MATERIALITY ASSESSMENT 101

Erin Manitou
Lead Project Analyst
ERA Environmental Management Solutions
 Agenda

What is a Materiality
Assessment?

Why Should My Organization

Perform One?

The Steps of the Materiality

Assessment Process

Best Practices

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 What is a Materiality Assessment?

The process of an organization engaging with internal

and external stakeholders to determine
Environmental, Social and Governance (ESG) issues,
and gain insight as to their relative importance.

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 Why should My Organization Perform a
Materiality Assessment?
In order to begin a successful
sustainability journey, your
organization needs to identify
ESG areas and topics where the
greatest impact can be achieved.

Once the greatest opportunities

and risks are identified, they
can help improve your final
product, its production, end
use, and disposal!
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How Does Materiality Assessment Fit into
the Sustainability Reporting Process?
Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution
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Material Topic Identification

Material
Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution
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 What Are Material Topics?

Material topics for a reporting organization should include

topics that have a direct or indirect impact on an
organizations ability to
create, preserve, or
erode economic,
environmental, and
social values for itself,
its stakeholders, and
society at large.

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Sustainability Topics of Interest

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 How Do We Determine Our
Materiality Topics?
✓ To get started - GRI offers guidance on topics that are aligned
with their categories and aspects structure
✓ The internal sustainability team
should also build their own list
✓ Customer Sustainability
assessments
✓ Bloomberg and other investor
driven reports
✓ Interview internal stakeholders to
see if the topics are complete - fill
in the gaps!
https://www.globalreporting.org/res
✓ Survey external stakeholders ourcelibrary/sustainability-topics.pdf
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 Who are the Stakeholders?

Internal Stakeholders:
• EH&S, Sustainability Managers across the Organization
• Board of Directors, Owners, CEO etc.
• Peers, Competitor ESG Score Review *
External Stakeholders:
• Customers
• Employees
• Investors
• Environment Impacts
• Social Impacts
• Peers, Competitor ESG Score Review *
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Prioritization of Material Topics

Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution
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 Internal Stakeholder Weighting

Example of Weighting Breakout

Internal Stakeholder Data Collected Weighting

EH&S, Sustainability Managers across the whole ESG 50%

organization Prioritization
Survey

Corporate (CEO, Board of Directors, Owners) Interview 40%

Peers/Competitors Sustainability 10%

Initiatives

100%

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 External Stakeholder Weighting
Example of Weighting Breakout
External Stakeholder Data Collected Weighting

Customers ESG Questionnaires, Interviews 50%

Employees ESG Prioritization Survey, 25%

Organizational Health Index Survey
Investors Interviews 10%
Environmental Impacts Life Cycle Analysis Results 10%
Social Impacts Neighborhood interviews, Community 5%
Organizations and United Way
Interviews
100%
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 What is Life Cycle Assessment (LCA)

Life Cycle Assessment (LCA) is a technique for evaluating the

impact associated with a product from “Cradle to Grave”.

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Sample: Product Life Cycle

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LCA Results May Surprise You!

They thought their

operations were their
biggest opportunity
for improvement.

It turned out it was

raw material
extraction, steel
production and
product end of life!

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Validation of Material Topics

Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution

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What Do the Results Tell You?

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Priority of Environmental
Sustainability Topics

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 Priority of Social
Sustainability Topics

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Priority of Governance
Sustainability Topics

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 Priority of Product
Sustainability Topics
Final Priority Sustainability Topics

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 Execute Your Initiatives!

Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution

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 Prepare your GRI &
Sustainability Reports
ERA can help!

Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution

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Continual Review and Reassessment

Material Topics
Identification

Review &
Prioritization
Reassess

Report Validation

Gap Analysis &

Strategize for
Execution

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MATERIALITY ASSESSMENT - BEST
PRACTICES

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 Get Internal Buy-In

✓Get someone with leverage on board.

✓Bring your internal stakeholders in
early and get them involved!

✓Keep what we are asking from staff as minimal as possible.

✓Surveys and meetings need to be concise!
✓Make sure they agree that the goals are feasible – How it will
relate to them.
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Watch out for your blind spots!

Look out for

topics that are
ranked high by
external
stakeholders,
but low by your
internal
stakeholders

your company
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 3rd Party Verification

3rd Party Verification is recommended to

keep your assessment credible

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 Reassess Your goals

✓ Shoot to reassess your goals by

repeating the materiality assessment
as often as possible.
✓ This is important because not only
will internal factors be changing, but
what your competitors are doing is
also going to be changing!
✓ You may realize that your goals are
not ambitious enough, or that the
goals need to change.

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 Questions?
Thanks for listening!

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