To report your company's Environmental, Social, and Governance (ESG) or sustainability factors, you first have to know what to disclose. Given the breadth of topics possible, it's important to narrow your focus to only the ones that matter—or are material—to your company. After you identify your material topics, you can start to collect data to reflect how your company impacts them, and their impact on your company.
Tip: As a starting point, Workiva recommends common topics that apply to any company, regardless of size or industry.
Step 1. Research your peers' topics
If you're identifying material topics for the first time, a good place to start is by looking at what other companies in your industry include in their sustainability reporting. For example, your peers and competitors may mention specific frameworks and prioritize common topics. To help inform conversations with stakeholders, research reporting from similar companies, and summarize the top topics and frameworks used.
Tip: For an outside perspective on your industry, refer to the Sustainability Accounting Standards Board (SASB) Materiality Finder.
Step 2. Engage stakeholders
Your stakeholders—both internal and external–have a vested interest in your company's sustainability performance. To understand the topics that your stakeholders find important, seek input from:
- Internal stakeholders such as C-suite executives, department heads, board members, and global team representatives
- External stakeholders such as customers, peers, investors, nonprofit groups, and trade associations
To engage these stakeholders, conduct interviews and surveys to learn how they score each topic's importance, and gather information about any potential impacts or market expectations:
- Use interviews to collect qualitative data such as your organization's overall mission, goals, and strategy. Ask open-ended inquiries and follow-up questions, such as:
- "Which three issues do you find most important?"
- "How does this issue impact our business model and what we deliver to customers?"
- "What are industry expectations in regards to our actions on this issue?"
- "What are the risks we don't address this issue?"
- Use surveys with multiple-choice questions to quickly collect quantitative data from many people. As part of the survey, ask stakeholders to prioritize topics using a point-scale or as High, Medium, Low.
Tip: Consider your audience. You may need separate surveys between your internal and external stakeholders.
Step 3. Score topics' materiality
To identify materiality, rank topics identified during peer research and stakeholder engagement based on their impact to the business, society, or both:
- Rank topics from internal stakeholders based on their impact to the business, for their financial materiality.
- Rank topics from external stakeholders and factors—such as peer research and industry trends—based on their impact on society, for their environmental and social materiality.
Use the high-ranking material topics to guide the direction of your sustainability reporting and data collection.
Step 4. Set KPIs
After you identify material topics, set goals with key performance indicators (KPIs) to track for each. As you define KPIs, identify the data you collect—or should start to collect—to reflect your company's performance in regards to each material topic. Use these KPIs to determine:
- Your company's strengths, to highlight in your sustainability story
- Opportunities to improve for the next reporting cycle