Materiality assessment is a topic that is rarely discussed among startups, if ever. It's a topic reserved for large corporations that are finally waking up to their ESG (Environmental, Social & Governance) responsibilities.

Here's how KPMG chose to define materiality assessment in a 2014 Sustainability Insight Report - "Materiality assessment is the process of identifying, refining, and assessing numerous potential environmental, social and governance issues that could affect your business, and/or your stakeholders and condensing them into a short-list of topics that inform company strategy, targets, and reporting."

What originally started as a risk-assessment tool has now become a strategic trust-building engine. 

For startups, here's a more straightforward definition of "materiality assessment."

Building trust with systematic stakeholder engagement.

As a 21st century startup, you have the advantage of incorporating ESG within your company DNA from day one. I like to think of this process as a systematic process of a startup building trust with society. 

How do you do that? First, understand societal expectations.

Pharma companies like Novartis have high expectations from society. To understand these expectations, they foster dialogs amongst patient representatives, customers, suppliers, investors, peers, regulators, and other partners. These dialogs, structured through materiality assessments, allow Novartis to identify what matters most to these stakeholders and how Novartis' decisions can impact their lives and livelihoods - financially, environmentally, and socially.

Learning from Novartis, here are the three core steps that your startup can follow to incorporate materiality assessments within your growth. Ideally, you conduct this assessment once a year. 

Step 1: Identify Key Stakeholders

When identifying stakeholders, make sure that you reach out to colleagues and partners across your business and industry functions. Remember to reach out to non-traditional stakeholders such as non-profits, academic institutions, and suppliers.

Step 2: Collect quantitative feedback.

Online surveys are the most accessible. In this survey, your goal is to ask the above stakeholders to rate a set of relevant issues from most important to least important. Once that's done, ask them to rank your startup on how you perform on each of these issues. 

The results of this step will educate your team on the relative significance of each issue overall, by stakeholder type.

Step 3: Gaining qualitative insights through interviews

Finally, conduct interviews and workshops with a representative sample of the survey stakeholders to understand "why" these issues are important to them. These insights will be essential to inform your future strategies and how to allocate your resources during your next growth phase.

There are two significant benefits to conducting materiality assessments in this manner. You will understand what matters most to the stakeholders within your society and take the first steps towards building trust with them. Further rounds of material assessments will only serve to strengthen that trust.