2-29 - Approach to stakeholder engagement

Engaging with our stakeholders to understand our key impacts, risks, and opportunities determines the priorities of our sustainability strategy and matters on which we report. We consider our stakeholders and users of our Sustainability Report. Key stakeholders  include both internal and external groups who help us create value and for whom we create value. Key stakeholders for us includes our associates, customers, government officials, non-governmental organizations, trade associations, scientists, and sustainability subject matter experts. 

Our engagement efforts include ongoing informal and formal channels of engagement that are integrated into Milliken's business practices, such as active involvement in trade associations and employee feedback channels. We formally engage our customers in a variety of channels, including as an example an annual customer experience survey. Our customer engagement also includes meetings throughout a project lifecycle and participation in channels for relevant industry insights. We also engage internal subject-matter experts to understand impacts, risks, and opportunities. These subject matter experts include those with responsibilities and insights into specific parts of our businesses and operations. We also consider credible independent experts such as non-governmental organizations that represent local, affected communities, and scientific articles and reports for environmental matters. Data from scientific sources also provides insights on silent stakeholders, such as the impacts on nature.

Our stakeholders have different needs and perspectives, and their relationships with us can lead to both positive and negative impacts. We aim to stay informed and act on opportunities and risks identified in our engagements. It is an ongoing process to review stakeholder feedback. The Board of Directors are informed of the results of feedback loops such as HelpLine matters, associate feedback surveys, and customer experience metrics.

In 2023, we began processes to implement a double materiality assessment into our stakeholder engagement channels. Our methodology for assessing impacts, risks, and opportunities (IROs) continues to evolve to comply with external reporting requirements and best practices. We continue to work integrate the results of our impact assessments into our enterprise risk management system and sustainability due diligence process. Generally, our financial risks and opportunities are assessed and scored using the metrics used in our existing enterprise risk management framework. In 2024, we also piloted ways to apply our impact analysis internally across key business units. We also continue to use the insights gained from our previous impact assessments. We revisit our work from prior years to ensure consistency and applicability. We continue to work on best practices for how to incorporate dependencies into our analysis.

In 2024, we implemented a structured survey and scoring system and thresholds to continue to improve and strengthen our methodology and ensure greater consistency. We focused on collecting specific data from 15 internal subject matter experts, in addition to conducting internal interviews and external interviews and reviews of industry benchmarks, and regulations. We internally reviewed the results with senior leaders and continue to use the information to influence our key impacts and sustainability strategy as we move beyond the framework of our 2025 Sustainability Goals.

In 2024, we continued a process of moving towards a scoring system that aligns with our enterprise risk management system and requirements of ESRS. We consider when the impact is expected to occur in the short, medium, and long-term (as such terms are defined in our enterprise risk management system). We aim to collect information that evaluates the scale, scope, severity (of negative and positive impacts), and likelihood of potential impacts materializing. For financial impacts, we aim to score the likelihood and potential magnitude of financial effects caused by the matter. We increasingly aim to capture where in the value chain the impact occurs, and review nature impacts and dependencies. We consider the topics prescribed in the ESRS, as well as other regulations (especially product-related existing or probable regulations) and other relevant topics (including our existing goal framework) when assessing our IROs.

Thresholds are applied for both the financial and impact assessments. Financial thresholds assess financial risks and opportunities to ensure alignment with how risks are generally evaluated in relation to financial performance. For impacts, internally developed thresholds are applied based on subject matter expert advice. We review our formal assessment process annually and continue to improve and align our formal assessment process with emerging regulations and best practices as well as monitoring methods to improve data collection systems. In 2024, we engaged a business school class to model different data collection tools and systems, including the use of artificial intelligence, to improve our data gathering and assessment processes for our impact assessments.