Sustainability reporting has become an essential way for companies to communicate their commitment to environmental, social, and governance (ESG) issues. A credible report, however, goes beyond internal performance data, it should also reflect the expectations and concerns of the company’s stakeholders.
A crucial step in this process is the materiality assessment, which identifies and prioritizes the issues that have the most significant impact on both the company and its stakeholders. To ensure this process is accurate and relevant, companies must understand who their stakeholders are and how data about their views and expectations are collected and analyzed.
Types of Stakeholders
Stakeholders can generally be divided into two main groups: internal and external.
1. Internal Stakeholders
Internal stakeholders are those directly involved in a company’s operations, such as employees, management, and shareholders. Their input is vital for understanding how sustainability strategies align with internal practices, governance policies, and workplace conditions. For instance, employees can provide insights about occupational safety or equality, while management focuses on operational efficiency and regulatory compliance.
2. External Stakeholder
External stakeholders, on the other hand, include customers, suppliers, government bodies, financial institutions, local communities, the media, and non-governmental organizations (NGOs). Each group has distinct expectations. Customers may demand more eco-friendly products, regulators monitor compliance with environmental laws, while local communities often focus on the company’s social and environmental footprint. Engaging with these groups ensures that sustainability reporting does not only serve business interests but also represents broader social accountability.
Data Collection for Sustainability Reporting
In a materiality assessment, stakeholders play a key role in helping the company identify which sustainability issues are most relevant and impactful. The process typically compares two perspectives: the internal business priorities and the external stakeholder expectations.
For example, company management may view energy efficiency as a top priority due to cost savings, while communities or regulators might emphasize waste management, pollution control, or human rights. By combining these perspectives, companies create a materiality matrix, a visual map that highlights which topics are most important both to the business and its stakeholders.
Gathering stakeholder input requires systematic and transparent methods. The most common techniques include surveys and questionnaires, which capture stakeholders’ opinions about what they consider the most pressing sustainability issues.
In addition, in-depth interviews and focus group discussions allow companies to gather qualitative insights from specific groups, such as local communities or key business partners. Many organizations also rely on media analysis and secondary data to understand public sentiment and emerging environmental or social trends.
After collecting the data, companies proceed with analysis and validation. The sustainability team reviews and interprets the data to identify key themes, rank material issues, and connect them with corporate strategy. The final outcomes are presented in the company’s sustainability report, typically aligned with international frameworks like the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).
Want to ensure your company’s materiality assessment and sustainability reporting processes meet standards and are environmentally responsible? Start by preparing a robust EIA. An EIA document helps companies understand their environmental impacts from the outset and serves as a crucial foundation for preparing a transparent, scientifically based sustainability report. Consult your company’s EIA needs with a trusted independent institution to ensure that the sustainability reporting process is credible, measurable, and compliant with regulations.
Author: Ainur Subhan
Editor: Sabilla Reza
References:
Torelli, R., Balluchi, F., & Furlotti, K. (2019). The materiality assessment and stakeholder engagement: A content analysis of sustainability reports. Corporate Social Responsibility and Environmental Management, 26(1), 1–15. https://doi.org/10.1002/csr.1813
Shams, S. M. R., Vrontis, D., Weber, Y., Tsoukatos, E., & Galati, A. (Eds.). (2020). Stakeholder engagement and sustainability. Routledge. https://doi.org/10.4324/9780429265518