Materiality: Reassessing our ESG strategy for a post-pandemic world
Our approach to Materiality
The purpose of our materiality assessment is to ensure we remain tuned onto the key ESG issues that matter to our stakeholders, impact our business and to ensure that our Corporate Responsibility (CR) and business strategy meets current needs and expectations.
To do so, we committed to re-perform our materiality assessment every 2 years. Each assessment builds on the results and lessons learned from the previous one, effectively leading to a cycle of continuous look-backs and improvement.
Our Materiality Assessment journey started back in 2018 when we built, with the support of Business for Social Responsibility (BSR), a holistic CR Framework. It came along with a 5-year Plan including targets and commitments agreed upon with leaders from different business functions. The methodology from BSR served us to perform the update of 2020.
In 2022, we revamped our approach to the Materiality Assessment, with the support of Price Waterhouse Coopers (PwC) Luxembourg, to improve readiness of this exercise with new upcoming legislation.
2022 Materiality Assessment: Framework
While the 2020 methodological approach was replicated from the 2018 assessment, we decided in 2022 to start aligning our assessment to the specific requirements of the upcoming Corporate Sustainability Reporting Directive (CSRD). Indeed, besides being the regulation that will likely be the most impactful for Millicom, it provides the most robust and detailed approach to perform a Materiality Assessment.
However, the CSRD methodology for Materiality Assessment requires the consideration of two perspectives for materiality, introducing the concept of “Double Materiality”:
- Impact materiality: the impact of the organization on its environment
- Financial materiality: the impact of the environment on the organization
The concept of financial materiality suggested by the CSRD being new, complex and not yet finalized, we decided that for the 2022 assessment to focus only on the alignment of our impact materiality and we will cover the financial perspective in 2023.
In the frame of this assessment of 2022, we will align with the CSRD in the following:
- Categorization between Environmental, Social and Governance topics covered by the Impact Materiality
2022 Materiality Assessment: detailed methodology
The list of topics:
The starting point of the assessment was to build the preliminary list of topics that may have the highest impact. The extent of this impact was determined by estimating if it is actual or potential, negative or positive, long term or short term and severe or weak. The preliminary list of topics was based on:
- An exhaustive list of topics published in the draft from April 2022 from the CSRD that were considered as relevant to Millicom
- The Materiality Assessment from 2020
- Competitor benchmarking
This initial list was tailored by a taskforce that gathered to determine which ones are materials for Millicom and should be prioritized. This taskforce was made up of experts with different backgrounds and knowledge in ESG, Human Resources, Finance, Controlling, Assurance, Risk, Legal and Compliance. It included internal Millicom stakeholders and external stakeholders in the form of PwC. Millicom’s list of Material Topics includes:
Alignment of the topics with the CSRD:
Once the tailored list of topics was obtained, we made sure to align the nomenclature (wording and categorization) with the CSRD. As such, changes have been made to the list of material topics compared to the previous reporting period:
Identification of material topics:
As in past exercises, in order to grasp the expectations from our stakeholders around the different topics, we asked them in a survey to rank the 10 topics which are the most material for them. In our desire of continuous improvement, we reached out to our four key identified stakeholders and this year we added another category of stakeholders in order to have the most comprehensive vision.
The Chief Finance Officer, Chief External Affairs Officer and Chief Accounting Officer were all involved in the Materiality Assessment and so in overseeing the organization’s due diligence and other processes to identify its impacts on the economy, environment, and people (as per GRI 2-12 and 2-13 disclosure requirements).
It is clear that our ESG framework is providing us with a robust basis to address evolving risks in the sector. While all our current areas of focus remain of interest to our stakeholders, some topics, such as climate change and workforce conditions/rights have increased in importance. In addition, other topics remained high on the agenda of stakeholders, such as Anti-corruption and bribery and Privacy / Freedom of Expression (FoE).
With upcoming obligations related to new regulations (such as CSRD and EU Taxonomy rules), the increased focus on environmental issues of stakeholders is aligned with the preparatory work we are conducting in this regard. We have also set ambitious new targets and initiatives for reducing greenhouse gas (GHG) emissions and meeting diversity, equity and inclusion milestones during 2022. These include science-based targets to reduce scope 1 and 2 GHG emissions by 50% and achieving a 50% gender balance in managerial positions by 2030. Furthermore, our achievements in Great Place to Work® rankings, demonstrate our commitment to addressing workforce conditions and access to equal opportunities. Additionally, we continue to demonstrate transparency and our work related to Privacy and FoE via our yearly Law Enforcement Disclosure (LED) report. Finally, we also continue to partner with our local communities with social projects in digital education, including our Maestros Conectad@s program focusing on training teachers (with 102,000 reached in 2022), our Conectadas program which trains women on digital literacy and entrepreneurship topics (reaching 171,000 women in 2022), and our Conectate Segur@ program focusing on protecting children and teens online (reaching 103,000 in 2022).
We consistently strive to better understand the opportunities that exist to more clearly link our ESG goals with business objectives, and to better communicate that alignment to all of our stakeholder groups. The Materiality Assessment exercise was an extremely valuable tool to take stock of our efforts and include a wide array of stakeholders in discussions around the risks and opportunities that we face as a Nasdaq-listed firm, with corporate offices in both the EU and US, and with on the ground operations in Latin America. With this unique footprint, we are subject to extremely high standards which provides us with relative strength in comparison to our regional peers in this area. However, we never take this for granted and are always seeking to improve and expand our efforts, for which we greatly appreciate the opportunity to take on board our stakeholders’ feedback in order to better define and implement our ESG priorities.