Discover the full framework starting from uderstanding stakeholders - Understanding Stakeholders in ESG Materiality Assessments | Complete Guide

Key takeaway

Stakeholder prioritization is where ESG methodology becomes strategic judgment.

Done well, it ensures that:

• The most affected stakeholders are not ignored
• The most influential stakeholders are properly engaged
• ESG priorities reflect real-world trade-offs, not internal bias

Once stakeholders have been identified, organizations face a more complex challenge: deciding whose voices matter most.

In theory, ESG materiality assessments aim to capture diverse perspectives. In practice, however, not all stakeholders:

• Experience ESG impacts equally
• Influence organizational decisions to the same degree
• Require the same level of engagement

Attempting to treat all stakeholders equally often leads to:

• Diluted insights
• Inefficient engagement processes
• Overrepresentation of easily accessible stakeholders

Stakeholder prioritization is therefore not about exclusion—it is about making deliberate, transparent decisions on how to allocate attention, resources, and engagement depth.

What Stakeholder Prioritization Determines

A well-executed prioritization process directly shapes:

• Which ESG topics emerge as material
• How engagement resources are allocated
• How conflicting stakeholder expectations are balanced
• The credibility of the final ESG disclosure

In essence, prioritization defines the “weight” of each stakeholder voice in shaping ESG outcomes.

Core Prioritization Criteria

While methodologies vary, leading practice consistently applies four core dimensions.

1. Level of Impact (Organization → Stakeholder)

This measures how significantly the organization’s activities affect a given stakeholder group, particularly in terms of environmental and social outcomes.

• High-impact stakeholders are often those directly exposed to operational externalities
• These groups are critical from both a risk management and ethical accountability perspective

What to assess:

• Environmental exposure (pollution, emissions, resource use)
• Social exposure (labor conditions, safety, livelihoods)
• Economic dependence

Example (Manufacturing company): Local communities near production facilities may face:

• Air and water pollution
• Noise and traffic disruptions → High impact → High priority

Example (Digital platform company): End-users may be most impacted through:

• Data privacy risks
• Algorithmic bias → In this case, users, not communities, become the highest-impact group

👉 Insight: Impact is highly sector-dependent—organizations must define it based on their operational reality.

2. Level of Influence (Stakeholder → Organization)

This assesses the stakeholder’s ability to influence the organization’s decisions, performance, or reputation.

Influence can be exerted through:

• Financial leverage (investors, lenders)
• Regulatory authority (government bodies)
• Public pressure (media, NGOs)
• Market power (key customers)
• Resource power (key suppliers)

Example (Listed company): Institutional investors may:

• Vote on shareholder resolutions
• Engage on climate strategy → High influence

Example (Consumer brand): Customers may:

• Shift purchasing behavior
• Drive brand perception via social media → Customers become high influence, even more than regulators in some contexts

👉 Insight: Influence is not always formal—reputational and market influence can be equally powerful.

3. Dependency on the Organization

This dimension captures how much a stakeholder relies on the organization for economic, social, or operational continuity.

• High-dependency stakeholders may face significant disruption if the organization changes or ceases operations
• This is particularly relevant in emerging markets or concentrated supply chains

What to assess:

• Economic dependence (income, contracts)
• Operational reliance (supply chain integration)
• Social reliance (community employment)

👉 Key Insight: Dependency introduces a responsibility dimension, even if stakeholders lack influence.

4. Expertise, Representation, or Advocacy Role

Some stakeholders play a critical role not because of direct impact or influence, but because they provide specialized knowledge, represent affected groups, or amplify ESG issues.

Examples:

• Environmental NGOs → climate, biodiversity expertise
• Labor organizations → worker rights and conditions
• Industry bodies → best practices and standard-setting

👉 Key Insight: These stakeholders often act as “force multipliers”, influencing broader expectations.

A critical point often overlooked: stakeholder prioritization is not universal. It varies significantly based on:

From Criteria to Action: The Influence–Impact Matrix

To operationalize prioritization, organizations often map stakeholders across two axes:

• Level of influence
• Level of impact

This results in four categories:

• High Influence / High Impact → Key stakeholders (priority engagement)
• High Influence / Low Impact → Strategic stakeholders (manage closely)
• Low Influence / High Impact → Vulnerable stakeholders (ensure inclusion)
• Low Influence / Low Impact → Monitor

It is worth to note: 

•  “Low influence” does not mean “low importance.”
• Vulnerable stakeholders often represent the most significant ESG risks.

DETAILED APPLIED EXAMPLE

Company: GreenTech Manufacturing Vietnam (GTMV)

(Continuing example - see Part 1 HERE)

Step 2: Prioritization Process

Step 2.1: Define Criteria

GTMV selects four criteria:

• Impact
• Influence
• Dependency
• Expertise

Each scored on a 1–5 scale.

Step 2.2: Score Stakeholders

Stakeholder Groups Identified:

• Employees
• Local communities
• Global buyers
• Suppliers
• Investors
• Regulators
• NGOs

Step 2.3: Scoring Table

Step 2.4: Interpretation

Key Stakeholders (Highest Priority)

• Employees (15)
• Global buyers (15)

Represent operational + market pressure

High Priority (Next Tier)

• Suppliers (13)
• Local communities (12)
• Investors (12)

Represent risk exposure + dependency

Strategic / Supporting Stakeholders

• Regulators (11)
• NGOs (11)

 Influence via policy and expertise

Organizations could also assign weights to each group, which help align extremely well with the double materiality framework. For example: 

• Impact → 40%
• Influence → 30%
• Dependency → 20%
• Expertise → 10%

Step 2.5: Influence–Impact Matrix Mapping

High Impact / High Influence

• Employees
• Global buyers

High Impact / Low Influence

• Local communities

High Influence / Low Impact

• Investors
• Regulators

Moderate Zone

• Suppliers
• NGOs

If you haven’t yet mapped your full stakeholder landscape, start with our guide on how to identify stakeholders for an ESG materiality assessment, which provides a structured approach to building a comprehensive stakeholder map.

After prioritizing stakeholders, the next step is to engage them effectively. Continue to our guide on selecting stakeholders and choosing engagement methods for ESG materiality assessments to design a robust engagement strategy.

 Reference List

• AccountAbility (2015). AA1000 Stakeholder Engagement Standard (AA1000SES).
• European Commission (2022). Corporate Sustainability Reporting Directive (CSRD).
• GRI (2021). GRI 3: Material Topics.
• IFRS Foundation (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
• OECD (2018). Due Diligence Guidance for Responsible Business Conduct.
• UN (2011). Guiding Principles on Business and Human Rights.
• World Bank (2017). Environmental and Social Framework.

SASB (2018). SASB Materiality Map.