Ethical-Strategic Materiality Matrix (ESMM) Worksheet

How to Use This Tool

This worksheet is designed for a collaborative leadership workshop (2-hour session recommended).

1.     Brainstorm (30 mins): As a group, use Part A to generate a comprehensive list of potential ethical and ESG issues relevant to your industry and business model.

2.     Assess Stakeholder Importance (30 mins): Use the framework in Part B to estimate how important each issue is to your key stakeholders (employees, customers, investors, etc.).

3.     Assess Strategic Impact (30 mins): Use the framework in Part C to score each issue based on its potential impact on your company's long-term strategic success.

4.     Plot the Matrix (30 mins): Use the canvas in Part D to plot each issue on the matrix. This will visually reveal your most "material" issues—those in the top-right quadrant.

Part A: Brainstorm Potential Issues

As a team, brainstorm a list of 10-20 potential ethical, social, environmental, and governance issues relevant to your business. Use the categories below to get started. Don't filter or judge at this stage.

●      Environmental: Carbon Emissions, Waste Management, Water Usage, Energy Consumption, Biodiversity Impact, Sustainable Sourcing.

●      Social: Employee Health & Safety, Diversity & Inclusion, Data Privacy & Security, Customer Welfare, Community Engagement, Supply Chain Labor Standards.

●      Governance: Business Ethics & Anti-Corruption, Board Oversight, Executive Compensation, Shareholder Rights, Transparency in Reporting.

Your List of Potential Issues:

1. -----

2. -----

3. ...(continue list)

Part B: Assess Stakeholder Importance

For each issue on your list, estimate its importance to your key stakeholders. A simple way to do this is to have a discussion and assign a consensus score.

Scoring Scale:

●      1 = Low Importance: Of minimal concern to most stakeholders.

●      2 = Moderate Importance: A known concern for some specific stakeholder groups.

●      3 = High Importance: A significant concern for most key stakeholders; a topic of public or industry discussion.

Part C: Assess Strategic Impact

Now, assess each issue based on its potential to impact your company's ability to achieve its long-term strategic objectives. Consider both risks (e.g., regulatory fines, reputational damage) and opportunities (e.g., new markets, brand enhancement, operational efficiency).

Scoring Scale:

●      1 = Low Impact: Minimal potential to affect business performance or strategy.

●      2 = Moderate Impact: Could have a noticeable effect on specific business units, brand reputation, or operational costs.

●      3 = High Impact: Has the potential to significantly affect overall business performance, financial results, access to capital, or license to operate.

Part D: The Materiality Matrix

Plot each issue on the matrix below based on the scores you assigned in Parts B and C.