can be used as a guide. For SMEs, the average number of IROs is around 200-300.
3rd ESRS IRO database: Presentation of several IRO examples
To make it easier for companies to identify and evaluate IROs, the ESRS IRO database of CSR tools was developed. This database offers a structured collection of pre-formulated IRO examples that are specifically tailored to the requirements of the ESRS.
Purpose of IRO examples in a database
The ESRS IRO database helps companies to identify the relevant IROs quickly and efficiently using the IRO examples. It serves as a tool to significantly speed up the duplicate materiality assessment process and ensure consistent reporting.
Content and structure of the IRO database
Prefabricated IRO examples: The database contains numerous IRO examples that are structured according to the specific requirements of ESRS.
Cross-industry applicability: Companies from different industries can benefit from the database as it covers a wide range of sustainability topics. There are also examples of industry-specific IROs.
Easy integration into existing processes: The IRO examples can be integrated directly into materiality assessment and adapted to company-specific circumstances – regardless of the use of software or an Excel tool.
Time savings through IRO examples
Identifying IROs usually requires extensive research and analysis, which can take between 20 and 40 hours depending on the size and structure of the company. Added to this is the time required to formulate and justify the IROs – around 5 minutes per IRO. Using the IRO examples from the database significantly reduces this time expenditure. Companies can use the pre-formulated IROs directly in their materiality assessment or integrate them with minimal adjustments, saving up to 85% of the time required.
IRO examples: How they are used
- Download: Purchase the IRO database via our online store or by e-mail order on account.
- Filter the relevant IRO examples: Use the preset filters to select the topic, keywords or IRO classification for which you want to enter an IRO.
- Copy and adapt if necessary: Copy the IROs that apply to your business and customize the content to fit your business needs.
- Integrate: Insert the copied IROs into your materiality assessment (e.g. our DMA Excel template or the Materiality Master) for a seamless and efficient analysis.
- Evaluate IROs: Evaluate the various factors such as scale, scope, reversibility and likelihood of IROs in your business context.
Save over 150 hours of working time with our IRO database
4. further assistance for the identification and evaluation of IROs
In addition to the IRO database, companies have other tools and resources at their disposal for identifying and evaluating IROs:
materiality assessment Excel template: A proven template for easy categorization and assessment of IROs that helps companies capture their sustainability issues in a structured way.
AI prompts for materiality assessment: A blog post with helpful prompts for identifying impacts, risks and opportunities that enable targeted analysis.
AI prompt for determining the IRO longlist: A detailed guide on how companies can use an AI question to generate a comprehensive IRO list for their company.
IRO document of the DNK The German Sustainability Code provides valuable information on the description, identification and formulation of IROs and is a useful guide.
These resources help companies to make the IRO identification process more efficient, meet regulatory requirements more easily and create a sound basis for sustainability reporting.
5 Conclusion on the use of IRO examples
The identification and assessment of IROs is a major challenge for companies, particularly in the context of CSRD and ESRS. The systematic recording of impacts, risks and opportunities is not only a regulatory necessity, but also a strategic opportunity to develop sustainable and resilient business models.
The ESRS IRO database from CSR-Tools is an innovative solution to simplify this process and make it more efficient. It provides a structured, pre-formulated list of numerous IRO examples that are specifically adapted to ESRS requirements and can save companies considerable time and resources.
Why should companies use the IRO examples from the ESRS IRO database?
- Time saving: Reduction of the time required for IRO identification by up to 85%.
- Regulatory compliance: Ensuring ESRS-compliant reporting.
- Simple integration: use of pre-formulated IROs for quick integration into the double materiality assessment.
- Competitive advantage: Companies can derive strategic measures at an early stage and use sustainability as a value driver.
Act now!
Use the ESRS IRO database of CSR tools to make your materiality assessment more efficient and optimize your sustainability reporting. Visit our website to find out more about the database and get your company ready for the future of sustainability reporting!
