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: 

Key Benefit	Description	Specific Benefit to the Food and Ag Industry
Prioritization of Critical Issues	Identifies and prioritizes the most relevant and impactful environmental, social and governance (ESG) issues, maximizing impact and efficiency.	Food and agriculture companies operate in complex ecosystems where numerous ESG issues compete for attention. The assessment results highlight key areas like water stewardship, emissions reduction and biodiversity, enabling targeted action. This ensures that critical topics are addressed effectively, enhancing both environmental and operational outcomes.
Alignment with Stakeholder Expectations	Ensures alignment with diverse stakeholders, fostering trust and shared commitment to sustainability priorities.	Food and ag companies must satisfy a diverse group of stakeholders, including farmers, processors, customers, investors and regulators. The assessment process builds trust and transparency with these diverse stakeholders by demonstrating accountability and aligning priorities with stakeholder values.
Goals and Target Setting	Determines key sustainability topics to develop KPIs, track progress and report to stakeholders.	Helps food and ag companies set measurable goals and establish data collection processes for areas like emissions, soil health, or worker welfare, ensuring continuous improvement.
Strategic Roadmap Development	Offers a blueprint for integrating sustainability into business strategies and operations.	Helps map material topics, such as biodiversity or water stewardship, to business strategies, ensuring sustainability is embedded into long-term planning and operational alignment.
Improved Supply Chain Transparency	Identifies opportunities to enhance sustainability across complex global supply chains.	Food and ag companies often rely on complex, global supply chains. The assessment reveals areas for improvement, such as emissions reduction, waste minimization, or labor practices, and fosters collaboration with suppliers and farmers to drive value chain improvements.
Communication and Credibility	Enhances transparency and trust through clear communication of sustainability progress.	Provides food and ag companies with a framework to share progress with stakeholders, strengthening relationships with customers, investors, and supply chain partners through sustainability reporting efforts.
Defining Material Topics	Encourages companies to define material topics within their specific context and stakeholder input.	Promotes critical conversations, aligning material topics with business goals. One of our clients, a dairy coop, determined that farmer succession planning and farmer livelihoods were material topics and defined exactly what this meant to their business and members based on farmer input.
Continuous Improvement	Allows for regular updates to sustainability strategies to address new challenges and opportunities.	Keeps food and ag companies agile by revisiting materiality assessments every three years, ensuring strategies remain relevant and forward-looking.
Communicating with Customers	Helps communicate sustainability priorities to customers using data-driven, stakeholder-informed assessments, managing growing requests effectively.	Many food and ag companies face increased requests from customers to complete various sustainability-related questionnaires and surveys, which are burdensome for a small team to complete.
Addressing Regulations & Market Demands	Prepares companies for evolving regulations and increasing consumer demand for sustainable products.	Aligns food and ag companies with frameworks like the EU’s CSRD or U.S. SEC climate disclosures, ensuring compliance while meeting consumer expectations for sustainability.

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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