A Simple Guide to ESG Materiality Assessment for Indian MSMEs
- Sankalpa Integrated
- 1 day ago
- 3 min read
Do MSME's only think about profit only? Things are changing fast and MSME's are answerable to the way they handle impact on the environment, people, and governance practices. This is where ESG – Environmental, Social, and Governance – comes in.
But if you’re a small business owner or an MSME in India, you might be thinking:
“Where do I even begin with ESG?”
The answer is: Start with a Materiality Assessment. Let me explain this simple concept.
What is a Materiality Assessment?
A Materiality Assessment is a simple process that helps you:
Identify which ESG issues are most relevant to your business, and
Understand what your stakeholders care about.
Instead of trying to do everything, it helps you focus your time, money, and energy on what truly matters — for your success and for society.
What Are ESG Issues?
Before you start your assessment, know the range of ESG topics you can consider. Environmental (E)
Energy consumption
Greenhouse gas (GHG) emissions
Waste management
Water usage and conservation
Pollution (air, water, noise)
Chemical and hazardous waste
Climate change risks
Renewable energy use (solar, wind)
Plastic use and packaging
Biodiversity impact
Environmental compliance
Social (S)
Employees
Health and safety
Fair wages and working hours
Training and skill development
Employee diversity and inclusion
Prevention of child or forced labor
Customers & Community
Product safety and quality
Customer satisfaction and grievance redressal
Data privacy and cybersecurity
Community support and CSR
Local employment generation
Human rights in supply chains
Governance (G)
Business ethics and anti-corruption
Legal and regulatory compliance
Financial transparency
Risk management
Internal audit systems
Whistleblower policy
Conflict of interest management
Board oversight
Tax compliance
Cybersecurity and IT governance
How to Do a Materiality Assessment in 6 Simple Steps
1. Make a List of ESG Topics
Start by choosing ESG issues that are relevant to your business from the list above. Pick the ones that affect your operations or are important in your industry.
2. Talk to Your Stakeholders
Your stakeholders are the people who are affected by your business — employees, customers, suppliers, lenders, and even the local community.
Ask them:
What issues do they care about?
What do they expect from your business?
You can use short surveys, WhatsApp messages, phone calls, or small meetings.
3. Score Each Topic
Use a simple scale (e.g., 1 to 5) to rate:
How much it impacts your business
How important it is to your stakeholders
Issue | Impact on Business (1–5) | Stakeholder Concern (1–5) |
Energy use | 5 | 4 |
Worker safety | 5 | 5 |
Plastic packaging | 2 | 3 |
4. Identify Top ESG Priorities
Once scored, identify the top 5–7 issues with the highest combined scores. These are your material issues — the ones you should focus on.
You can also visualize them on a Materiality Matrix:
X-axis = Importance to stakeholders
Y-axis = Impact on business
5. Make an Action Plan
For each material issue, decide:
What you want to achieve (your goal)
Who will be responsible
How you’ll track progress
Example:
Issue: Energy consumption
Goal: Reduce electricity use by 10% in 6 months
Action: Install LED lighting and train staff on energy-saving practices
Responsibility: Admin or operations team
6. Share and Use It
Once done, share your material issues and action plans with:
Your team
Customers or clients
Banks or investors
It builds trust, improves your business reputation, and may help in getting loans or equity for your business.
Conclusion
You don’t need to be a big company to care about ESG. Even if you're a small factory, shop, or service provider — taking simple, thoughtful steps toward sustainability and responsible business builds trust, opens doors to better business avenues, and makes your business future-ready.
Be ready before it is late.
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