Why a Materiality Assessment Matters in Construction

In the dynamic landscape of the construction industry, a materiality assessment plays a pivotal role in shaping sustainability within a construction firm. Let’s discuss why materiality assessments are so beneficial in the engineering and construction sector, and why it’s time to consider one if you haven’t already. 

For more on materiality assessments for the construction industry, visit our Guide to ESG Disclosure in Construction.

Understanding Materiality in Construction

Materiality in construction involves identifying and prioritizing sustainability issues that significantly impact project and company success. It goes beyond materials used, encompassing environmental, social, and governance considerations crucial to project planning and execution.  

Environmental and social materiality evaluates how the company impacts consumers, employees, society, and investors. Financial materiality evaluates how ESG issues, like climate, impact the company and its ability to generate cash flow. A rising practice is double materiality, where the company looks inward at its decisions’ impact on business value and outward at how the company affects the outside world.  

Various regulatory bodies and sustainability frameworks can impact the kind of materiality assessment a company undertakes. Unless legal mandates in the company’s operating jurisdiction dictate otherwise, the decision on the approach lies with the company. The selected method should assist the company in identifying crucial ESG factors, executing effective strategies, and drawing in clients and investments. 

Prioritize ESG Factors 

Materiality assessments serve as a lens to identify and understand stakeholder ESG concerns. By acknowledging and addressing these concerns, companies gain trust and support from key players, enhancing overall project and company success. Identifying material issues helps companies to: 

  • Engage with stakeholders early to identify their priorities. 
  • Identify sustainability compliance requirements at the company and project level. 
  • Prioritize areas of focus for those supporting sustainability efforts at the company. 
  • Demonstrate a commitment to prioritized issues. 

A materiality assessment helps leaders focus their teams on the most impactful topics, establishing construction firms as trustworthy partners through commitment to prioritized issues. 

Create and Implement an Effective ESG Strategy  

The identification of material issues supports the creation and implementation of an effective ESG strategy. Developing strategies, programs, and activities for the highest-rated issues ensures identified priorities translate into tangible actions.  

Insights gained from a materiality assessment can also guide the company’s strategic decision-making. To make progress on ESG strategy, alignment with the company’s core values is crucial. This synergy between decision-making and materiality priorities fosters long-term viability and success in the construction industry. 

Efficient resource allocation is essential to successful construction companies. Materiality assessments guide firms in directing resources toward issues that truly matter, optimizing both financial and human capital. This includes strategic allocation of people, consulting hours, and other resources like software. 

Attract Investment 

ESG-focused investors are increasingly seeking construction firms with strong sustainability performance. Materiality assessments help in developing key performance indicators (KPIs) and showcasing actual performance, making companies more attractive to investors who prioritize environmental and social responsibility. 

Sustainability is increasingly a key differentiator in bid evaluation, providing a competitive advantage to companies with strong and focused programs. Meaningful policies, programs, and data allow construction companies to tell a proposal story rooted in strategy and measured performance. 

Let’s Go!   

In conclusion, materiality assessments can have tremendous impact on a construction company. They strengthen the company’s understanding of stakeholder ESG concerns, focus teams on what’s most important, and attract new clients. Now that we’ve addressed the “why”, the next question is for you. When?  

About the Author

Jennifer Debias leads business development, sales, and marketing at ensogo, working with ESG and EHS professionals to optimize their sustainability strategies with technology. She has more than 15 years in EHS&S leadership experience in global facilities operations, construction, regulatory compliance, and software. Before joining ensogo, Jennifer served as EHS Director for AECOM, Director of Business Development at RegScan, and ESG product specialist at Intelex.