Session 3 – Materiality

Assessment
September 2023
Recap | A proven approach to ESG strategy: Six steps to ESG leadership

1 ESG vision and ambition

Validate/update sustainability vision and ambition, and take
stock of existing efforts

2 Materiality 3 Measures and prioritization 5 Org, focus KPIs,

assessment Develop sustainability strategy for highest-impact governance
issues—derive quantifiable targets and define initiatives
Identify/confirm highest incl. business cases to achieve developed strategy Outline lean & efficient organization
impact ESG topics—by relevance and define focus KPIs for performance

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to business success and importance assessment, review sustainability skills,
to stakeholders—and discuss RWE resources, and systems
starting point vs. peers
4 Flagship initiatives
Define flagship initiatives with high influence on
target achievement and proven business case
to support ESG narrative

6 ESG reporting and eco-system management

Provide transparency, generate buy-in from all stakeholders inside and outside of the company and actively
shape the ecosystem—develop and execute ESG communication strategy

Source: BCG 1
Materiality assessment in the context of
sustainability is like figuring out what
WHAT? A structured process of determining ESG issues that could impact the
business or internal/external stakeholders, and an assessment of impact
really matters for a company and its
on business, society and environment
stakeholders when it comes to
environmental, social, and governance In the process, perspectives from a breadth of internal/external
(ESG) issues stakeholders should be considered

Recap | WHY? To comply with regulations and standards – deep dive in following slides

What is Materiality assessment is required for all large companies1 according to

the European Sustainability Reporting Standards (ESRS), and for
companies reporting according to GRI2
Materiality To focus ESG efforts
assessment?

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A materiality assessment is a first step in an ESG transformation to focus
effort on material topics

HOW? 1. Scan the environment to identify ESG topics with potential impact
2. Engage with relevant stakeholders and experts to prioritize ESG
topics
3. Assess significance of the impact on business, society and
environment for each ESG topic
4. Present in a materiality matrix
1. Companies exceeding 2 of the 3 thresholds: Average number of employees >250; Net
turnover >40m€; Balance sheet total >20m€ 2
2. GRI = Global Reporting Initiative, a voluntary standard for sustainability reporting
 Materiality in sustainability needs to be discussed equally along all 3 ESG
dimensions
ALL OF THEM ARE EQUALLY AS IMPORTANT FROM THE VIEWPOINT OF EXTERNAL SHAREHOLDERS IN GENERAL

Environmental Social Governance

• Energy, emissions and • Human rights and inclusiveness • Corporate governance and ethics

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climate change in supply chain and workforce
• Influencer of change: advocacy
• Circular economy: waste, resource • Safety and well-being strategy and policy shaping
mgmt and recycling
• Socio-economic development: • Anti-corruption
• Water local and national
• Reporting and KPIs
• Biodiversity and land • Access and inclusiveness in
• …
products and services
• …
• …
Source: BCG 3
What characterizes a solid materiality assessment?
ENSURE THAT the topics that are material to us are simple, definite ( not too
many ) and easily explained so that everyone understands what you strive for

Following a proven methodology in line with current and future standards

(incl. ESRS1 and GRI2)

Involvement of a breadth of stakeholders, both internally and externally

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‘Easy’ to communicate with secured buy-in from the internal organization

Providing a clear foundation for future work on ESG

1. ERS = European Sustainability Reporting Standards

2. GRI = Global Reporting Imitative
Source: BCG 4
Latest reporting directives concerning materiality assessment

Companies • All companies listed on regulated markets (except listed micro-enterprises)

subject to CSRD • All large companies, i.e. companies exceeding 2 of the 3 thresholds:
– Average number of employees >250
– Net turnover >40m€
– Balance sheet total >20m€

Changes that • Information to be disclosed within the Management Report of the Annual Report
apply with CSRD • Mandatory limited assurance of reported information by the statutory auditor
• Introduces a requirement to report according to European Sustainability Reporting Standards (ESRSs)
• Requires digital tagging of reported information (machine readability)
Double materiality means that
Proposed • Reporting to be guided by the concept of Double materiality covers 2 things - Inside
reporting – Impact materiality: Impacts on society and environment
Meteriality and external
content – Financial materiality: Risks & opportunities for the company
• 13 proposed reporting standards materiality,
– ESRS 1: General principles for sustainability reporting Inside meteriality This refers to the traditional concept of materiality from

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– ESRS 2: General, strategy, governance and materiality assessment the company's perspective.
– ESRS E1-E5: Specific disclosure requirements related to Environmental matters Outside Materiality: This extends the concept of materiality to consider
– ESRS S1-S4: Specific disclosure requirements related to Social matters the impacts of a company's operations on external stakeholders, society,
– ESRS G1-G2: Specific disclosure requirements related to Governance matters and the environment
• Companies to publish information related to:

Strategy Implementation Performance

• Strategy and For each For each
business model material topic: material topic:
• Sustainability governance & organization • Policies • KPIs
• Sustainability impacts, risks & opportunities • Targets • Performance
• Actions & resources against targets

Source: BCG analysis 5

Example | The final output is a materiality matrix with the importance for
stakeholders and double materiality
DEVELOPING THIS MATRIX IS IMPORTANT IN CONEXT TO OUR BUSINESS, WE SHALL DISCUSS Illustrative
HOW TO MAKE THIS SHITTY MATRIX IN THE NEXT FEW SLIDES

Topic lists per

Aggregated matrix considering all stakeholders
stakeholder group
Y-axis
Importance of ESG
topics for
stakeholders (e.g.
investors, clients,
Importance for stakeholders

NGOs and the public)

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X-axis
Double materiality:
• Financial
materiality,
financial risks &
opportunities for
the business
• Impact
materiality,
impacts on
society and
environment Business, people and planet criticality

Source: BCG analysis 6

Different ways to represent double materiality

Perspective on double-materiality aligns with EFRAG's1 draft guidelines2, which acknowledges that financial
and impact materiality should be given equal importance in assessing whether an ESG topic is material

Financial Materiality Non-financial Materiality

Potential impact of ESG Potential impact of
Double materiality: business undertaking on
topics on the value of
applying financial and environment and society
enterprise
impact materiality
independently, without Includes impacts caused or
Includes impacts on any

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ignoring interactions contributed to by business,
levers that contribute to
value creation or found anywhere in
extraction – e.g., enterprise value chain
manufacturing capital,
human capital, etc.
Critical to consider both lenses, given dynamic nature of materiality – e.g., as
attitudes shift, topics that were previously only impact-material can become financially
material as well

Note: EFRAG proposed assessments informed by SASB (financial) and GRI (impact), the guidelines which are poised to become the prevailing ESG reporting standards once finalized
1. European Financial Reporting Advisory Group draft from European Sustainability Reporting Standards (ESRS); 2. Double materiality assessment is a tool which provides criteria to
determine whether a sustainability topic or information has to be included in the sustainability report. A sustainability matter is “material” when it meets the criteria defined for
impact materiality, financial materiality or both 7
Material topics to be determined along a variety of lenses
Text

Corporate strategy Key benchmarks

Considering company's current Considering key benchmarks
strategy particularly focusing on its illustrating company's ESG
decarbonization and sustainability performance vs that of its key
ambitions peers

Existing material topics Peers’ material topics

Paying attention to the key topics Considering the key topics

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RWE has been focusing on or is company's stakeholders and peers
intending to focus on in the future are focusing on in their ESG
agenda

Management input & decisions Stakeholder expectations

Taking into consideration the Paying attention to the demands of
management's vision as well as its company's current and future key
decisions and announcements stakeholders

Source: Company website, LinkedIn, BCG analysis 8

A materiality assessment is conducted in 6 steps

1 2 3 4 5 6

Shorten the list to 30- Gather input from Refine and prioritize
Long list of topics Finalize prioritized list
40 topics and create internal and external Develop matrix with senior leaders
to consider of material topics
definitions stakeholders and SteerCo

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Leveraging industry Take out duplicates, Interviews and/or Weighing input Based on additional Based on input from
standards (ISO, SASB, merge topics, offline surveys from different qualitative insights SteerCo, senior
GRI) and peer take out irrelevant groups as relevant from trend analysis, GF leaders and
matrices topics, etc. interviews and from project team
comparing to peers

9
 Step 1: Long list of
topics

Step 1: Multiple elements leveraged to build sustainability topic long-list

We built on internal and external elements … … to create long-list of 55 sustainability

topics

Company

Company purpose Strategy 2025

and identity

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Sustainability Peer materialities
frameworks & Deep dive provided on next slide
reporting standards
10
FROM THIS LONGGGGGGGG LIST MAKE A SHORT LIST FROM THE 80/20 RULE - 20% OF THE STUFF IS THE MOST IMPORTANT, AND WOULD LEAD TO MAXIMAL
DEVELOPMENTS IN OUR ECG STRATEGY , WE MAKE THIS LIST SHORT IN THE NEXT STEP Step 1: Long list of
topics

Step 1: Long-list of 55 topics before merging and short-listing

Typical Example

Emissions Resource management Human rights Consumer welfare Governance

• GHG emissions in operations • Minimal/sustainable water • Diversity, inclusion and equal • Product access & • Active participation in public
• Product lifetime GHG use in operations opportunity affordability decision-building process
emissions • (Client) Water stewardship • Non-discrimination • Product quality & safety • Ensured supplier
• Pollutant emissions in • Sustainable and transparent • Freedom of expression • Selling practices, product sustainability
operations (NOx, etc.) material choice • Forced or compulsory labor, labeling & consumer service • Environmental compliance &
• Product lifetime pollutant • Hazardous materials modern slavery • Consumer health, quality of environmental risk & impact
emissions (NOx, etc.) management • Child labor life and comfort assessment
• Minimal waste from • Access to essential services • Transparency on end-user • Socioeconomic compliance &
Energy operations / internal waste (e.g. water, sanitation, food) influence and factors on socioeconomic risk & impact
management • Data privacy and security product decision assessment
• Energy efficiency in • (Client) Waste stewardship, • Land rights and rights of • Dispute resolution
operations product lifetime waste indigenous peoples Community mechanisms
• Product energy efficiency management • Internal conflict culture

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• Independency from fossil • Responsible agriculture Labor • Community involvement
energy / sustainable energy • Community development Others
• Employment & individual
choice Ecosystem & • Community access
employee benefits • Product Design & Lifecycle
biodiversity • Occupational health and Management
Natural disasters safety • Business Model Resilience
• Sustainable land use • Freedom of association,
• Disaster prevention/ • Market Presence
• Protection & restoration of collective bargaining &
protection • Indirect Economic Impacts
natural habitats employee involvement
• Disaster relief management • Procurement Practices
• Invasive species mgmt. • Employee career
• Consequences of natural • Supplier Environmental
• Animal Product Use development
disasters Assessment
• Corporate culture • Supplier Social Assessment

11
 Step 1: Long list of
topics

List of material topics and their description used in interview process (I/III)
A short, easy to understand description, and acertained with mutual understanding of the management via meetings etc, certain
elements such as water stewardship can be hard to understand therefore easy explanation and description is key

Topic Topic description

Emission of climate change contributing green house gases in the company's own operations (incl. product manufacture, logistics,
GHG emissions in operations
indirect procurement, etc.)
Emissions

Product lifetime GHG emissions Emission of climate change contributing green house gases in connection with the lifecycle of products (e.g. during use, recycling, etc.)

Pollutant emissions in operations Transparency and reduction of emission of non-green-house-gas pollutants such as NOx with negative impact, e.g., toxicity for environment or human health
(NOx, etc.) in connection with the manufacture and logistics of products and other operations
Product lifetime pollutant emissions Transparency and reduction of emission of non-green-house-gas pollutants such as NOx with negative impact, e.g., toxicity for environment or human health
(NOx, etc.) in connection with the lifecycle of products (e.g. during use, recycling, etc.)

Energy efficiency in operations Usage of energy efficient solutions in the company's operations to minimize overall energy use
Energy

Product energy efficiency Energy demand of products and reduction of the products' energy demand

Independency from fossil energy /

Usage of energy from renewable sources such as wind, water and solar energy in operations and products that enable the use of sustainable energy sources

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sustainable energy choice
Minimal / sustainable water use Usage of water efficient solutions in operations to minimize water use in the company and/or use of sustainable water sources such as rainwater or re-used
in operations water instead of fresh water
Resource management

Helping or enabling customers to become water efficient and responsible, e.g. designing products that help monitor or save water, supporting water saving
Enabling customer water stewardship
targets and/or build partnerships that support sustainable water solutions
Sustainable and transparent Consideration of environmental footprint of materials used by the company (not water or energy), e.g. make material choices transparent with material
material choice passports; preferring sustainable materials (renewable materials over plastics, recycled materials over virgin materials,…)
The company ensures to minimize use of hazardous materials and manage them responsibly, including ensuring that any hazardous materials included in
Hazardous materials management
products get collected or it is otherwise ensured, that the hazardous materials are not lost in the environment
Minimal waste from operations / internal Reduction of waste generation in operations and the management of non-hazardous waste including the treatment, handling, storage, disposal and
waste management regulatory compliance
Enabling waste stewardship, product The company taking responsibility for the waste from products over the full lifetime, e.g. from lubrication, maintenance, disposal, etc., for example by
lifetime waste management taking old products back or helping customers to recycle responsibly

12
 Step 1: Long list of
topics

List of material topics and their description used in interview process (II/III)

Topic Topic description

dis. & Bio

Protection & restoration of natural Consideration of impact of operations, products and product use on natural habitats such as wetlands, rivers, etc. for example by active participation in
Nat. Eco

habitats efforts to restore natural habitats or designing products that help protect them
Prevention and relief of natural and man-made disasters such as floodings, sewage spills, chemical leaks, e.g. through provision of pumps
Disaster prevention/protection/relief
during floodings or developing systems to prevent man-made disasters
Employment conditions & individual The company ensuring and promoting fair employment conditions, e.g. enabling work-life balance, fair pay, transparency about performance
employee benefits requirements, etc.
Assurance of the health & safety of employees through, e.g. safety regulations in industrial processes, psychological counseling services and safe working
Occupational Health and Safety
environment for women
Labor

The company ensuring employees get the best opportunity and support to develop, e.g., training programs and leadership development programs, options
Employee development
to balance work and personal development
Freedom of association, collective The company ensuring the protection and promotion of employee's rights to unionize, form workers' councils and to get involved in the development as a
bargaining & employee involvement company and employer. Both within the company but also with close business partners.
Diversity, inclusion, non-discrimination The company protecting and promoting diversity, inclusion and equal opportunities within the organization and across society including prevention &

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and equal opportunity sanction mechanisms for discriminatory behavior
The company protecting and promoting the right to free speech and free assembly within the organization and the societies the
Freedom of expression
company acts in
Human rights

Forced or compulsory labor, modern The company safeguarding and promoting the freedom to choose employment within the company, the supply chain and customers, e.g., by refraining from
slavery, child labor disproportionate non-compete clauses; prevention of worker exploitation, minimum wage-violations, etc.
Access to essential services The company safeguarding and promoting people's access to essential services such as water, sanitation and food, e.g., in communities around the
(e.g. water, sanitation, food) company's facilities but also by collaboration with NGOs, funds and governments
The company protecting and promoting the right to data privacy and data ownership of employees, customers and other business partners, e.g. by ensuring
Data privacy and security
compliance with GDPR regulation and developing digital products to the highest standards
Land rights and rights of The company ensuring to respect land rights and rights of the local population, legally and culturally, e.g. by increased control for projects the company
indigenous people participates in or by pursuing business partners to respect land rights
Well.

Ensuring products are accessible for underprivileged population groups by e.g. ensuring the products affordability to those groups and supporting non-profit interest
Con.

Product access & affordability

groups especially where basic services like drinking water transportation are performed by the company's products

13
 Step 1: Long list of
topics

List of material topics and their description used in interview process (III/III)

Topic Topic description

Product quality & safety The company ensuring customer safety and health, product longevity and functionality as well as leading after-sales support
Consumer welfare

Selling practices, product labeling & The company committing to fair and accurate marketing practices, e.g., by avoiding misleading advertisements or aggressive selling and lending practices;
consumer service fair contractual practices; transparency about alternative solutions, etc.
The company promoting wellbeing beyond the product quality and safety, e.g., ensuring their products enable a save and healthy living environment,
Consumer quality of life and comfort
increased comfort, etc.
Inclusion of local communities e.g. in business development planning or by ensuring job offers to members of local community & development of
Community involvement & development communities e.g. with pro bono training & educational offers for children & supporting local social initiatives, providing free infrastructure services, etc.
Transparency on end-user influence and The company ensuring a deep and continuous clear view on actual end-user priorities, decision making factors and interests to ensure solid connection
factors on product decision between maker and user and ensuring full use of product potential as well as sharing this insight with distributors and installers
Choosing suppliers based on the company's sustainability standards; promoting compliance of suppliers with the company's own sustainability standards;
Ensured supplier sustainability
creating value-chain transparency of products environmental and social footprint
Environmental compliance & environmental The company is to ensure compliance to all (local) regulation, assessing environmental risks and understanding the impact the company's decisions and

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risk & impact assessment practices have on the environment
Governance

Socioeconomic compliance & socioeconomic The company is to ensure compliance to all (local) regulation, assessing social risks and understanding the impact the company's decisions and practices
risk & impact assessment have on the social and economic well-being of people
The company ensuring transparent and functional mechanisms to resolve disputes with business partners e.g. by clear contractual design and pre-aligned
Dispute resolution mechanisms
solutions to possible disputes, refraining from using lawful options to full extend, etc.
The company ensuring a productive internal culture, free from open conflict, mobbing and unproductive criticism and focused on resolution, exchange and
Internal conflict culture
cooperation
Active participation in public decision- Actively influencing the decision-making process and policies to promote sustainable development, transport the company's values, ensure adequate
building process regulation, etc.
Mgm.

The company ensuring products contribute or enable a responsible agriculture and/or sustainable land use, for example by water saving technologies,
Res.

Responsible agriculture and land use

ground water use alternatives, etc.

14
 Step 2: Shorten
the list

Step 2: Short-list of 38 topics used in materiality assessment Typical Example

Resource Consumer
Emissions Human rights Governance
management welfare
• GHG emissions in operations • Diversity, inclusion, non- • Product access & • Active participation in public
• Product lifetime GHG • Minimal/sustainable water discrimination and equal affordability decision-building process
emissions use in operations opportunity • Product quality & safety • Ensured supplier
• Pollutant emissions in • (Client) Water stewardship • Freedom of expression • Selling practices, product sustainability
operations (NOx, etc.) • Sustainable and transparent • Forced or compulsory labor, labeling & consumer service • Environmental compliance &
• Product lifetime pollutant material choice modern slavery, child labor • Consumer health, quality of environmental risk & impact
emissions (NOx, etc.) • Hazardous materials • Access to essential services life and comfort assessment
management (e.g. water, sanitation, food) • Transparency on end-user • Socioeconomic compliance &
• Minimal waste from • Data privacy and security influence and factors on socioeconomic risk & impact
Energy operations / internal waste • Land rights and rights of product decision assessment
management indigenous peoples • Dispute resolution
• (Client) Waste stewardship,
• Energy efficiency in mechanisms

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operations
product lifetime waste Community • Internal conflict culture
• Product energy efficiency
management Labor
• Responsible agriculture and
• Independency from fossil • Community involvement &
land use
energy / sustainable energy • Employment conditions & development
choice individual employee benefits
Ecosystem & • Occupational Health and
biodiversity Safety
Natural • Employee development
• Protection & restoration of • Freedom of association,
disasters collective bargaining &
• Disaster natural habitats
prevention/protection/relief employee involvement

15
 Step 3: Gather input
INTERVIEWS WITH WHOM? - WITH STAKEHOLDERS, INTERNAL AND EXTERNAL STAKEHOLDER

Step 3: Conducted interviews to assess importance & relevance of material

issues and extended the analysis with secondary research
We assess company's' material sustainability
issues across two dimensions We have conducted 64 interviews …
33 31
Importance to individual stakeholders
1
7 Business Suppliers
• How important is the topic for your assessments 11
development Customers
and decisions as a stakeholder? 8
Sales 4 NGOs & regulators
6
Relevance for company's long-term business success1 Operations
15 Employees
• How relevant are or will topics be to the company's ability to 12 Group functions
create value over time?

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Internal Others
… and supplemented them with additional
datasets2
• Investment banks' materiality assessments
Deep dives available
• NGO publications on sustainability issues in backup
• Brand Promise customer interviews
Show the short list of topics you have and their definitions, in conext to these persons and
conduct the interview accordingly, in this interveiw you can establish what is material and if
1. Only internal stakeholders were asked about the relevance for long-term business success your definitation is correct and the relevance of the topics is right?
2. "Internal" and "Others" groups as well as stakeholder sets within groups were balanced equally in final analysis to ensure even representation independent from number of interviews/data sources
16
 Backup
Step 3: Gather input

Step 3: The investor perspective was distilled from banking materiality

reporting

Banks' core business is Banks' own materiality We selected banks We mapped the Banks'
to have investor lense assessments show across company's material issues &
stakeholder view footprint scores with company

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• As financial investors, • Banks follow own material • Scores on stakeholder
• Analyzed the materiality of importance weighted by
banks choose the topics topics through investment
they deem important to decisions
5 banks to ensure full and the number of banks
make investment decisions • Material topics reported
coverage across core naming them
are equivalent to their
markets • Aligned consolidated
priorities as stakeholders and weighted banks
topics to taxonomy of
company material
assessment
17
 Backup
Step 3: Gather input

Water is a scarce commodity, so we should

be doing all we can around protecting that Typical Example water
in the environment technology company

- UK partner

Step 3: Brand Sewage economy so taking sewage

Promise Research Our municipality has a
and generating more energy from it
clearly does more to reduce the
interviews suggest purpose to provide safe and carbon footprint
company customers' health through water to
- UK partner
people and planet
material focus to be
- Danish partner
on water, circularity,

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energy and GHG We focus on the reduction of
emissions greenhouse gases & the reduction
of consumption of water,
There are a number of challenges. electricity & energy
First is Net Zero - US partner
- UK partner

Source: B2B International Brand Promise Research

18
 Step 3: Gather input

Detailed approach to gain stakeholder insights

Cont.
Ramp up Materiality assessment ESG
0 1 2 journey
Gather data and collect Assess materiality and importance per each topic and Refine matrix and
topic list, 2 weeks develop materiality matrix, 2 weeks benchmark to peers, 1 week

• Collect existing, internal • Analyze existing materiality work (if existing) • Host workshop with top
Mgmnt &
materiality work • Survey top 100 managers management to validate
employees
• Schedule interviews • Interview top 5-10 managers matrix
Clients/ • Survey top 10 suppliers and clients
• Schedule interviews
suppliers • If applicable: Interview top 2-3 clients
Investors & • Scan investor reports on
financial adv material topics
• If applicable: Interview the 2-3 most relevant
Community
organizations

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• Analyze material topics
Peers (ind.)
with MMAP and SASB
• Analyze material topics
Public
with Quid
• Aggregate list of • Based on survey and interview input, assess materiality • Refine matrix
• Benchmark peers on
material topics and importance per each shortlisted topic
Aggregation material topics
• Prioritize into short list • Conclude assessment in materiality matrix • Optional: Forward-looking
based on e.g., MMAP • Cross check with BCG experts and management benchmark with TVL
• Compile survey and interview guide • Document the process
Enablement
• Compile assessment framework • Suggest next steps
Key meetings
Kick-off Workshop 1 Workshop 2
Project team meetings
19
Source: BCG
 Step 3: Gather input

Example | How a materiality matrix is technically derived

Do not take a average of the data from the interviews, rather allocate weights to certain individuals and certain stake holders
depending upon their relevance and then analysise the interviews as a whole
Illustrative
this is the
weightage
Internal
Employees Survey of top employees from across org XX%
view
XX%
Average
Importance for internal &

Key importance
external stakeholders

Survey and 1:1 interviews with top clients XX%

suppliers/customer for
stakeholders
Investors & financial
Scan of investor reports XX% (Y axis)
advisors External
view
XX%
Community 1:1 interviews with most relevant organizations XX%

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Public Scan of social media global news etc. XX%

Financial Average
Management 1:1 interviews with top executives XX% 50%1
materiality

materiality Business,
Double

people and
Impact planet
Employees Survey of top employees from across org XX% materiality
50%1 criticality
(X axis)
Output to be refined based on input from BCG experts and internal management
1. Equally weighted according to ESRS (European Sustainability Reporting Standard) proposal
Source: BCG 20
Typical Example Step 3: Gather input

Step 3 deep dive: Stakeholder group balancing

Stakeholder interviews are collected —————> then grouped —————> then weighted

Stakeholder interviews Grouping Balancing Combined view

Business • Equal weight for internal and
Business Development 7 12,5% Internal 50%
Development other voices
Sales 8 Sales 12,5%
Group Risk 1 Group functions 12,5% • Good coverage of multiple
Finance 01 Operations 12,5% markets & business segments
50/50 weightage • Including DBS, CBS, IND, WU
Product compliance 5 • Including major regions
Legal & Public affairs 3 Western Europe, China,
HR 1 India, USA, South America

EHS 1

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• Flexibility to cover granular
Production 2 angles from multiple functions
Logistics & Distribution 2 without overemphasizing
(e.g. within group functions)
Purchasing 2
Customers 11 Customers 10% External 50%
Suppliers 1 Suppliers 10%
NGOs & Regulators 4 NGOs & Regulators 10%
Employees 15 Employees 10%
Investors2 5 Investors 10%
1. Interviews outstanding 2. Included via financial institution materiality assessments of 5 global banks, see investors deep dive
Source: Project team, BCG analysis
21
 Typical Example Step 4: Develop matrix

Step 4: Materiality matrix showing company's most material topics Typical Example water
This is a combination of the Internal and the external materiality matrix, which has been combined by the technology company
weights allocated to the specific elements by enternal or internal stakeholders
Environmental Social Governance
Included
Product
stakeholders:
quality & safety
• Business
High

NATURALLY THESE Development

Environmental compliance TOP RIGHT ITEMS ARE
& risk & impact assessm. • Sales
Employment OF HIGH IMPORTANCE
Occup. Health Product energy • Group risk
Importance for stakeholders

conditions & benefits efficiency

Employee
and Safety • Product
Diversity &
development equal opportunity
compliance
(Client) Water • Production
stewardship • Logistics &
Hazardous Socioeconomic complianceSelling practices,
Participation in public distribution
materials mgmtdecision-building & risk & impact assessm. product labeling Transparency on end-user
Data privacy
influence and factors
• Purchasing
(Client) Waste Forced and security • HR
Sustainable on product decision
stewardship

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material choice labor Consumer • EHS
Access to essential health & comfort
Community involvement
Disaster prevention/ services (e.g. water,Product lifetime • Employees
protection/relief
& development sanitation, food) GHG emissions • Suppliers
Water use
Responsible
in operations Ensured supplier sust. • Customers
agriculture Own energy
Product
Freedom of
efficiency
• NGOs &
expression Product lifetime Own GHG
affordability regulators
pollutant emissions emissions
Independency from
• Investors
Own pollutant
fossil energy Internal conflict • Finance
Protection & restoration emissions
culture
Land rights of natural habitats
Own waste
Freedom of Dispute resolution
Low

mgmt
association mechanisms

Low Relevance for long-term business success High

Source: BCG analysis 22
Text
 Typical Example Step 4: Develop matrix

External stakeholders: Higher ranking of environmental issues visible

Environmental Social Governance
Included
(Client) Water
stakeholders:
stewardship
Product energy Product • Employees
High

Environmental compliance efficiency quality & safety • Customers

Responsible & risk & impact assessm.
agriculture Selling practices,
• NGOs &
product labeling Socioeconomic compliance regulators
Importance for stakeholders

Disaster prevention/
Hazardous & risk & impact assessm. • Investors
materials mgmt Occup. Health • Suppliers
protection/relief
Water use and Safety
Own pollutant
Community involvement in operations Employment
Product lifetime emissions
Land rights & development Employee conditions & benefitsProduct lifetime
pollutant emissions GHG emissions
development Transparency on end-user
Diversity & influence and factors
Product Forced equal opportunity on product decision
Sustainable (Client) Waste
affordability
material choice stewardship labor

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Data privacy
Protection & restoration Own GHG Ensured supplier sust. and security
of natural habitats Own energy emissions Consumer
Freedom of efficiency Participation in public Access to essential
health & comfort Note: Relevance
decision-building determined by
Freedom of expression services (e.g. water,
association sanitation, food) internal stake-
Dispute resolution Own waste
mechanisms
holders only!
mgmt
Independency from
fossil energy
Notedly higher
than combined
matrix
Internal conflict Notedly lower
Low

culture than combined

matrix
Low Relevance for long-term business success High
Source: BCG analysis 23
 Typical Example Step 4: Develop matrix

Internal stakeholders: Higher importance assigned to employment related

issues
Environmental Social Governance
Occup. Health
Included
Product
Employment and Safety stakeholders:
quality & safety
conditions & benefits • Business
High

Employee Diversity &

equal opportunity Transparency on end-user
Development
development
influence and factors • Sales
on product decision • Group risk
Importance for stakeholders

Internal conflict
culture Consumer • Product
Access to essential health & comfort Product energy compliance
services (e.g. water,
Participation in public Data privacy efficiency • Production
sanitation, food) and security
decision-building • Logistics &
Environmental compliance
& risk & impact assessm. distribution
Freedom of
expression Sustainable Hazardous Forced • Purchasing
Selling practices, Product lifetime
material choice materials mgmtlabor • HR
product labeling GHG emissions

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Independency from
(Client) Waste • EHS
stewardship Ensured supplier sust.
fossil energy (Client) Water Outstanding
Community involvement Disaster prevention/ Water use stewardship perspectives:
protection/relief in operations Socioeconomic compliance
Product
& development
Own energy • Finance
& risk & impact assessm.
affordability efficiency
Own GHG
Dispute resolution emissions
Own waste Responsible
mechanisms agriculture Own pollutant
mgmt
Product lifetime emissions Notedly higher
pollutant emissions than combined
Freedom of Protection & restoration matrix
association of natural habitats
Notedly lower
Low

Land rights than combined

matrix
Low Relevance for long-term business success High
Source: BCG analysis 24
 Step 5: Refine &
prioritize

Step 5: 50+ sustainability trends researched across materiality topics

leveraging multiple sources Typical Example

Topics long list as starting Sources for trends assessment

point

Company

Company's' World Economic

ESG reporting standards & BCG Megatrends existing research/ Forum Global Major thought

Copyright © 2023 by Boston Consulting Group. All rights reserved.

BCG Materiality Mapping Analytics analyses expertise Risks leaders
• Materiality assessment long list as • BCG expertise • The company's • WEF angle • Materiality topics
starting point ensuring comprehensive ensuring insights broadening providing not covered by
view on trends comprehensive in-depth view on connection of risks trends of previous
• Allowing alignment of trends with the and global view on trends in core and trends sources
company's material topics sustainability markets • Enhancing view on complimented by
trends trend relevance other thought
leaders

25
 We look at future trends and future outlook and importance of the certain elements and then drag their Step 5: Refine &
Typical Example
importance in the matrix higher or lower. This helps us become FUTURE PROOOFFFFFF prioritize

For discussion: Which materiality topics do we expect to move driven by

specific trends?
Environmental Social Governance
Included
stakeholders:
• Business
High

Development
• Sales
• Group risk
Importance for stakeholders

Occup. Health • Product

Product energy compliance
and Safety
efficiency
• Production
Diversity & • Logistics &
equal opportunity
(Client) Water
distribution
stewardship • Purchasing
Environmental compliance • HR

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Disaster prevention/ & risk & impact assessm. • EHS
protection/relief • Employees
Access to essential • Suppliers
services (e.g. water,
• Customers
sanitation, food)
• NGOs &
Protection & restoration regulators
of natural habitats
Own GHG
• Investors
Independency from emissions • Finance
fossil energy
Low

Low Relevance for long-term business success High

Source: BCG analysis 26
 Step 5: Refine & prioritize

Step 5: Most material topics supported by underlying trends

Typical Example
Material topic Trend Relevance Trajectory Rationale
• Very high relevance as digital water solutions provide significant opportunities to reduce water
Digital water technologies1
consumption; calls for R&D efforts by the company

Growing focus on water re-use & • Highly relevant with significant sustainability impact potential in connection with core business with
(Client) Water decentralized water treatment1 offering products for small scale, decentralized water treatment facilities
stewardship • Very highly relevant as effective reduction of non-revenue water shares involves, e.g., smart
Increasing regulation of non-revenue water
metering applications that the company can provide

Increasing regulation of use of • Very highly relevant as the company's groundwater pump business will be negatively affected by
groundwater pumps imminent regulation of, e.g., private groundwater use

Product energy Importance of energy efficiency

• High relevance as water pumps energy consumption major challenge for reduction of environmental
efficiency footprint of products

Diversity & Rising importance of diversity & inclusion

• Highly relevant as the company w/ chance to be part of Nordic shining beacon if additional efforts
equal opportunity are implemented; but currently company not a North Star

Occup. health Growing importance of health, safety, • Highly relevant due to the company's responsibility to provide safe working environments in

Copyright © 2023 by Boston Consulting Group. All rights reserved.

& safety security and environment production facilities & their responsibility to provide safe water solutions

Environmental Increasing regulatory requirements • Highly relevant as regulatory developments mainly in the company's major markets; compliance is
compliance towards CSR new normal with increasing financial risks in case of failure to comply

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

1. Extraordinary relevance to comapny going forward. 27

 Step 5: Refine & prioritize

Step 5: Several trends are expected to increase materiality of topics within

fossils, GHG emissions, natural habitats, access to water & disaster prevention

Typical Example
Material topic Trend Relevance Trajectory Rationale
Demand in heating & cooling decarbonization • Very high relevance as water-based heating & cooling solutions are major lever for sector coupling &
Independ. technologies reduction of GHG emissions
from fossil
energy • High relevance as switching to renewable energy sources major lever & challenge to reduce
Focus on renewable/alternative energy
environmental footprint for industrial goods sector
Own Regulation of GHG emissions • Highly relevant as, e.g., tax regulation of GHG emissions may cause higher cost base for the company
GHG emissions (e.g. CO2 certificates) but also stimulate industry energy efficiency
Protection of Ongoing major biodiversity loss and risk of • Highly relevant as a major challenge & risk for world community calling for collective efforts; may

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nat. habitats ecosystem collapse encompass business opportunities, e.g., UV solutions for sewage overflows

Access to Continuing large-scale involuntary migration • High relevance as continuing geopolitical instability causes challenges for access to clean water;
water of populations turning public eye to companies with ability to mitigate consequences

Disaster Growing number of natural disasters & • Very highly relevant as water-related natural disasters increase demand in disaster-relieving products;
relief changing precipitation patterns changing precipitation patterns require infrastructure investments

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

28
 Step 5: Refine & prioritize

Sustainability trends classified by relevance and trajectory (1/4)

Trajectory also helps us understand what topics can be
allocated addiitonal points tio be futur prooof
Cluster Trend Relevance Trajectory Rationale
Growing expectations on net-zero / • Relevant as trend provides challenge to increase efficiency for energy intensive pump business;
net-negative emissions yet net-zero has already become the new normal

Demand in heating & cooling decarbonization • Very high relevance as water-based heating & cooling solutions are major lever for sector coupling &
technologies reduction of GHG emissions

• High relevance as consumer awareness provides opportunities with pumps being lever for
Air emissions Growing global warming awareness
decarbonization; but also challenges due to increasing focus on energy efficiency

Regulation of GHG emissions • Highly relevant as, e.g., tax regulation of GHG emissions may cause higher cost base for the company
(e.g. CO2 certificates) but also stimulate industry energy efficiency

Regulation of pollutant emissions • Low relevance as the company neither has an overly big pollutants footprint with its products nor
(e.g. diesel powered cars) in its operations

Growth of electric vehicles and charging • Relevant to the company as cooling technologies of charging infrastructure can provide business
infrastructure industry opportunity to the company

• High relevance as switching to renewable energy sources major lever & challenge to reduce

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Focus on renewable/alternative energy
environmental footprint for industrial goods sector

• Highly relevant as water pump energy consumption is major challenge for reduction of environmental
Importance of energy efficiency
footprint of the company's products

Emerg. distributed energy resources, • Relevant as proliferation of distributed energy resources and microgrids as a means of exploring
Energy
microgrids & energy storage techn. water sources provides an opportunity for the company's growth

• Relevant as regulation of GHG emitting energy sources will cause greater urgency to switch to
Regulation of energy sources (e.g. coal)
renewables and increase energy efficiency in operations

Growing energy demand in developing • Low relevance as impact on the company is only indirect; rather the underlying economic growth is a
countries catalyst for, e.g., water trends & demand in products

• Relevant to the company as difficulties to meet increasing demand in electricity may lead to higher
Increasing electrification & sector coupling
energy costs

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

29
 Step 5: Refine & prioritize

Sustainability trends classified by relevance and trajectory (2/4)

Cluster Trend Relevance Trajectory Rationale

Rise in water scarcity / dropping ground • Very highly relevant with direct implications to core business; increasing demand for high-
water levels performance pumps

• Highly relevant with potential implications to core business; neutral trajectory as the company not
Growing need for water desalination
currently focusing on market

Growing focus on water re-use & • Highly relevant with significant sustainability impact potential in connection with core business with
decentralized water treatment offering products for small scale, decentralized water treatment facilities

• Very highly relevant with direct implications to business in European core market; increasing
Increasing wastewater treatment standards
growth potential

• Very high relevance as digital water solutions provide significant opportunities to reduce water
Digital water technologies
consumption; calls for R&D efforts by the company

Resource Investments into transport & storage

• Very high relevance as necessary updates to water infrastructures will induce demand in products
management infrastructure

• Highly relevant as water use regulation may decrease water demand in regulated areas within the

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Increasing regulation of water usage
company's core markets requiring larger geographical footprint

• Very highly relevant as effective reduction of non-revenue water shares involves, e.g., smart
Increasing regulation of non-revenue water
metering applications that the company can provide

Increasing regulation of use of • Very highly relevant as the groundwater pump business will be negatively affected by imminent
groundwater pumps regulation of, e.g., private groundwater use

• Low relevance as the company's with limited opportunities and impact with green products in
Rise of green products
common sense (e.g. food, daily-use products); energy consumption primary lever

Importance of circular economy and waste • Relevance as the company needs to ensure circularity of products in emerging markets; while high
management metal share of products facilitates recyclability

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

30
 Backup
Step 5: Refine & prioritize

Sustainability trends classified by relevance and trajectory (3/4)

Cluster Trend Relevance Trajectory Rationale

Ongoing major biodiversity loss and • Highly relevant as a major challenge & risk for world community calling for collective efforts; may
Biodiversity risk of ecosystem collapse encompass business opportunities, e.g., UV solutions for sewage overflows

Natural Growing number of natural disasters • Very highly relevant as water-related natural disasters increase demand in disaster-relieving products;
disasters & changing precipitation patterns changing precipitation patterns require infrastructure investments

Growing expectations towards HR • Low relevance for IG sector in relation to other sectors; yet use of suppliers from HR critical markets
supply chain management such as China provides risks and needs for compliance measures

Increasing regulatory requirements • Highly relevant as regulatory developments mainly in the company's major markets; compliance is
towards CSR new normal with increasing financial risks in case of failure to comply
Governance
Increasing consumer expectations regarding • Relevant as sustainability of particular relevance in Nordics; yet consumer expectations focusing on
positive societal impact companies with big production footprint in developing countries

• Relevant to the company as sustainable financing can be major driver for development
Importance of green/sustainable finance
and spread of decentralized water treatment facilities

Rising focus on corporate community • Relevance as the company with ability to continue to be positive example of deeply

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Community involvement rooted community involvement; providing opportunity to positive PA attention

Growing importance of health, safety, • Highly relevant due to the company's responsibility to provide safe working environments
security and environment in production facilities & responsibility to provide safe water solutions

Increasing expectations towards new • Relevant C-19 accelerated demand and necessity of implementation of new working models;
Labor ways of working providing challenges relating to trade-off of business & employee interests

Improving labor standards & • Relevant regarding trending regulation in core markets such as limitations to non-competes, paid
worker's rights leave & fair compensation

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

31
 Backup
Step 5: Refine & prioritize

Sustainability trends classified by relevance and trajectory (4/4)

Cluster Megatrend Relevance Trajectory Rationale

Increasing regulation on data privacy & • Relevant to the company as non-compliance can lead to considerable penalties and negative
ownership public attention

Increasing regulation against modern slavery • Low relevance to companies with smaller production footprint in developing countries; yet
and other HR violations understanding of broad implication of increasing HR standards important

• Highly relevant as the company w/ chance to be part of Nordic shining beacon if additional efforts
Rising importance of diversity & inclusion
are implemented; but currently not a North Star
Human Rights
• Relevant as growing global footprint of the company increases necessity to ensure fair pay across
Rise in global divide
markets; yet core markets remain in developed world

• High relevance as continuing geopolitical instability causes challenges for access to clean water;
Continuing large-scale involuntary migration
turning public eye to companies with ability to mitigate consequences

Newly rapid and massive spread of infectious • Highly relevant as C-19 and risk of spread of other diseases enhances demand for safe water
diseases solutions; risks relating to with upkeeping business & ensuring employee safety

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Relevance to business model Very low Very high Trajectory of business impact Positive Negative No clear impact

32
Recap | We now walked through all 6 steps of a materiality assessment

1 2 3 4 5 6

Shorten the list to 30- Gather input from Refine and prioritize
Long list of topics Finalize prioritized list
40 topics and create internal and external Develop matrix with senior leaders
to consider of material topics
definitions stakeholders and SteerCo

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Leveraging industry Take out duplicates, Interviews and/or Weighing input Based on additional Based on input from
standards (ISO, SASB, merge topics, offline surveys from different qualitative insights SteerCo, senior
GRI) and peer take out irrelevant groups as relevant from trend analysis, GF leaders and
matrices topics, etc. interviews and from project team
comparing to peers

33
Energy Utilities

Example Energy Utilities: Focus on climate and health & safety

If something is super imporant, for stakeholers and not important for the business atall, a discussion with the stakeholders should be followed, but it is rare, at the same time being
not on the top list doesn’t mean that it can be neglected, it may rather mean that we can put a little less focus on it, but we do place focus on it

Selected peers1
considered in analysis:
Climate change and low-carbon
THIS IS THE INDUSTRY AVERAGE MATRIX of all MAJOR PLAYERS most important topics as expected
Low Importance for stakeholders High

Addressing climate change

Low-carbon product portfolio

Prevention of major accidents

Reducing environmental footprint Client experience and satisfaction

Responsible products and services Product quality and safety
Innovation and research Health and safety
Cybersecurity
Waste management and circular economy Access and affordability
Social impact already
Digital transformation
high on agenda Community engagement and impact

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Transparency, accountability and reporting Data governance and privacy Company financial performance
Protecting biodiversity Responsible investing and lending Corporate ethics
Diversity and inclusion
Water management
Corporate governance
All topics around digitalization
Regulatory compliance and reform Employee recruiting, development and retention and data still key
Pay/compensation yet Human rights
with low significance2
Supply chain sustainability and responsible procurement
Systematic risk management
Fair pay and executive compensation Supply chain not yet in focus, but is
Food security
currently becoming more important

Low Relevance for long-term business success High

Governance Social Environmental

1. Peers selected based on players who publish complete materiality matrices per GRI guidelines 2. But e.g. E.ON with recent change to link executive compensation to ESG targets
Source: Company annual sustainability reports & websites; BCG analysis 34
Energy Utilities

Example: Most material ESG topics for a utility

Key questions Ingoing hypotheses for material topics
Environmental
• Decarbonize existing portfolio
• Accelerate Coal/lignite phase out in Europe
• Reduce trading activities in physical fossil fuels
• Engage in recultivation to protect biodiversity
• Support decarbonization of hard-to-abate sectors (via e.g. H2, e-fuels)
Social
Materiality: What are the key ESG topics
• Take responsibility for whole supply chain1
for a utility company?
• Strengthen health & safety measures
• Ensure high employee attractiveness

Copyright © 2023 by Boston Consulting Group. All rights reserved.

• Enhance diversity in top management and overall workforce
Governance
• Increase cybersecurity measures
• Ensure compliance when entering new markets/partnerships
• Update corporate branding

Ambition level: What is the ambition level

• To be detailed in project, once material topics are aligned, and to be
that company wants to reach for each
discussed along business case scenarios (ESG and financial performance)
material topic (Comply, Compete, Lead)?

1. incl. compliance with "Lieferkettengesetz", human rights assessments, responsible procurement, etc.
Source: BCG 35
Industrial Goods

Example Industrial Goods Company: Scope III emissions, circularity, SC

sustainability and employee development are top 3 material topics
FOR E, S & G RESPECTIVELY

GHG emissions in product lifecycle (scope III) Key observations

High

E1
Employee dev., cond. & retention
Innovation and research S1 • GHG emissions, circularity, SC
SC sustainability & responsible procurement
Importance for stakeholders

Selling practices & labelling

S3 G2 G1 E2 Circular product design sustainability and employee
Transparency, accountability, & report. E3 development deemed significant
Corporate gov. & control Resource management
Diversity and inclusion important for both internal &
Data gov. & privacy S2 external stakeholders
Product quality and safety GHG emissions in Danfoss’ ops (Scope I)

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Waste mgmt. & recycling S4 • Innovation & research and
Human rights Health and safety selling practices particularly
E4
important for customers
Systematic risk management Pollutant emissions Community engagement & impact
Corporate philanthropy • Biodiversity and water
Water management Regulatory compliance
management deemed less
GHG emissions from procured energy (Scope II) important by both internal and
Protecting biodiversity external stakeholders
Low

Low Relevance for long-term business success High

Environmental Social Governance

Note: Stakeholder importance only result of customer input thus far

Source: Company annual sustainability reports & websites; BCG analysis 36
Industrial Goods

Comparison across stakeholder groups suggest emissions,

safety and employee development of key importance
1 2
Material topics Peers Company Customers Financials Community Key take-aways
GHG emissions (Scope I)
Each scope of GHG emissions
GHG emissions (Scope II)
deemed important across peer
GHG emissions (Scope III)
group – Scope II significantly
E Circular product design
more important for peers
Resource management
Waste management & recycling Customers with high focus on
Pollutant emissions product lifecycle &
Diversity and inclusion circularity – governance
Health and safety deemed significantly more
Employee dev. and retention
Not yet important than for Danfoss
interviewed
S Community eng. and impact Most important social topics

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Product quality & safety for peers are Health & safety
Innovation & research and innovation – Diversity &
Human rights inclusion ranked low
SC sustainability & resp. sourcing compared to Danfoss
Regulatory compliance
Banks rank actions against
G Transparency & accountability
climate change high but GHG
Corporate governance & control
emissions are of less
Data governance & privacy
importance
Materiality matrix: X-axis Combined y-axis
# Deep-dive in appendix
Note: Peers, investors and company aggregated across the two dimensions, Criticality for business and Stakeholder importance. Note: only Topic scored in top right corner
material topics deemed material topis for one of either group is included, Peer group: ABB, Alfa Laval, Eaton, Parker, Rockwell, Siemens, Topic scored in mid-green area
Emerson and Bosch, banks included: Barclays, ING, UBS, BoA, DBS.
Source: Peers: Company Annual Sustainability reports & company websites, Financial: Bank materiality assessments, Interviews 37
Automotive

Pressure test, and map material topics identified considering Automotive

suppliers customers to anticipate evolution in material topics
EVEN FOR EXTERNAL STAKEHOLDERS, THE SUPPLIERS AND CUSTOMERS MAY HAVE DIFFERENT
PRIORITIES AND THEREFORE YOU MUST ALLOCATE WEIGTHS CAREFULLY

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Customers more focused on
environmental and social topics than
supplier indicating required shift in
supplier's materiality matrix

Comparison of supplier's materiality matrix with that of your customers will help to define the
dynamics of the matrix, identifying trends and anticipating future pressures on materiality
topics for the supplier
38
 Automotive Because of the dynamic nature of businesses it is essential for us to keep on
rechecking the matrix and updating it depending upon the developments over time

Consolidated materiality matrix for automotive suppliers

Organizations
considered
in analysis:1
High

Corporate ethics
Company financial performance Client experience and satisfaction
Product quality and safety
Importance for stakeholders

Transparency, accountability, and reporting

Responsible products and services
Innovation and research
Employee recruiting, development and retention

Health and safety

Human rights
Regulatory compliance and reform
Reducing environmental footprint
Data governance and privacy

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Diversity and inclusion
Supply chain sustainability and responsible procurement
Waste management and circular economy
Addressing climate change
Community engagement and impact

Protecting biodiversity
Environmental Social Governance
Water management
Low

Low Relevance for long-term business success High

Source: Company annual sustainability reports & websites; BCG analysis. Only includes ESG topics mentioned by at least 2 of the 4 analyzed companies. 39
1 Peers selected based on international and local utility players who publish complete materiality matrices per GRI guidelines.
 If a company is not able to reach its commitment on a certain sustainablity target, it would be amazing if the
Automotive company can report the reason for the same and then find an alternative means to cover the gap and indicate the
same in the rport. Very much in conext to Emissions reporting

Consolidated materiality matrix for automotive peers

Organizations
considered
in analysis:1
High

Vehicle CO2 emissions and fuel efficiency

Low-carbon product portfolio
Human rights Corporate governance
Client experience and satisfaction
Importance for stakeholders

Reducing environmental footprint

Responsible marketing
Corporate ethics
Product quality and safety
Addressing climate change
Supply chain sustainability and responsible procurement Company financial performance
Waste management and circular economy Innovation and research
Health and safety Employee recruiting, development and retention

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Cybersecurity
Diversity and inclusion
Water management

Systematic risk management

Community engagement and impact
Protecting biodiversity

Corporate philanthropy
Environmental Social Governance
Low

Low Relevance for long-term business success High

Source: Company annual sustainability reports & websites; BCG analysis. Only includes ESG topics mentioned by at least 2 of the 6 analyzed companies. 40
1 Peers selected based on international and local utility players who publish complete materiality matrices per GRI guidelines.
 Shipping
CONSERVATIVE INDUSTRY ON THE MOVE.- SHIPPING INDUSTRY IN CONEXT TO SUSTAINABILITY

The matrix for the shipping industry shows the importance of Reducing
Emissions and Health & Safety
Governance Social Environmental
High

Health and safety

Importance for stakeholders

Prevention of major accidents

Reducing emissions

Company financial performance

Client experience and satisfaction
Protecting biodiversity
Corporate Ethics
Climate strategy Systematic risk management
Diversity and inclusion Corporate governance Regulatory compliance and reform
Cybersecurity Employee recr., dev. and retention
Transparency, accountability, and reporting Innovation and research
Human rights Responsible products and services
Supply Chain Management

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Community engagement and impact Waste management and circularity
Water management Data governance and privacy
Low

Low Relevance for long-term business success High

Note: Includes ESG topics mentioned by at least 10 times by the 47 analyzed companies
Source: Company annual sustainability reports & websites; BCG analysis. 41
Shipping

The short list of material topics for the shipping industry has been gathered as
a basis for company specific materiality assessment

Environmental Social Governance

Reducing Emissions Health & Safety Client Experience & Satisfaction

Protecting Biodiversity Prevention of Major Accidents Corporate Ethics

Climate Strategy Employee Recr., Dev. & Retention Company Financial Performance

Waste Management & Circularity Innovation & Research Systematic Risk Management

Responsible Products & Services Diversity & Inclusion Regulatory Compliance & Reform

Water Management Human Rights Corporate Governance

Community Engagement & Impact Cybersecurity

Consumer Health Data Governance & Privacy

Product Quality & Safety Supply Chain Management

Stakeholder Engagement Transparency, Account. & Reporting

Topics mentioned less than 10 times across industry, but very important for stakeholders who have mentioned

Notes: Topics are ranked after importance for industry as a whole; Source: BCG analysis; Project team analysis 42
 Step 6: Finalize
the list

Shipping

Rank Material topic

1 Health & Safety

2 Reducing Emissions
3 Client Experience & Satisfaction
4 Prevention of Major Accidents
11 most material
topics for the shipping 5 Corporate Ethics

industry as a whole 6 Company Financial Performance

Copyright © 2023 by Boston Consulting Group. All rights reserved.

7 Systematic Risk Management
8 Protecting Biodiversity
9 Regulatory Compliance & Reform
10 Climate Strategy
11 Employee Recruiting, Dev. & Retention

Topic scored in top right corner

Source: BCG analysis; project team analysis

Topic scored in mid-green area
Topic scored in low-green area 43
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