Lessons learned from undertaking an ESG-specific Double Material Assessment

At Smiths Group we recently released our FY2023 Sustainability at Smiths report. This outlines our performance against our key ESG targets and commitments over the past year. Fundamental to our ESG strategic deliverables in FY2023 was carrying out a focused Double Materiality Assessment (DMA) to test our ESG approach.

It was a valuable opportunity for us to engage with stakeholders, understand expectations and identify our highest-impact sources of ESG value. It helped sharpen our focus and reinforce our top priorities, and I’m pleased to share a few lessons we learned along the way.

Outcomes depend on inputs – and success depends on planning. 
DMA is a process, not a magic wand. It’s a tool to disaggregate and synthesize stakeholder views of value across multiple dimensions. Like other stakeholder processes, it invites reflection and welcomes fresh perspectives. And the value of the exercise hinges entirely on translating what’s interesting into action. 

It may sound obvious, but better planning leads to better results. DMA is inherently bespoke and your investment of time and focused attention in the planning phase will yield multi-fold returns. Start with the end in mind.  Be specific about how you will use the results and structure an efficient approach that generates clear answers. For Smiths, it was important that our DMA specifically tested our existing ESG priorities and clearly distinguished, for example, between at least three dimensions of climate impacts: physical risks, delivering net zero and commercialising high-value green technology. In the end, a thoughtful design delivered clear results – highlighting our significant opportunity for positive impact through decarbonization solutions and the relatively lower impacts of physical climate risks.  

A DMA is an opportunity to actively listen 
The heart of the DMA is the dialogue it creates. The process offers a precious opportunity to educate, connect, engage and actively listen. It naturally requires translating ESG concepts to connect with diverse perspectives and the opportunity to see directly where and how these resonate – or require rethinking. For large, complex and global companies like Smiths, this is particularly important – helping ensure we speak with an authentic voice and demonstrate respect for the people who make it all happen. 

A DMA informs priorities 
At Smiths, prior to the DMA we developed a 10-element holistic ESG framework. Through the DMA, we validated that this framework gives a complete picture of material ESG topics for Smiths and helped place our 10 elements within a broader context including emerging themes, such as biodiversity. Most importantly though, the DMA also helped sharpen our focus – highlighting particularly the significant positive impacts of commercialising high-value green technologies and delivering on our own Net Zero emissions targets. 

Why these two? Analytically, they came through strongly as being important to all our stakeholder groups and, uniformly, among the highest impact in both dimensions of ESG double materiality. They are areas where our stakeholders agree our work significantly impacts the world as well as Smiths as a business. In short, the DMA helped solidify our view that succeeding in these two areas is essential to delivering our business objectives and meeting the expectations of those with a stake in our success. 

While decarbonisation was always a central element of our ESG framework, the DMA helped reinforce and communicate the impact and value of delivering our own Net Zero commitments and helping others do the same. The DMA helped crystallise why this is such an important and exciting opportunity for us at Smiths. To those of us closest to the business, the only surprise was perhaps how quickly our stakeholders are recognizing the value of our focus on decarbonisation – represented well by Smiths recent wins to supply critical components to enable Canada’s Net Zero Hydrogen project in Alberta, NEOM in Saudi Arabia, one of the world’s largest CCUS projects in Malaysia and the world’s first commercial-scale green steel plant utilising the Hydrogen-DRI process.

Each DMA will be different, and it’s worth putting in the time and effort to do it well. The results will speak for themselves - informing your approach, providing actionable insights and outcomes, and strengthening relationships with stakeholders. For Smiths, confidence, conviction and clarity over our strategic approach stood out as the most important takeaways and I look forward to being inspired by others’ DMA work in the future.