If you’re a fan of video games, you’re undoubtedly familiar with the phrase: "It's dangerous to go alone! Take this.” The iconic phrase was first uttered by an unnamed old man in the video game The Legend of Zelda for Nintendo Entertainment System, as a way to give the player-character Link the sword he needed to complete his quest to rescue Princess Zelda.
Why am I bringing this up, and how does it relate to your environmental, social, and governance (ESG for short) journey? Well, in any successful quest—in life, in business, or in video games—you need to first gather the requisite tools, capabilities, or information (your sword) needed to achieve your goal. You will fail without it. In any ESG quest, this requires conducting a materiality assessment to give yourself a foundation of where you’re at, where you’re going, and what you need to prioritize to get there. Here’s how to get started.
Establish a Baseline
You can’t measure, improve, or achieve what you don’t know. At this point, you’ve hopefully assembled the right people from the right departments to help you on the ESG quest. Now, it’s time to put that team into action by taking the step to create and conduct a wide-scale materiality assessment on your business. Put simply, a materiality assessment is a “formal exercise aimed at engaging stakeholders to find out how important specific environmental, social and governance issues are to them,” according to Antea Group.
The end result is a pile of data that should help direct your overarching strategy and prioritize your plan of action on the key issues to improve upon under each pillar of the ESG framework. It also helps level-set where your company currently sits in the journey of ESG, and—maybe more importantly—the social, environmental, and governance issues and areas that your stakeholders deem most important to focus on and improve.
The conversation the materiality assessment starts is not just between your company and employees. It also involves a bevy of other stakeholders who all play a part in driving opinion, impact, and influence on your business. This includes customers, industry analysts and influencers, suppliers and vendors, and board members. A good assessment should incorporate the opinions of all of these groups. Once you have identified this list and the sample size of responses you’re hoping to get, it’s time to delve into the questions you need to ask to ensure you get the right data for your quest.
Craft Your Survey Questions
The questions for your survey should be laser-focused on the key topics that fit into your ESG program and each of its respective pillars. You need to craft the questions with an end goal of composing a prioritized list of the current ESG topics deemed most impactful by your stakeholders. Here’s a quick look at some sample topics that might fall under each pillar in the survey:
- Product/business energy and efficiency
- Waste management and recycling
- Environmental compliance and stewardship
- Inclusion, diversity, and belonging
- Employee wellbeing (physical, emotional, mental health)
- Social issues/justice and community engagement
- Business ethics and integrity
- Cybersecurity and data protection
- Data privacy
These sample topics should provide a general framework as to how to craft your survey. If you need additional support, there are a variety of third-party consultants and agencies who specialize in this area and should be able to help further.
Organize Your Findings
After you finalize your questions, identify your contact list, and get your requisite approvals from folks in marketing and legal, it’s time to send out your survey and get back your data. Once you receive your raw data, it’s important to analyze and rank the priority topics as determined by your stakeholders. One great way to visualize this is through a Materiality Index, which ranks the importance of each of the topics surveyed in an easy-to-digest nine-box format. Your own index will be unique to your organization and your place in your industry and the larger business world. It also gives you an easy on-ramp for prioritizing the actions that will be most meaningful to your stakeholders in the short and long-term.
Conducting a thorough materiality assessment takes time. It won’t happen overnight or in a couple of weeks. But it is absolutely worth it. Having this foundation in place allows you to take rapid next action and show clear signs of progress and improvement in the areas that mean the most to your business and its stakeholders. It also serves as an easy-to-use guide to always remind you of your path and remove distractions in the process—kind of like another famed Zelda character, Link’s fairy and guide, Navi.
Here’s hoping you use the materiality assessment as your own guide on the quest. Take this.