Questions to ask when building an ESG strategy:

1. Consider what company culture you would like to build, based on your values. Main topics to consider are:

   1. Environment: how to create minimal harm to our planet by your operations
   2. Social: how to build a fair and inclusive workforce
   3. Governance: how to comply with law and regulation alongside building a diverse board, what policies should be in place to ensure the above

2. Who are the key stakeholders of the company? This may include, but is not limited to:

   • Internal stakeholders: Owners, board members, and employees
   • External stakeholders: Customers, suppliers, investors, creditors, media, communities, and government agencies

   Identifying and understanding the interests of these stakeholders can help prioritize early-stage objectives and shape the company's stakeholder engagement strategy. A step-by-step process for stakeholder analysis is available here.

3. Are there any significant inefficiencies or challenges within the company's ecosystem that you anticipate?

4. Is there a potential connection between ESG considerations and the company's impact? Would you be interested in exploring this further by aligning your mission to create a positive societal and environmental benefit? If so, please read the impact section of this page

5. Have you taken into account any potential negative impacts (economic, social, or environmental) of your product or service while striving to achieve the company's mission and/or contribute to the vision of the ecosystem?

For companies in the beginning of their ESG journey, we recommend creating a materiality map along these lines, especially for early-stage startups. This will be the basis of your analysis on what to focus on and what can wait.

Growth-stage companies should go into further details and build a materiality map that should assist them in identifying gaps in their current operations and mediate risks, as seen below.

How to assess the materiality of ESG issues for the company

Materiality analysis can be used to determine which sustainability topics your organization should prioritize and, in turn, what should be included in your ESG reports.

<aside> <img src="https://prod-files-secure.s3.us-west-2.amazonaws.com/9099153a-1832-4693-a34c-1af5fb0f85dc/aea571ff-28f7-4b80-ae85-4ff313b3255c/I53wxU-c_400x400.jpg" alt="https://prod-files-secure.s3.us-west-2.amazonaws.com/9099153a-1832-4693-a34c-1af5fb0f85dc/aea571ff-28f7-4b80-ae85-4ff313b3255c/I53wxU-c_400x400.jpg" width="40px" /> Materiality = ESG issues that are most important to the company's long-term success.

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<aside> <img src="https://prod-files-secure.s3.us-west-2.amazonaws.com/9099153a-1832-4693-a34c-1af5fb0f85dc/30507f6c-5478-422f-a64d-5b65c78c2922/I53wxU-c_400x400.jpg" alt="https://prod-files-secure.s3.us-west-2.amazonaws.com/9099153a-1832-4693-a34c-1af5fb0f85dc/30507f6c-5478-422f-a64d-5b65c78c2922/I53wxU-c_400x400.jpg" width="40px" /> Materiality analysis = Process to determine which ESG issues are most important to the long-term success of the business and most important to stakeholders.

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The below chart shows an example of a materiality balance between business and stakeholders across ESG factors.

Source: WHAT ARE MATERIALITY ANALYSIS AND MATERIALITY MATRICES AND WHY ARE THEY IMPORTANT FOR ESG?

After identifying the relevant issues that pertain to your ecosystem, industry, and company, it is important to consider the following aspects:

• Assess the level of influence or control you have over each issue and to what extent:
  • Categorize your company's influence on each issue using a scale, such as "no control," "indirect control," or "direct control."
  • Conduct the influence/control assessment as if resources were unlimited, avoiding letting resource constraints influence your judgment.
• Estimate the potential economic, environmental, or social effects on your stakeholders and company if these issues are left unaddressed:
  • Use a scale of "moderate," "high" or "very high" to gauge the magnitude of the effects.
  • Take into account how these effects may evolve as your company expands and scales.

By carefully evaluating these factors, you can gain valuable insights into the significance of each issue and prioritize your actions accordingly.