A guide to materiality assessments

Your approach

The what, the why and the how behind materiality assessments

What is it?

A materiality assessment is a strategic tool to identify environmental, social and governance issues that could impact your business, your customers and our planet. It’ll help you focus your efforts on the issues your business can have the biggest impact on.

It engages your stakeholders to understand which issues are important to them – and this information helps your business understand where you should focus your attention. The results from the materiality assessment are an excellent foundation for most responsible business strategies.

It also helps your business identify future trends and gives you insight into what your stakeholders feel are the most important issues for your business.

We’re providing you with a slimmed down version of a materiality assessment, to make it as useful a tool as possible for SMEs.

Key steps involved

For the materiality assessment to be successful, here are the key steps, which we’ll take you through. Once you’ve read through the resource, come back to this stage and plan how long you would like to spend at each step:

  1. Identify stakeholders to speak to
  2. Decide what you want to ask them
  3. Conduct research with your stakeholders
  4. Analyse survey results
  5. Develop a strategy on how to address insights

Step 1: Identify stakeholders to speak to

You need to engage internal and external stakeholders to get a wide range of perspectives for this to really work. You want to get an overview of what people think your business’ top issues are.

Use a checklist like this to think about who to engage with and how:

Potential group Engaging with them? (Y/N) How? (email survey, face to face interview, group workshop, printed form)
Specific employee groups
Senior management
Executives/Board members
Key customers  
Key suppliers  
Partner organisation (examples: charities, trade associations)  
Warm customers (people who follow you on social media or are on your mailing list)  
Local community (examples: buildings next door, local business estate)  

Step 2: Decide what you want to ask them

Once you’ve identified who you’ll be working with, make sure to tell them early on why you’d like their views, and let them know when you want them to participate and how. Keep your messaging short and explain that their insights will help inform your business’ strategy and practices.

You want to understand what these stakeholders think are the most important environmental, social and governance issues for your business. Rather than giving them a very long list, you’ll need to narrow down some of the options to make it a useful exercise.

A good starting point that you could use is by looking at global issues that have been identified by the UN’s 17 Sustainable Development Goals (SDGs).

As a smaller business with limited time and resources, we recommend looking at the 17 SDGs  and selecting five – ten which you think are the most important to your business. You can of course include all 17, or you could choose your own issues which you think fall under responsible business work.

An example of a business choosing which goals are most relevant and why:

An example of a business working in financial services may choose:
Sustainable Development Goal (SDG) Reason for choosing SDG
1 – No Poverty All people should have equal access to economic resources, as well as access to financial services
4 – Quality Education Numerical literacy is essential to all our jobs, and future employees
5 – Gender Equality Lack of gender diversity within business, especially at senior levels
12 – Responsible  Consumption and Production  Many of the businesses we provide services to are manufacturing companies
13 – Climate Action We want to be a more sustainable company and protect our future

Step 3: Conduct research with your stakeholders

Once you know what you’ll be asking your stakeholders to rate, it’s time to get their views.

You should have told them  in advance why you’re seeking their input and how they can participate. You may also need different wording for different audiences, for example employees vs your customers.

If you’re sending people a survey, you can use free tools such as SurveyMonkey, Google Forms or Microsoft Forms to collect responses.

Here’s a sample materiality assessment question template with possible main questions:

Introductory remarks: why you’re doing this, how you’ll use the data and take actions from responses
Introductory questions (make sure that any contact details are voluntary)

  • Organisation (if external)
  • Department within organisation/ role (if internal)
SDG related questions (ranking options)

  • Please rank these sustainable development goals in order of what you think should be our business’ priority, with 1 being most important and 5 least important (if doing have a sliding scale option)
  • Please include a few words to explain your choice [text box]
  • Are there any other goals you think are important which have not been included, and why? [text box]
SDG related questions (individual goal)

  • How important do you think it is for our business to support sustainable development goal 1, no poverty? [Very important, quite important, not important]
  • What actions are expected of our business, and our industry on this goal? [text box]
  • What are the risks of not addressing the issue [text box]
  • Are there any other goals you think are important which have not been included, and why? [text box]

Step 4: Analyse survey results

Once you have your results, you should have a combination of quantitative and qualitative results.

When looking at the quantitative, you can turn the results into percentages to be able to have a comparison. When you have the figures, these are the questions you should ask of the data:

  • Which were the topics that were ranked highly?
  • Were any of these topics ranked highly by all groups?
  • Were there any significant differences in topics when looking at internal vs external stakeholders?

When looking at the qualitative:

  • Is there anything missing that someone picked up on?
  • Are there any common themes?
  • Are there any new ideas presented worth exploring?

Remember that you’ll have a large collection of data from different sources. Decide whether you’ll give more weight, and importance, to a particular group over another.

Extra steps

If you want to go further, here are a few ideas:

  • Review industry standards and upcoming legislation, how will that impact the sustainable development goals and your approach?
  • You can choose to map out the top priorities against the importance to your business vs the importance to your stakeholders , then think about your business’ ability to influence and make a difference in them
  • You can plot your results on a materiality matrix (google for ideas) that can visually show the relative difference importance of different issues, like this:
Materiality matrix

Step 5: Develop a strategy on how to address insights

With the information gathered, you should have a clearer idea of what your priority themes could be.

Make sure to communicate back to everyone who took part. It’s best to be transparent about the results but also what you’re going to be doing with them. If the results feed into your responsible business strategy, then say it!

Return to our building a strategy guide and continue with ‘Step 3: Creating the strategy’.

This was last updated in May 2023 by Heart of the City. We’ve created these resources for individual SMEs to use. None of our content is to be adapted, reused or repurposed for commercial use.