How Home Depot Conducts a Materiality Assessment to Prioritize, Address Sustainability Issues

One of the best ways companies have found to set sustainability and energy management goals, and to understand their ESG impact and opportunities, is to talk to stakeholders. From customers and employees to shareholders, suppliers and NGOs, stakeholders have opinions, ideas and expertise to share on how to manage a company’s environmental impact. An effective process to engage with stakeholders on the topic, many experts agree, is to conduct a materiality assessment.

“Our ongoing interactions may be formal or informal…,” says Ron Jarvis, chief sustainability officer for Home Depot, in the company’s 2021 ESG report. “These interactions help validate our own materiality assessment; they also help us gauge the impact of our business, refine ESG priorities, measure our progress, and design ways to improve.”

Hilton is another company that engages with stakeholders to determine the areas that are most material to its sustainability journey. In 2020, the company undertook a thorough ESG materiality assessment to ensure that its Travel with Purpose programs “remained aligned with the issues that matter most to Hilton’s business and stakeholders” and focus its efforts on the areas it can have the most impact, the company said.

Home Depot outlined its recent materiality assessment framework in its 2021 ESG report, Doing Our Part. The seven-step process helps the company’s Sustainability Council assess, prioritize and address material sustainability issues in the areas of people, communities, climate change, energy reduction, waste and recycling, chemicals, natural resources, responsible sourcing and corporate governance.

Step 1. Identify potential sustainability issues. In this step, the company looks for specific examples of places where issues could potentially become a problem. These issues might include chemicals, fuel cells, global warming, hazardous materials, rainforest depletion, recycled content, and renewable energy.

Step 2. Trigger materiality assessment. With potential issues identified, the company takes them to both internal and external stakeholders to determine which of these are of most concern.

Step 3. Engage relevant internal business teams. Once the areas of top concern are pinned down, the company brings relevant personnel onboard. These might include teams from corporate communications, government relations, Human Resources, IT, investor relations, legal, merchandising, operations, real estate and construction and supply chain.

Step 4. Gather information and recommendations. At this point, the company works with internal experts and stakeholders on fact-finding, data collection and scientific research surrounding its most material sustainability issues identified in the first two steps.

Step 5. Develop solutions. With all the facts at their fingertips, the Sustainability Council works on developing solutions to potential problems or modifying its current path. It monitors projects periodically or, when initiatives have been successfully completed, exits the program.

Step 6. Establish an ongoing plan. At this point, the council tracks and reports on initiatives and maintains momentum.

Step 7. Continue progress. This is the ongoing process of sustainability. The Sustainability Council shares findings, sets improvement goals, tests alternatives, and continues to work on ongoing issues.

By following this seven-step process, the company has made strides such as decreasing electricity consumption across its US stores by more than 14% year over year in 2020 and achieving a 22% reduction in carbon intensity, the company says.

“We know that when we invest in running a responsible, sustainable company, we make our business stronger, more flexible, and more resilient,” says Craig Menear, chairman and CEO of Home Depot.

Jennifer NASTU



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