Challenges in performing materiality assessment -A Case study from Beyond Sustainability on how to overcome them

Materiality assessment is the process of determining the significance or importance of various factors or issues related to a company’s operations, products, or services. The purpose of materiality assessment is to identify and prioritize the most important issues that a company needs to address in order to achieve sustainability and transparency in its operations.

Materiality assessments are often conducted by companies as part of their sustainability reporting or corporate social responsibility (CSR) initiatives. These assessments may involve engaging with stakeholders, such as customers, employees, suppliers, investors, and communities, to understand their concerns and expectations regarding the company’s environmental, social, and governance (ESG) practices.

The results of a materiality assessment can help a company to develop a sustainability strategy that focuses on addressing the most important issues while also creating value for stakeholders. This strategy may include setting goals and targets, implementing initiatives and programs, and monitoring and reporting progress. Materiality assessment is an important tool for companies to understand their impact on society and the environment, and to identify opportunities for improving their sustainability performance.

Case study
Beyond sustainability helped one of our client conduct a materiality assessment for disclosing their ESG data through a GRI report.

What are some of the challenges we faced ?
1) Defining materiality
As most of the people in the organization were from a different background including HR, Engineering, Supply and logistics, the major challenge was in making the members who were taking the assessment understand the concept of materiality and ensure they had clarity on the material topics.

What did we do ?
We developed a visual workflow with different charts that the members could access to understand in detail about the material topics. These included information about what is materiality assessment, why it needs to carried out and several indicators of the material topics

2) Stakeholder engagement
As the stakeholders were dispersed geographically, it was a challenge to engage them and bring them all to the same page. As the concept of ESG was also new to the organization, engaging stakeholders were a major challenge

What did we do?
We organized awareness sessions to engage the stakeholders and discussions about the overall ESG strategy development for the organization. We ensured that we made the stakeholders understand that the materiality assessment is the first step towards identifying issues within the organization and also developing strategies to address them

3) Data collection and analysis:
One of the major challenges was to ensure that we have a systematic data collection process and how we can reduce the time we spend on data analysis. As the teams were spread diverse location, manual collection was a major challenge

What did we do?
We developed a customized form to perform the materiality assessment for the organization. We ensured that the collected results were easy to interpret and develop insights saving us time on data analysis.

4) Transparency and disclosure:
Some of the members were hesitant in sharing issues within the organization. Most of the information collected were sensitive in nature

What did we do?
We ensured that the assessment was done anonymously to capture the information in a transparent manner. We also provided a section in our response form to detail out on issues for each material topic that the member feels the company should address.

Other challenges:
-Defining the scope and boundaries
We decided to involve only internal stakeholders as it was their first materiality assessment & to avoid complexities.
-Incorporating the insights to take action
The insights generated through the materiality assessment was made as a presentation to the leadership team to take action and was incorporated as part of the ESG report development. The materiality assessment helped us to develop KPIs, goals & targets for their overall ESG strategy.

To get access to some of the materials we used, feel free to drop a mail to beyondsustainability2040@gmail.com with an introduction about yourself. We’d be happy to support on what you do.