IRO stands for Impacts, Risks, and Opportunities. These are factors that a company must identify and evaluate in its double materiality assessment (DMA). Following the IRO approach allows companies to identify the issues that are material to both a business and its stakeholders.
Under ESRS 1 and ESRS 2, companies are required to describe their process for identifying IROs across their value chain. Impacts refer to the actual or potential effects of a company's activities on people and the environment. Risks and opportunities relate to how sustainability matters may create financial effects for the business. The IRO assessment is a foundational step that determines which topical ESRS standards a company must report on.
Learn more about CSRD reporting requirements and read our detailed guide on the European Sustainability Reporting Standards (ESRS) to understand how IROs fit into your disclosure obligations.
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