How do I identify IROs for environmental topics other than climate change?

To identify IROs (impacts, risks, and opportunities) for environmental topics other than climate change, companies should apply the LEAP (Locate, Evaluate, Assess, Prepare) approach, as recommended by the ESRS. The materiality assessment for such matters corresponds to the first three phases of this LEAP approach, while the fourth phase addresses the outcome of the process. This structured method ensures a comprehensive materiality assessment.

How to identify IROs using the LEAP approach:

(a) Phase 1: Locate (L) - Identify where your business interfaces with nature

Determine where in your own operations and value chain (upstream and downstream) your business interacts with nature.
Identify key dependencies on natural resources such as water, biodiversity, and raw materials.
Map out critical environmental areas impacted by your business, including land use, pollution, deforestation, or biodiversity loss.

(b) Phase 2: Evaluate (E) - Understand environmental dependencies and impacts

Assess dependencies: Identify how your company relies on ecosystem services (e.g., clean water, healthy soil, natural pollination).
Evaluate impacts: Determine how your business negatively or positively affects the environment (e.g., waste generation, deforestation).

(c) Phase 3: Assess (A) - Identify material risks and opportunities

Risks:
- Physical risks (e.g., loss of biodiversity affecting raw material availability).
- Transition risks (e.g., stricter environmental laws increasing compliance costs).
Opportunities:
- Innovation in sustainable product lines.
- Cost savings from circular economy strategies.

(d) Phase 4: Prepare (P) - Reporting and integrating findings into strategy

Document findings from the materiality assessment.
Incorporate risks and opportunities into sustainability and business strategy.