Now that you have understood how our Impact Materiality Assessment system works, the main challenge is to determine which values of the different characteristics (scale, scope, remediability) that suit best your company's situation. That is the tricky part of the exercise!
To help you on that, you will find hereafter some concrete examples, using 5 company's "personas", with 3 typical questions in terms of Impact Materiality (one for each ESG pilar) :
Environmental Impact Question: "To what extent does your company's operations contribute to greenhouse gas (GHG) emissions, and how widespread are the environmental impacts?"
Social Impact Question: "How significant is your company's impact on employee working conditions, including health, safety, and fair wages?"
Governance Impact Question: "How effectively does your company implement ethical business practices, such as anti-corruption policies and transparency in decision-making?"
Discover our personas
1. "Local Food Processing Company"
Sector: Food & Beverage (Agriculture/Food Processing)
Size: Medium (1,500 employees)
Global Reach: Operates within one country but exports products to neighboring regions.
Operations: Owns two processing plants and partners with local farmers.
ESG Complexity: Medium, focused on water usage, waste management, and community engagement.
Challenges:
Managing water consumption and pollution from food processing, sourcing sustainable ingredients, and maintaining good community relations with local suppliers and stakeholders.
2. "Sustainable Fashion Brand"
Sector: Textile and Apparel
Size: Small (200 employees)
Global Reach: Based in one country, with international sales through e-commerce.
Operations: Owns a small manufacturing facility and works with local and overseas fabric suppliers.
ESG Complexity: Medium, focused on supply chain ethics, sustainable sourcing, and waste reduction.
Challenges:
Ensuring fair labor practices both locally and with international suppliers, reducing waste and water use in textile production, and maintaining transparency in sourcing materials.
3. "Regional Renewable Energy Developer"
Sector: Energy (Renewables)
Size: Small (500 employees)
Global Reach: Primarily operates within one region, developing solar and wind farms.
Operations: Develops and manages small-scale solar and wind energy projects.
ESG Complexity: Medium to high, with a focus on environmental impacts (biodiversity, land use) and local community engagement.
Challenges:
Managing the environmental impacts of renewable energy projects on local ecosystems, ensuring community buy-in for energy developments, and navigating regulatory requirements.
4. "Local Automotive Parts Manufacturer"
Sector: Industrial Manufacturing (Automotive Parts)
Size: Medium (2,000 employees)
Global Reach: Operates mainly in one country, but exports parts to international car manufacturers.
Operations: Owns two manufacturing plants and partners with a global network of raw material suppliers.
ESG Complexity: Medium, focused on emissions, resource efficiency, and supplier relations.
Challenges:
Reducing emissions from manufacturing processes, improving resource efficiency (energy, water, raw materials), and ensuring the sustainability of materials sourced from international suppliers.
5. "Digital Financial Services Provider"
Sector: Financial Services (Fintech)
Size: Small (300 employees)
Global Reach: Operates online, offering financial services to clients in multiple countries.
Operations: Provides digital financial solutions, including loans, payments, and investment management, with no physical products.
ESG Complexity: Low to medium, primarily focused on data privacy, cybersecurity, and responsible lending practices.
Challenges:
Ensuring strong data privacy and cybersecurity measures, avoiding financing activities that could negatively impact the environment or society, and managing employee well-being in a tech-driven, fast-paced environment.
How Each Persona Would Answer
1. Local Food Processing Company
1. Environmental Impact (GHG emissions):
Scale: 3 (Moderately severe)
The company’s food processing operations emit GHGs, particularly from energy use in factories, though emissions are moderate.Scope: 3 (Significantly widespread)
The impact is significant as it affects the region in which the company operates and influences supply chains in neighboring areas.Remediability: 2 (Remediable with moderate effort)
The company can reduce emissions by investing in energy-efficient technologies over time.Likelihood: 1 (Current impact)
The GHG emissions are currently ongoing.
Justification: Food processing is energy-intensive, contributing to GHG emissions, but there is potential to reduce this with moderate investments.
2. Social Impact (Employee conditions):
Scale: 3 (Moderately severe)
Working conditions are acceptable but could be improved, especially regarding fair wages and health safety in factories.Scope: 2 (Limitedly widespread)
The impact is mainly localized within the company’s two factories.Remediability: 1 (Easily remediable)
Improving wages and safety standards can be done with minimal investment.Likelihood: 1 (Current impact)
These impacts are present today.
Justification: Factory work comes with moderate risks, but improvements in working conditions are achievable.
3. Governance Impact (Ethical business practices):
Scale: 2 (Minimally severe)
Ethical practices are mostly in place, but improvements could be made, especially in transparency.Scope: 2 (Limitedly widespread)
The impact is mainly internal, affecting employees and local suppliers.Remediability: 1 (Easily remediable)
Improving policies and transparency practices is straightforward.Likelihood: 1 (Current impact)
Current practices are somewhat effective but could be improved.
Justification: Being a regional company, the scale of governance issues is small, but it is relatively easy to improve.
2. Sustainable Fashion Brand
1. Environmental Impact (GHG emissions):
Scale: 2 (Minimally severe)
The company’s emissions are low due to small-scale production and focus on sustainable materials.Scope: 1 (Localized)
The impact is confined to the local manufacturing site and limited distribution.Remediability: 1 (Easily remediable)
Sustainable fabrics and energy-efficient processes make reducing emissions relatively easy.Likelihood: 1 (Current impact)
Emissions are a present issue.
Justification: The brand’s focus on sustainability keeps emissions low, with room for further reductions.
2. Social Impact (Employee conditions):
Scale: 2 (Minimally severe)
Employee conditions are decent, though there’s room for improvement in terms of wages for overseas suppliers.Scope: 2 (Limitedly widespread)
The impact is mainly on a few overseas suppliers.Remediability: 1 (Easily remediable)
Improving conditions for overseas workers is achievable with better supplier policies.Likelihood: 1 (Current impact)
These conditions are currently in place.
Justification: The small team has good conditions locally, but overseas labor could benefit from better policies.
3. Governance Impact (Ethical business practices):
Scale: 1 (Negligibly severe)
The company follows ethical business practices closely, with little room for negative impact.Scope: 1 (Localized)
The impact is small, affecting only the local team and suppliers.Remediability: 0 (No impact)
No significant issues to remediate.Likelihood: 1 (Current impact)
Good practices are currently in place.
Justification: The brand’s mission is focused on ethical practices, so governance issues are minimal.
3. Regional Renewable Energy Developer
1. Environmental Impact (GHG emissions):
Scale: 1 (Negligibly severe)
The company’s focus on renewables keeps GHG emissions very low.Scope: 2 (Limitedly widespread)
The impact is minimal, though local communities could be indirectly affected.Remediability: 1 (Easily remediable)
Any minor emissions can be further minimized with technology.Likelihood: 1 (Current impact)
Minor emissions are present.
Justification: Renewable energy focus keeps emissions very low with minimal negative impact.
2. Social Impact (Employee conditions):
Scale: 2 (Minimally severe)
Field workers face minor risks in installation and maintenance of renewable energy infrastructure.Scope: 2 (Limitedly widespread)
Affects local workers in energy projects.Remediability: 1 (Easily remediable)
Safety protocols can further reduce risks.Likelihood: 1 (Current impact)
Risks are ongoing but manageable.
Justification: Employee risks are low but can be managed with improved safety measures.
3. Governance Impact (Ethical business practices):
Scale: 2 (Minimally severe)
There is a strong focus on transparency and anti-corruption, with minimal room for improvement.Scope: 2 (Limitedly widespread)
The impact is mainly internal, affecting employees and partners.Remediability: 1 (Easily remediable)
Improvements in reporting could be made but are simple to implement.Likelihood: 1 (Current impact)
Current practices are in place.
Justification: Governance practices are sound, but slight improvements in transparency could be made.
4. Local Automotive Parts Manufacturer
1. Environmental Impact (GHG emissions):
Scale: 4 (Substantially severe)
Manufacturing processes generate significant GHG emissions.Scope: 3 (Significantly widespread)
The impact is widespread due to the export market and large operations.Remediability: 3 (Difficult to remediate)
Reducing emissions will require significant investment in technology and processes.Likelihood: 1 (Current impact)
The emissions are ongoing.
Justification: Industrial manufacturing inherently generates high emissions, requiring substantial efforts to reduce.
2. Social Impact (Employee conditions):
Scale: 3 (Moderately severe)
Working conditions, particularly safety in manufacturing plants, could be improved.Scope: 3 (Significantly widespread)
The impact is significant as it affects all employees across two plants.Remediability: 2 (Remediable with moderate effort)
Improving working conditions would require moderate changes in safety protocols and equipment.Likelihood: 1 (Current impact)
These impacts are present today.
Justification: Safety risks are present in manufacturing but are addressable with moderate changes.
3. Governance Impact (Ethical business practices):
Scale: 2 (Minimally severe)
There are minimal governance issues, but compliance with international standards can be improved.Scope: 2 (Limitedly widespread)
The impact is mainly internal and affects business partners.Remediability: 1 (Easily remediable)
Improvements are simple to implement.Likelihood: 1 (Current impact)
Current practices are somewhat effective.
Justification: Compliance with international standards could be improved, but the company is mostly ethical in its practices.
5. Digital Financial Services Provider
1. Environmental Impact (GHG emissions):
Scale: 1 (Negligibly severe)
The company’s operations are digital, so its environmental footprint is small.Scope: 1 (Localized)
Minimal emissions, limited to local server use and office operations.Remediability: 1 (Easily remediable)
Moving to energy-efficient servers can reduce this further.Likelihood: 1 (Current impact)
Ongoing low-level emissions.
Justification: A digital company with minimal environmental impact, easily remediable.
2. Social Impact (Employee conditions):
Scale: 2 (Minimally severe)
Working conditions are good, but remote work policies could be enhanced.Scope: 2 (Limitedly widespread)
Impact is mainly on employees in one region.Remediability: 1 (Easily remediable)
Improving work-life balance through remote policies is simple.Likelihood: 1 (Current impact)
Current impact on employees is moderate.
Justification: As a digital company, employee well-being is a key focus, with room for improvement.
3. Governance Impact (Ethical business practices):
Scale: 2 (Minimally severe)
Ethical governance is strong, but privacy regulations could be better enforced.Scope: 2 (Limitedly widespread)
Impact affects customers and employees.Remediability: 1 (Easily remediable)
Privacy concerns can be addressed through policy improvements.Likelihood: 1 (Current impact)
Current impact on governance is minimal but ongoing.
Justification: The company handles sensitive financial data, requiring continuous improvement in governance.