IRO
Impacts, risks and opportunities
IROs (impacts, risks and opportunities) are the units a company identifies and scores in its double materiality assessment under the ESRS. Impacts are the company's effects on people and the environment; risks and opportunities are the financial effects of sustainability topics on the company.
The term is defined in ESRS 1, the general requirements standard. An impact can be actual or potential, positive or negative, and can sit in the company's own operations or anywhere in its upstream and downstream value chain.
Impacts are scored on severity (scale, scope and irremediable character) and, for potential impacts, likelihood. Risks and opportunities are scored on likelihood and the size of the possible financial effect. Each material IRO then links to the policies, actions, targets and metrics the company reports on.