MATERIALITY: A STAKEHOLDER S PERSPECTIVE. The State of CSR in Australia 2012

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1 MATERIALITY: A STAKEHOLDER S PERSPECTIVE The State of CSR in Australia 2012

2 Material issues are those which have a direct or indirect impact on an organisation s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society at large. ~Global Reporting Initiative

3 MATERIALITY: STAKEHOLDER ENGAGEMENT Sustainability report readers expect that reporters will: Disclose which stakeholders were consulted to help determine report content Explain how stakeholders concerns influenced report content Explain how stakeholders issues were prioritised for inclusion/exclusion. 5 December

4 A rigorous materiality process can create competitive advantage by pinpointing where the organisation can reduce risk and capitalise opportunities in priority areas.

5 ADDING VALUE THROUGH MATERIALITY Now Identifying areas of risk Improving stakeholder engagement Benchmarking performance and issues coverage against peers/competitors Preparation for sustainability report assurance Guiding sustainability report content. Into the future Informing organisational policies and strategies Improving performance in key areas Addressing identified gaps in service or product delivery Building a strong social licence to operate with stakeholders.

6 ABOUT THE STUDY: A META-ANALYSIS Interview transcripts from 257 respondents to materiality assessments undertaken for 11 sustainability reports published by 8 companies between December

7 THE TOP ISSUES 5 December

8 THE TOP ISSUES Operations economic impacts Better engagement with local community More locally focused information 5 December

9 THE TOP ISSUES: WHAT DOES THIS TELL US? We need to better prioritise and execute stakeholder engagement We need to think creatively about presentation of data We need to determine why economic information is not being reported. 5 December

10 STAKEHOLDERS WANT MORE TRANSPARENCY Transparency and governance were the most mentioned issues At least 1/3 of each stakeholder group wants more locally focused information The majority of contractors and suppliers (54%) are concerned about the sustainability impacts of investments and want to see reporting against targets At the same time, at least 1/5 th of each stakeholder group does not want more information than already supplied just different, better targeted information. 5 December

11 HOW CAN WE MEET STAKEHOLDERS DESIRES? Embed transparency and disclosure into how you do business. Be creative in communicating information. Leverage technology. Embed the creation of targets and data systems necessary for reporting on those targets into regular reporting cycles. Recognise materiality as material. 5 December

12 MATERIAL ISSUES FOR FINANCE VS MINING & ENERGY SECTORS Again, more local information desired But not at the expense of report length 5 December

13 Stakeholders want more relevant, better targeted information. Not more information.

14 SOCIAL IMPACTS REQUIRE IMPROVED REPORTING Is it that stakeholder engagement needs improvement? Or that reporting on stakeholder engagement needs improvement? Is it that social implications of operations are poorly understood? Or that social implications are understood but poorly reported?

15 Greenhouse gas emissions and climate change were the most mentioned environmental issues. There s nothing like a cost to concentrate the mind.

16 STAKEHOLDERS CARE ABOUT HOW YOU TREAT YOUR EMPLOYEES

17 AND THEY WANT TO KNOW HOW YOU IMPACT THE ECONOMY This interest is likely to increase as G4 focuses on value chain 5 December

18 Contractors, suppliers and employees show considerably more interest in human rights than other stakeholder groups.

19 Product responsibility was the least mentioned category of material issues for all stakeholder groups and industries.

20 Is this because product responsibility is seen as immaterial? Or is this because stakeholders do not understand what product responsibility is?

21 TAKE-AWAYS Transparency and disclosure are major stakeholder concerns Report better targeted information, not more information. Leverage technology for more creative, targeted reporting. Concentrate on measuring the intangibles. Improve understanding of what product responsibility is and why it matters.

22 TAKE-AWAYS Materiality is material.

23 ASSESSING MATERIALITY A few common methods 5 December

24 COMMON MATERIALITY ASSESSMENT METHODS Identify priority issues of your organisation and your organisation s key stakeholders Rank these issues on an impact/influence matrix for each of the following considerations: Social impact/influence Environmental impact/influence Economic impact/influence Governance impact/influence 5 December

25 COMMON MATERIALITY ASSESSMENT METHODS Enlist key decision-makers and data owners in your organisation to complete a materiality spreadsheet, organised by GRI aspects or indicators Rank materiality of each aspect or indicator by considering the importance of the issue to such considerations as: Risk/opportunities for your firm Special internal expertise in the area Activities of competitors on this issue Regulation/compliance requirements Stakeholder expectations Linkage to firm values/mission External experts acknowledge the issue as vital in your sector 5 December

26 COMMON MATERIALITY ASSESSMENT METHODS Workshop material issues with key decision-makers and data owners through interactive methods: Material issues card sort Group discussion of materiality worksheet findings Group activities to identify and prioritise material issues Undertake external stakeholder interviews or materiality surveys Enlist your assurance provider to complete a materiality assessment. 5 December

27 Download the full report and our companion report, Stakeholders as Readers of Sustainability Reports at:

28 5 December 2012 MATERIALITY: A STAKEHOLDER S PERSPECTIVE The State of CSR in Australia 2012