How can you ensure that your materiality assessment is aligned with your company's values?

Ensuring a materiality assessment aligns with your company's values involves actively involving key stakeholders in the assessment process to capture diverse perspectives and priorities. Regularly review and update the assessment criteria to reflect evolving company values and stakeholder expectations. Use transparent methodologies and data sources for credibility. Prioritize issues that resonate with your company’s core mission and strategic objectives. Embedding your company's values into the framework of the materiality assessment fosters alignment, driving strategic decision-making that supports sustainable growth and stakeholder trust.

Materiality assessment is one of the primary objectives of all large firms, to ensure that they are on the right path of achieving respective sustainable goals. These assessments convey a larger picture which portrays a company’s overall mission to its stake holders, consumers, employees, and the state. It is imperative that the organisation’s goals are clearly defined, their pathways spelt out, and communicated clearly. Moreover, feedback loops, following active communications mentioned above, should be strong enough to monitor and reinforce the company’s values, paying attention to ‘double - materiality’ equally. The tracking and monitoring methods should be in accordance with the laws and norms of the sector.

While I agree you should define your purpose for completing materiality, you must be clear on your company's mission and vision. Your entire sustainability strategy should ladder up to who you are. This is why I work with clients to do a strategy on a page, similar to a brand house, that begins with your mission and vision, then flows through material issues down to your strategic goals and KPIs.

Stakeholder engagement is a constant. Every company must identify their key stakeholders that are affected by its businesses or those that influence company's decisions. These generally include customers, suppliers, employees, shareholders, lenders, business partnerships, communities etc. Given their role, interaction with them is usually frequent. Companies should have mechanisms in place that can capture stakeholders needs, concerns and feedback as these can inform company's strategy, resource allocation which basically also translates into what is material and area of focus for the company. By incorporating stakeholders feedback not only helps to improve company's performance but also result in improved reputation

- Select stakeholders impacting or affected by operations. You can do that by engagement surveys. - Engage selected stakeholders to understand priorities. - Prioritize issues aligned with core values and stakeholder interests. - Share results transparently for feedback and validation, changing actions based on findings.

Together with our customers (who need to have a CSRD/ESRS reports) we do the stakeholder identification and analysis with the same idea in mind as the double materiality approach, i.e. we ask two oposite questions - how strong do we (as a company) influence the stakeholder group and how strong does this stakeholder group influences us (as a company). With this approach you can relatively quickly and efficiently find the impact (=strong influence) on the stakeholder and vice versa.

Identify the stakeholders in first place followed by identification of core issues which are relevant to the stakeholders having significant impact materiality as well as financial impact. This concept is known as double materiality. Organisation needs to perform double materiality assessment in accordance with the relevant stakeholders. This is the framework of mapping relevant stakeholders in line with the business requirements of the organisation.

When selecting material topics, it is crucial for a company to establish criteria for assessing materiality that align with the company's values. For instance, if a company prioritizes environmental sustainability, it should give more importance to issues related to resource conservation, emissions reduction, and waste management during the assessment process.

It depends on the framework you are using. Mostly the approach is extrapolated by the framework. We in Germany have a very strong regulatory push towards CSRD and ESRS where the criteria for the materiality are well defined. However the most critical question here is how to do the scoring matrix with regards to the threasholds used.

Additionally incorporating a dynamic feedback mechanism ensures that emerging issues and changing stakeholder expectations are captured and addressed. Leveraging advanced data analytics and trend analysis tools can provide deeper insights into the evolving landscape of ESG priorities.

1ST step of materiality assessment, a firm needs to decide what makes an ESG topic material. Three perspectives on materiality identified: business case, societal impact, stakeholder view. 2ND step in materiality assessments, a firm needs to define topics to be included.?Many firms start by summarizing ESG topics mentioned in reporting standards & sustainability indices. They then adjust the terminology to their context.3RD step in materiality assessment to decide which information sources to use for determining materiality of ESG topics.After selecting information sources, data need to be collected to assign materiality scores.?After assigning materiality scores, insights need to be combined to rank & select the material ESG topics.

Here is also a very non well defined topic in the CSRD / ESRS methodology. Yes validation by the stakeholders and top management has to be done. But how? Since this is a topic which can be very effort consuming it is important to connect and align the validation of the material topics with your initial stakeholder analysis. You key stakeholders are also the ones who are most important for you validation steps. You need to make it efficient, easy and understandable since e.g. customers or owners will not have days or many ours to validate your material topics.

To ascertain whether you have identified the right material topics, it is important to assess them together with your stakeholders. They could be your workforce, clients, suppliers, financiers and local residents . But equally they could be the media or society in general. There are tools to carry out a stakeholder validation analyses using the materiality matrix. With these method you can ask your stakeholders in an interactive way how they rate the matrix and which topics they consider important for your organisation.

To effectively communicate sustainability topics to both internal and external audiences, it's crucial to establish clear, transparent messaging around your company's goals and initiatives. Engage employees and stakeholders through educational campaigns and workshops. Share compelling stories that highlight successes and lessons learned. Utilize data and metrics to track progress and showcase achievements, employing visualizations and dashboards. Embrace a multi-channel approach, leveraging social media, newsletters, websites, and annual reports to reach diverse audiences. Highlight partnerships and collaborations that amplify sustainability efforts and encourage feedback and dialogue to foster continuous improvement and accountability.

The success of aligning the materiality assessment with the company's values depends largely on the way in which the process was conducted. It is necessary for leaders to lead with values and communicate values clearly and consistently, so that they permeate all stages of the process and have meaning at the end.

Deciding the Materiality Cycle: As sustainability issues, as well as the context of firms, are dynamic, the materiality of ESG topics also changes over time. Repetition did not always mean that the full assessment was repeated. In the annual cycles, firms often switched between an extensive assessment in one year to a smaller update in the next. Overall, maintaining consistency in methods across the years was perceived by firms to be challenging. Dynamic nature of sustainability issues led to new definitions of ESG topics, new connections between topics, and new stakeholders to be involved. In addition, reporting authorities are seen to change their standards for assessing materiality. Keep up with new developments, methods and practices.