What are some of the best practices and tools for materiality analysis?

2 Engage your stakeholders

Stakeholder engagement is essential for a credible and comprehensive materiality analysis. You need to identify and consult the relevant internal and external stakeholders who have an interest or influence on your sustainability performance and impacts. These may include employees, customers, suppliers, investors, regulators, NGOs, communities, and media. You can use various methods to engage your stakeholders, such as surveys, interviews, workshops, focus groups, or online platforms. The aim is to understand their perspectives, expectations, and concerns on the ESG topics that matter to them and to your business.

3 Assess your material topics

Once you have collected and analyzed the input from your stakeholders, you need to assess the materiality of the ESG topics based on their significance and influence. Significance refers to the extent to which the topics affect your business performance, risks, and opportunities, as well as your impacts on society and the environment. Influence refers to the degree of interest and attention that the topics receive from your stakeholders. You can use a materiality matrix to plot the topics on a two-dimensional chart, where the horizontal axis represents influence and the vertical axis represents significance. The topics that fall in the top-right quadrant are usually considered the most material ones.

4 Validate and disclose your results

After you have identified your material topics, you need to validate and disclose your results. You can do this by involving senior management, external experts, or third-party assurance providers to review and approve your materiality process and outcomes. You also need to communicate your results to your stakeholders, both internally and externally. You can use different channels and formats to disclose your material topics, such as sustainability reports, websites, newsletters, or presentations. You should also explain how you conducted your materiality analysis, what criteria and sources you used, and how you plan to address the material topics in your strategy and actions.

5 Review and update your analysis

Materiality analysis is not a one-off exercise, but a dynamic and iterative process that requires regular review and update. You need to monitor the changes in your business context, stakeholder expectations, and ESG issues that may affect the materiality of your topics. You also need to measure and evaluate your progress and performance on your material topics, and identify any gaps or opportunities for improvement. You should update your materiality analysis at least every two or three years, or whenever there is a significant change in your business or stakeholder landscape.

6 Use available tools and resources

Materiality analysis can be a complex and challenging task, but you don't have to do it alone. There are many tools and resources available to help you conduct a robust and transparent materiality analysis. For example, you can use the Global Reporting Initiative (GRI) Standards, which provide guidance and indicators on how to identify, prioritize, and report on your material topics. You can also use the Sustainability Accounting Standards Board (SASB) Standards, which offer industry-specific frameworks and metrics on the ESG topics that are financially material for your business. Additionally, you can consult the Materiality Map from the Sustainability Disclosure Standards Board (SDSB), which shows how ESG topics are linked to value creation and financial performance.