In 2020, we conducted a materiality analysis to define and prioritize key environmental, social and governance (ESG) issues. We are using the results of this analysis to inform Armstrong World Industries’ sustainability strategy and reporting.
To identify our material issues, we assessed key ESG external reporting frameworks, including the Task Force on Climate-Related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), and the Future Fit Business Benchmark. We also considered material issues identified by key ESG raters and rankers, including Institutional Shareholder Services, MSCI, and Sustainalytics, as well as an analysis of competitive sustainability reports. We then conducted interviews with approximately 20 stakeholders, including architects, designers, certifiers and distributors, and internal leaders on areas of impacts, risks and opportunities. .
Over 100 sub-issues were identified and then clustered into 27 issue groups. These issue groups were then prioritized in terms of their impact on stakeholders and the impact on our company.
The final materiality analysis was reviewed and confirmed in a workshop conducted with a cross-functional group of internal subject matter experts. We have included an overview of our material issues below and explained why they matter to us.
Note: Our Sustainability goals, KPIs, projects, plans, targets and expectations are aspirational and forward-looking. Statements of aspiration, future events or conditions are sometimes identified by the words “will,” “should,” “intend,” “expect,” “estimate,” “believe,” “could,” “project,” “target” or other similar words or expressions. By their nature, they are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. As such, no guarantees or assurances are made that they will be achieved or successfully executed. Additionally, the Sustainability data, statistics and metrics included herein, unless otherwise specifically indicated, are non-audited estimates, were not prepared in accordance with U.S. generally accepted accounting principles (GAAP), have not been externally assured, continue to evolve and may be based on assumptions believed to be reasonable at the time of preparation, but should not be considered guarantees. Except to the extent required by applicable law, we undertake no obligation to publicly update or revise any forward-looking Sustainability statement, whether as a result of new information, future events or otherwise. Our Sustainability reporting may also use certain terms, including those that the GRI Guidelines or other reporting formats refer to as “material” topics, to reflect the issues of greatest importance to us and our stakeholders. Used in this context, these terms are distinct from, and should not be confused with, the terms “material” and “materiality” as defined by or construed in accordance with securities law or as used in the context of financial statements and reporting.
The global context
2020 was a year that both illuminated and exacerbated existing rifts in society:
COVID-19 – The coronavirus was responsible for millions of deaths globally, along with countless physical and mental health issues. The pandemic also laid bare the social and economic vulnerabilities and resulted in unequal impacts to different social groups.
Climate change – The ongoing climate crisis caused choking fires in the Amazon, across the Western U.S., Australia and Siberia, as well as unprecedented numbers of other extreme weather events, which highlighted how quickly the earth’s systems are degrading, affecting the most vulnerable.
Social justice – The police killings of George Floyd, Breonna Taylor and others galvanized a global movement towards racial justice, building upon decades of civil rights and social justice protests and actions.
These events have sparked discussion of what long-term resilience means in terms of how we live, work and build our communities.
Considering the big picture on health and circularity
With 2020 bringing significant changes in how people live and work, many in the building products industry have doubled down on making their products resilient, healthy and circular while also utilizing technology and digitalization to enhance peoples’ experiences indoors.
In pandemic recovery plans around the world, the concept of “building back better” has been widespread as an economic stimulus and as a way to mitigate and adapt to the threat of climate change. This includes funding for renovation, adaptive reuse of buildings and enhancing buildings’ sustainability qualities. We are seeing a surge of interest around building renovation as leaders around the globe think about how to respond to both climate change and the impacts of the pandemic.
Meanwhile, as construction waste becomes less manageable, companies are re-envisioning circular business models along the lines of Armstrong World Industries Ceiling Recycling Program. Others are studying ways to reduce embodied carbon and even to create carbon negative products. Companies are also more deeply considering their ecological impact on landscapes — including on biodiversity and natural resources such as forests and water.
As health concerns have mounted during the pandemic, aspects of air quality are being more closely scrutinized, particularly the risks of chemicals of concern found in building materials. In addition, companies are actively envisioning buildings that support a more holistic vision of health and wellness.
Lastly, while building materials have not received much scrutiny in the past for potential human rights impacts in the supply chain, new legislation from individual states and countries will shine a spotlight on issues such as forced labor, prison labor and living wages.
The push for transparency
Investors are more actively assessing the ESG performance of companies. This increased interest means that companies will need to become more active in engagement and transparency across their material ESG issues.
In addition to traditional topics, such as corporate governance and economic performance, a top issue for investors is climate change. Investor-focused raters and reporting frameworks have pushed companies to provide information on climate-related risks and opportunities.
Product transparency databases and voluntary certification programs are particularly relevant in the building products sector, providing tools for assessing healthy and sustainable product portfolios, like SUSTAIN and a demand for products with no chemicals of concern, reduced carbon footprints, and responsible supply chains. An emergent topic is human rights, which the industry is starting to better understand.
Thriving communities and workplaces
We have been building strong relationships with our employees for over 160 years and have high rates of employee attraction and retention. Employee health and safety continues to be deeply embedded in Armstrong World Industries’ culture and processes, and our company also has solid relationships with labor unions and is committed to paying its employees at living wage or above.
Meanwhile, diversity, equity and inclusion are a moral and business imperative. At Armstrong World Industries, our employees have stated that diversity, equity and inclusion should be considered beyond manufacturing — particularly in offices and senior leadership.
With our focus shifting to healthy spaces, we will continue to consider the employee experience at all of our facilities to go beyond health and safety to the idea of proactively encouraging well-being.
Armstrong World Industries, as a community leader and through its charitable Foundation, has opportunities to go beyond traditional philanthropy to engage communities, employees and suppliers as partners in meeting bold goals to enable health and well-being.
Our materiality analysis
The materiality analysis is as follows:
Read our material issues definitions.