ESG materiality assessment: A practical guide for food processors

This article builds on an earlier piece for food processors about the importance of properly documenting their sustainable practices. Check it out here.

As environmental and social responsibility requirements increase, food processors face growing expectations from retailers, including restaurant chains, financial partners and major brands, who are now giving priority to strong commitments backed by tangible, measurable initiatives, rather than mere expressions of intent.

As such, the ESG (environmental, social and governance) materiality assessment is a strategic tool to help structure your approach and ensure consistency in how you address the issues that really matter to your business.

What is an ESG materiality assessment?

"It helps identify and rank the main ESG priorities for your company and its stakeholders: employees, customers, suppliers, lenders, public institutions," explains Valérie Duval, Sustainability Manager at IC Canada.

The assessment basically looks at three key questions:

1. What matters most to your company’s stakeholders?

2. Where does your company have a direct impact?

3. What are the risks or opportunities influencing its performance?

The tangible benefits of a materiality assessment

When should you consider performing a materiality assessment?

A materiality assessment is not a one-and-done. It needs to be conducted and updated regularly, especially at pivotal moments in your business's development, such as:

• Signing a new contract with a retailer who requires sustainability indicators

• Preparing to expand, modernize or seek out financing

• Meeting regulatory changes (plastics, emissions, labour, food waste)

• Managing operational risks, such as supply disruptions or water usage restrictions

An approach tailored to your specific situation

As most food processors are small and medium-sized businesses, the resources they can allocate to sustainability are often more limited than those of larger organizations, which typically have dedicated sustainability teams.

Nonetheless, this approach is within reach for any business. Even if it’s built on complex international standards, such as the double materiality of ESRS (European Sustainability Reporting Standards), which serve as the benchmark for sustainability disclosure, there’s a simplified version you can use to fully comply with the spirit of ESRS by tailoring it in a practical way to your specific situation.

According to Duval: “The idea is to start thinking about it in a structured way and not get bogged down in the methodology. It’s a great starting point for a process that you can improve over time.”

Figure 1: Examples of ESG issues

Key steps of the analysis

Before you start: Collect all critical information

• Your main customers’ ESG requirements, their expectations and anticipated priorities based on their public records, your contracts, your direct conversations with the managers involved, and sector intelligence

• Your competitors' practices

• Stakeholders who influence your business

• Applicable regulations

• Trends in the food industry

Post materiality assessment follow-up

The materiality matrix is not just about documenting your ESG priorities. It informs your decision-making and the specific actions you will be taking. Here’s how it can be used:

• Capital planning: Prioritizing investments based on the most important ESG issues for the company and its stakeholders

• Business improvements: Focusing on processes or practices with the greatest impact on sustainability

• Internal ownership and accountability: Clarifying who's responsible for each issue and defining roles to ensure follow-up

• Reporting: Structuring your internal and external communications around the priorities you’ve identified

• Ongoing reviews with customers or creditors: Using the matrix to discuss progress, build trust and align your actions with partners' expectations

A materiality assessment helps you:

Support transparent conversations with creditors

Reduce perceived risk for financial partners

Prioritize investments (energy efficiency, waste reduction, modernization)

Lay the foundation for financing in support of sustainability

A driving force for continuous improvement

“When a business takes the time to do this assessment, it's a sign that they see it as more than just a formality. It’s a driving force for continuous improvement that reflects the consistency and credibility of your commitment. The exercise also helps better prepare your business for the challenges ahead, while ensuring responsible management,” Duval concludes.

Sustainability isn’t just an obligation. It's a new way to make decisions, act and focus effort where it’ll have the greatest impact. It builds consistency, resilience and capacity to thrive in a complex and ever-changing environment.

Article by: Melanie Lagacé

Read next

How an ESG assessment helped a bakery have its cake and eat it too

4.5 min read

Managing People & Operations

Three ways Just Cakes bakery used an ESG assessment to improve their business performance.