As sustainability reshapes the business landscape, materiality assessments have become a vital first step for companies embarking on their sustainability journey. This is especially true for the U.S. dairy industry, where environmental, social and economic considerations are deeply intertwined with operational realities and long-term resilience. 

For companies newer to sustainability, materiality assessments represent an essential first step. They help establish clarity around key priorities, create alignment across internal and external stakeholders, and provide a roadmap for actionable sustainability initiatives. Sustainability reports, goals, strategy and activities should all be based on the results of the materiality assessment and the company’s most material topics. 

Based on our experience conducting materiality assessments for many U.S. dairy companies (and others in the food and ag space more broadly), we’ve compiled the following recommendations and guidance for food and agriculture companies looking to complete a materiality assessment.  

What Are Materiality Assessments? 

Materiality assessments identify and prioritize the important environmental, social, economic and governance topics most relevant to a company’s stakeholders and operations. In short, a materiality assessment provides insight into where a company has the most impact and provides a structured approach to evaluating impacts and aligning efforts with organizational goals, customer expectations, stakeholder perspectives and regulatory requirements. This process isn’t just an exercise in compliance — it’s a strategic tool that builds a foundation for long-term resilience, innovation and a successful sustainability program.  

Materiality Assessments in the U.S. Dairy Industry 

The U.S. dairy sector, which is deeply connected to both local ecosystems and communities and to global markets, illustrates the transformative potential of materiality assessments. These assessments have proven indispensable for addressing the complex challenges facing the industry and individual companies, from greenhouse gas emissions to water use, biodiversity, farmer succession planning and social equity. 

Unlike other sectors in the food and agriculture industries, the U.S. dairy sector has conducted a materiality assessment at the national level for the entire industry (the 2021 Materiality Assessment for U.S. Dairy). This serves as a foundational guide for individual dairy companies conducting their own assessments. Companies that adopt the U.S. Dairy Stewardship Commitment are required to complete materiality assessments, underscoring the sector’s maturity in sustainability compared to other food and agriculture industries. These efforts offer valuable lessons for other sectors and companies seeking to prioritize sustainability effectively and conduct their own assessments. 

Key Benefits of Materiality Assessments for Food and Agricultural Companies: 

1. Clarity, Focus and Prioritization of Critical Issues: Food and agriculture companies operate in complex ecosystems with numerous competing environmental, social and governance (ESG) issues. Materiality assessments help identify and prioritize the most relevant and impactful topics, such as water use, soil health, greenhouse gas emissions, biodiversity and worker welfare. By focusing resources on high-priority areas, companies can maximize impact and efficiency. For example, assessments often reveal that water stewardship and emissions reduction are top stakeholder concerns, enabling targeted actions in these areas. 

2. Alignment with Stakeholder Expectations: Food and ag companies must satisfy a diverse group of stakeholders, including farmers, processors, customers, investors and regulators. By engaging stakeholders through the materiality assessment, companies can foster alignment and shared commitment to sustainability priorities. Engaging stakeholders through the assessment process builds trust and transparency with customers, investors and supply chain partners by demonstrating accountability and shared values. 

3. Goals and Target Setting: By determining the most important sustainability-related topics, a company can then start to develop KPIs and data collection processes for key topics to report back to internal and external stakeholders and track progress over time.  

4. Strategic Roadmap Development: Assessments offer a blueprint for sustainability initiatives by helping companies set priorities based on a rigorous assessment and stakeholder input. By mapping material topics to business strategies, companies can embed sustainability into operations and planning, ensuring alignment with organizational goals.  

5. Improved Supply Chain Transparency: Materiality assessments help food and ag companies identify opportunities to enhance sustainability — such as reducing emissions or waste or addressing labor issues — while fostering collaboration with suppliers and vendors. Many clients uncover existing sustainability efforts, duplication of efforts and gaps during assessments, leading to greater efficiency and streamlined practices. 

6. Communication and Credibility: The results of materiality assessments can enhance transparency and trust. They provide a shared language for communicating progress with employees, customers and other stakeholders. 

7. Defining Material Topics: Clients often go through an exercise to define material topics based on their unique context, activities and stakeholder input. This process fosters critical discussions, aligning topics with company vision, goals and values. For example, a dairy cooperative client identified farmer succession planning and livelihoods as key topics, refining what exactly this meant for them as a business based on farmer input. 

8. Continuous Improvement: Revisiting and refreshing materiality assessments (this should be done about every three years) helps companies adapt to new challenges and opportunities, keeping their sustainability strategies agile and forward-looking. 

9. Communicating with Customers: Many food and ag companies face growing customer requests for sustainability information, which can strain small teams. Materiality assessments streamline this process by clearly defining and prioritizing key topics, enabling data-driven communication of sustainability priorities to customers. 

10. Addressing Regulations and Market Demands: Materiality assessments prepare companies for expanding regulations (e.g., the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the U.S. Securities and Exchange Commission climate disclosures) and align with growing consumer demand for sustainable products. 

Materiality assessments are the cornerstone of a strong sustainability program and set the foundation for a company’s sustainability program and strategy. For the U.S. dairy industry and beyond, they offer clarity, alignment and actionable insights to tackle current challenges and prepare for the future, driving impact, resilience and innovation. 

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