Research gathered in partnership with a team of data experts.
One of the most challenging parts of an environmental, social and governance program is deciding which topics to engage in and support. Communications leaders can use this research as well as material ESG issues to help prioritize and shape strategic and sustainability decisions.
Data Insights
This research is based on the November 2023 analysis of 207 materiality assessments from S&P 500 companies, identifying the top 10 most commonly reported cross-industry material issues in sustainability and ESG.
Communications leaders should use these insights to help leaders prioritize commitments and investments in environmental, social and governance (ESG) issues that are most likely to generate positive stakeholder responses and improve business outcomes:
- Climate change, business ethics, and integrity and DEI were rated as the top three material issues heading into 2024.
- Business leaders and external stakeholders both reported the same top six material issues. Climate change and cybersecurity and/or data privacy were the first and sixth most important regarding business and stakeholder importance, respectively.
- Four new additions to 2023’s top 10 list compared to 2022, including environment, health and safety (EH&S), cybersecurity and/or data privacy, product quality and safety, and digital and technology innovation.
- Water issues and human rights have dropped in importance since 2022. Human rights are the tenth most important issue to external stakeholders, but the issue doesn’t make the top 10 for business importance.
What You Need to Do
Communications leaders should share this list with their ESG and sustainability leaders and bring these insights into ESG and sustainability committees and conversations. This will serve as a starting point to prioritize issues for their organizations. It will also help drive cross-functional alignment and buy-in, which is critical.
Communications leaders should:
- Use this research, combined with their organization’s current strengths and stakeholder expectations, to align with the corporate narrative to build a business case for issues the organization will support.
- Conduct materiality assessment with internal and external stakeholders to educate their teams. Understand which issues matter most for their most important stakeholders.
- Share this information (or your own materiality assessment results) with ESG and sustainability leaders to build buy-in on proposed sustainability or ESG investments or commitments and/or inform their future decision making.
What You Need to Know
This research analyzes 207 materiality assessments of S&P 500 organizations gathered from publicly available sources such as organizational websites and sustainability reports. The top issues are based on the materiality assessment of these organizations, calculated based on both business and external stakeholder importance. However, materiality assessments reflect an organization’s unique risks, opportunities, values, and impacts.
Therefore, organizations should still conduct their own materiality assessment to determine where they can apply unique organizational expertise, authentically link back to company identity (values, purpose and brand), credibly engage audiences and address opportunities for improvement.
| Business ethics and integrity | Ethical leadership is in high demand, but many leaders are in uncharted territory. Ethics and integrity are often addressed as an exercise in risk management that protects companies from legal punishment and reputational harm. Moving forward, stakeholders will require advanced transparency and traceability. |
| Climate change | Climate change was identified as the top material issue when looking at business importance alone (stakeholder importance aside) and stakeholder importance alone (business importance aside). Enterprises increasingly respond to stakeholder expectations to set greenhouse gas reduction goals. Many are also called out for slow progress against interim milestones or limited scope. Climate change impacts are projected to increase, necessitating widespread climate adaptation measures for increased organizational transparency and traceability. |
| Community investment and engagement | Sustainability extends beyond an organization’s operations to the communities in which it operates. The critical question is whether the community is better or worse because of the organization’s presence. Philanthropy, employee volunteer days and nonprofit partnerships are ways companies engage with their communities. Community engagement builds trust, strengthens and showcases company values, and gathers diverse experiences and ideas from employees and others. |
| Cybersecurity and/or data privacy | Increasing reliance on digital technologies and the interconnectedness of global systems have amplified the risks of cyberthreats and privacy breaches. This has led to a growing recognition that organizations must actively manage these risks to protect their stakeholders and ensure business continuity. Regulatory frameworks globally are addressing cybersecurity and data privacy concerns. Governments and regulatory bodies are introducing stricter laws and regulations to protect individuals’ digital rights and uphold their fiduciary duty to stakeholders. |
| Digital and technology innovation | Digital and technology solutions have the potential to address various environmental challenges. For example, they can help optimize energy use, reduce greenhouse gas emissions and enable efficient resource management. Technology plays a crucial role in addressing social issues and promoting social well-being. It enables access to education, healthcare and financial services, particularly in underserved communities. Technology will continue to enable companies to better track and report on their environmental and social impacts, facilitating better ESG disclosure and performance measurement. |
| Diversity, equity and inclusion | Organizations consider visible and invisible characteristics such as gender, age, ethnic background, disability, socioeconomic background, veteran status and sexual orientation to increase organizational diversity. In the U.S. context, some forms of DEI have seen real political and legal pushback. But when perceived to be authentic, DEI commitments and actions will help gain access to talent, ensure organizations become increasingly cross-functional and enhance critical thinking and opportunity identification, enabling differentiation in meeting strategic objectives. |
| Environment, health and safety (EH&S) | Prioritizing EH&S enables organizations to mitigate the impact of their operations on the environment and their workforce. This creates compliant, safe and more sustainable businesses, often resulting in stronger cultures, higher productivity and reduced costs. Consumers and employees increasingly demand environmentally friendly and socially responsible organizations, pushing organizations to prioritize EH&S to stay competitive. |
| Product quality and safety | Consumers today are more conscious about the impact of their purchases on their health, the environment and society. Regulatory bodies and governments are emphasizing product safety standards more often. Compliance with safety regulations is a legal requirement and a key aspect of responsible business practices. As sustainability and responsible practices gain momentum, a shift toward more stringent regulations and standards related to product quality and safety will occur. |
| Sustainable products and services | Environmental sustainability drives the need for new or improved products. Understand how a product’s sustainability value proposition is communicated to consumers through packaging, advertising and marketing messages, owned media channels and other means. |
| Talent management | As employees look for employers aligned with their values, the employee value proposition goes beyond financial reward. Organizations must act on ESG issues that matter to employees to support a shared purpose and attract new talent. |