Sustainability can be challenging when you don’t know where to begin. With the broad scope of sustainability and ESG, deciding what to focus on can take time and may push back plans for strategies and reporting. Starting strong in the journey towards sustainable development may lead businesses to more successful and doable actions in a shorter amount of time. Sustainability focuses on moving towards a brighter future.
There is a need for a good sense of direction.
So where do we begin? Sustainable practices can be found across all operations. Each action has an impact towards the environment and society.
A way to discover what impacts your business and your stakeholders is through a Materiality Assessment. Materiality is defined as something of significance and relevance to the performance and success of a business. In the context of sustainability and ESG, materiality is found in measurable topics, such as waste management, greenhouse gas emissions, employee well-being, data security and privacy, and the like. With all these possible topics, navigating the sustainability landscape and coming up with an impactful sustainability strategy can be overwhelming when it looks like there is so much to cover.
Through this formal assessment, businesses will be able to identify sustainability issues and take action on what matters most.
When conducting a Sustainability Materiality Assessment, it is important to remember that the activity and its results go beyond the business, extending to stakeholders, the environment, and society. It is a collaborative effort that relies on the voice and perspective of various people. The assessment can be simplified into 4 steps.
Take a look at your business. What do you provide? Who are your customers? What functions do you have? Where are you heading into the future? We need a good sense of direction. Think of your business as a journey from Point A to Point B. Each step has something that will help you move forward and something that may slow you down.
Now let’s look at it on a larger scale, in the grand scheme of things. What issues or setbacks do you experience on the way? What factors play a great role in the success of your product? How do you impact the environment? What human rights topics may be relevant to your business?
Step 1 in a Sustainability Materiality Assessment is creating an exhaustive list of potential issues that play a role in your business. These topics can be sector-specific. You can even find these listed down in sustainability reporting frameworks or requirements set by governing bodies. Topics can also be sorted into categories such as environmental impact, societal impact, governance and compliance, and economic growth. Through this list, you can further narrow down and discover how your sustainability journey will play out as you move towards Point B.
The Materiality Assessment doesn’t end there. This exhaustive list can be simplified. As mentioned before, this practice is a collaborative effort.
To find out what matters most, we need to talk to those who matter.
Step 2 requires engaging with stakeholders. Now that you know what affects your business, it’s time to know what affects your stakeholders. Before engaging, it is good to create a list of stakeholder groups and individuals that may provide information that can support your Materiality Assessment. In addition, conducting initial outreach towards your list of stakeholders will allow them to prepare for and anticipate your engagement strategy.
Using the list you made in Step 1, you can conduct interviews or surveys with both internal and external stakeholders. Reach out to people across your organization and to your customers, suppliers, investors, and other communities or sectors which may be relevant to your operations. Your stakeholders can provide valuable and insightful knowledge on how your business is moving towards sustainability. Through Step 2, you will be able to discover what sustainability issues impact and concern them the most. There may be new realizations towards issues internal conversations left unnoticed.
With this new perspective, we can now map out our business in a sustainability perspective.
After gathering data from your stakeholders, previous company reports, and from current sustainability news, trends, and reporting frameworks, mapping out sustainability issues will help bring out what to prioritize in your sustainability journey.
Go through the data you collected. What issues are each stakeholder group concerned with the most? Are there any overlapping data or common issues experienced by multiple stakeholders? How does this affect your business?
Step 3 is usually done through a materiality matrix where the most significant sustainability issues are plotted out on an x-y axis, one pertaining to the importance of the issue towards stakeholders, and the other to the business. After plotting each sustainability issue and having this reviewed, evaluated, and approved by significant stakeholders and business leaders, you will be able to see what matters most.
Now that you have your sustainability issues prioritized, then what?
It’s time to act. The Materiality Assessment is just the beginning of this sustainability journey, but it is a strong start. Now that you know what impacts you and your stakeholders, you can start developing a sustainability strategy that would bring positive results to your business, to the environment, and to society through tackling issues that have a heavy role in your sustainability story. Additionally, a Materiality Assessment can help you outline your sustainability reports, adding more emphasis to your sustainability initiatives and simplifying data collection.
Moving forward to a brighter and sustainable future is not done in a straight line. Issues and sustainability laws and regulations emerge and evolve overtime, making the road from Point A to Point B a winding one. As these evolve, so do we. It is a good practice to review and assess your Materiality Assessment periodically to see if you are still on the right track and if your actions have impacted your business and your stakeholders in a new way.
Sustainability doesn’t have to be difficult. When you know where to start, the journey ahead isn’t a road full of twists and turns that lead to dead ends or lost causes. While the exercise can be time-consuming and complicated with all the possible issues that may arise, it is a strong step towards better practices, improved stakeholder engagement, and sustainable development. This is just the beginning. Through Sustainability Materiality Assessments, you’re able to determine issues, risks, and opportunities to create smart and impactful sustainable development strategies that will improve what matters most to your business and your stakeholders.
At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization on its sustainability journey, please don't hesitate to get in touch with us.
