Impacts, Risks, and Opportunities (IROs) in Sustainability Reporting: Key Insights and Best Practices

As companies publish their first sustainability reports aligned with the Corporate Sustainability Reporting Directive (CSRD), identifying, assessing, and disclosing material Impacts, Risks, and Opportunities (IROs) is one of the most valuable steps. According to our recent CSRD Pulse Check Survey findings, IROs are not just a compliance exercise — they are essential for informed decision-making, strategic planning, and long-term business resilience.

To help businesses with IROs, we analyzed over 270 early CSRD-aligned reports published in 2024, uncovering key trends, common pitfalls, and best practices. Here’s what sustainability and business leaders need to know based on the findings from our analysis.

Why IROs Matter in Sustainability Reporting

Under the European Sustainability Reporting Standards (ESRS), businesses must report on material IROs and their interaction with the company’s strategy and business model. This is essential for demonstrating how sustainability factors influence governance, value creation, and resource allocation.

Despite the importance of IROs, our research found that 64% of CSRD-aligned reports published in 2024 did not reference IROs at all. Among those that did, only 26% of all the reports sampled addressed all three dimensions — impact, risks, and opportunities — while 10% covered just one or two aspects. This highlights the need for a more structured and comprehensive approach to IRO disclosures.

The Fundamentals of a Strong IRO Statement

A well-structured IRO statement should be clear, specific, and actionable and include three key components:

• Event: What happened or could happen?
• Cause: What triggered or could trigger the event?
• Consequence: What is the financial, social, or environmental outcome of the event?

For example, instead of stating “Climate change poses a risk to our operations,” a stronger IRO statement would be: “Rising global temperatures are increasing the frequency of extreme weather events (cause), leading to higher operational costs and potential disruptions at key manufacturing sites (event), which may impact our production output and financial performance (consequence).”

Common Pitfalls in IRO Disclosures

Our analysis showed that many companies are struggling with IRO reporting, and the examples we saw fell into the following three main categories: 

• Vague or generic statements: Lacking specificity about the exact risks, impacts, or opportunities.
• Missing elements: Omitting cause, event, or consequence, thereby reducing the decision-usefulness.
• Weak links to strategy: Failing to demonstrate how IROs influence governance and decision-making.
  
  

Best Practices for CSRD-Aligned IRO Disclosures

To enhance IRO disclosures, businesses should:

• Align IROs with risk management frameworks – Leveraging established methodologies like COSO or WBCSD ensures integration into corporate governance.
• Structure IRO statements effectively – Using the Event-Cause-Consequence framework improves clarity and decision-usefulness.
• Conduct a value chain analysis – Assessing IROs beyond direct operations ensures full compliance with the double materiality principle.
• Prepare for assurance requirements – The CSRD mandates independent third-party verification, requiring robust data collection and internal controls.
  
  

The Path Forward

CSRD’s IRO requirements push companies beyond compliance and into more integrated sustainability governance. Businesses that proactively align IRO disclosures with strategic decision-making will gain a competitive advantage while enhancing stakeholder trust.

As CSRD reporting evolves, adopting a structured approach to IRO assessment and disclosure will be key. For more insights, best practices, and guidance on IRO disclosure and CSRD compliance, download the full white paper here. 

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