Materiality: The Most Important Trend in Sustainability

Transcription

1 Materiality: The Most Important Trend in Sustainability Kevin Wilhelm and Ruth Lee Sustainable Business Consulting University of Tacoma CSR Business Conference March 12, 2014

2 Agenda Introduction (20 min) What is materiality Why materiality matters What is happening in the market How to evaluate materiality Exercise: Stakeholder Map (20 min) Exercise: Material Topic Selection (5 min) Exercise: Materiality Test (20 min) Q&A and Wrap Up (25 min)

3 Materiality Definitions GRI Definition Material issues are those that reflect: The organization s significant economic, environmental and social impacts; Or that substantively influence the assessments and decisions of stakeholders SASB Definition Information presenting a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available. IIRC Definition Information about matters that substantively affect the organization s ability to create value over the short, medium and long term.

4 Why Does Materiality Matter? Determine what matters to stakeholders Make reports relevant to stakeholders Focus internal efforts Encourage stakeholder engagement

5 Reporting Mechanisms

6 Market Trends GRI Reporting Percentage of reports including a description of stakeholder engagement process and a list of material topics Banks & Financials sector: 48% of reports Technology sector: 64% of reports Sustainability Accounting Standards Board (SASB) US-based NGO creating sustainability accounting standards for use by publicly-listed corporations in disclosing material sustainability issues for the benefit of investors and the public 89 industries in 10 sectors to be used in the SEC Forms 10-K and 20-F

7 Materiality and Boundaries Corporate HQ only Global Corporate Supply Chain Operational Operational supply chain

8 Materiality Criteria Stakeholder concerns Largest impacts Legal, regulatory, policy factors Peer-based norms Societal factors with financial implications Opportunities for innovation Alignment with company values

9 Materiality Process 1. Identification 2. Prioritization 3. Validation 4. Review Topic list & stakeholders Stakeholder engagement Internal materiality process Constantly revisit and refine

10 What is a Stakeholder? Are interested in or affected by organization s impacts Can influence outcomes within the organization Are invested in success/failure of organization

11 Primary & Secondary Stakeholders Primary Customers Employees Suppliers Investors Community partners and donor recipients Secondary Media Government NGO s Creditors Industry associations Other groups relevant to your company

12 Traditional and social media In-person meetings Intranet sites Feedback channel, website, Methods of Engagement Surveys Webcasts Community events Focus groups Newsletters

13 Significance to Stakeholders Visualizing Materiality Aspects of high significance to either Stakeholders or to the Organization should be considered for reporting Technical Protocol Applying the Report Content Principles Significance to Organization

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15 Question Materiality Survey Example How important are the following environmental issues to the business of Company A? Please help us prioritize by selecting your top 3 choices, with 3 being most important. Enviro Topics 3 Most Important 2 1 Least Important Materials Energy X Water X Land and Animal Impacts Emissions Waste X

16 Materiality: Quantifiable Results Environment Materials Energy Water Land and Animal Impacts Emissions Waste Supplier Supplier Supplier Customer Customer Customer 3 2 Rank

17 Materiality: Quantifiable Results Environment Materials Energy Water Land and Animal Impacts Emissions Waste Employee 1 3 Employee 2 3 Employee Employee Employee Employee Rank

18 Materiality Barriers Time May expose weakness Difficulty identifying stakeholders No defined process Concerns with disclosure

19 Exercise in Small Groups Determining Materiality for your Company

20 Primary Exercise: Stakeholder Map Identify Stakeholders (e.g. employees, customers, NGOs, government, etc.) Current communication (e.g. surveys, annual reports, focus groups, social media, etc.) Ideal communication Level of Influence (High, medium, low) Secondary

21 Exercise: Topic Selection Category: Environmental Materials Energy Water Biodiversity Emissions Effluents and Waste Products and Services Compliance Transport Overall Supplier Environmental Assessment Environmental Grievance Mechanisms Category: Economic Economic Performance Market Presence Indirect Economic Impacts Procurement Practices

22 Exercise: Materiality Test Selected Topic Is this already mentioned as important by stakeholders? Materials Yes Yes No Yes Does this constitute a future challenge for your sector? Is it already discussed by peers?

23 Q&A

24 Thank you! Kevin Wilhelm and Ruth Lee Sustainable Business Consulting