MAKING MATERIALITY WORK FOR YOU

MAKING MATERIALITY WORK FOR YOU Marcella Thompson, ENV SP HDR, Sustainability Director North American Meat Institute 2016 Environmental Conference

materiality noun ma te ri al i ty \mə-ˌtir-ē-ˈa-lə-tē\

DEFINING MATERIALITY SUSTAINABILITY ACCOUNTING STANDARDS BOARD (VIA U.S. SUPREME COURT) information is material if there is a substantial likelihood that the omitted or misstated item would have been viewed by a reasonable resource provider as having significantly altered the total mix of information.

DEFINING MATERIALITY Information that may reasonably be considered important for reflecting the organization s economic, environmental and social impacts, or influencing the decisions of stakeholders. GLOBAL REPORTING INITIATIVE

DEFINING MATERIALITY INTERNATIONAL INTEGRATED REPORTING COUNCIL A matter is material if it could substantively influence the assessments of providers of financial capital with regard to the organization s ability to create value over the short, medium and long term.

MATERIALITY ASSESSMENT PROCESS Issue Identification Assessment of Business Impact Stakeholder Engagement Issues Prioritization

water scarcity waste dehorningreduction water quality packaging anti-corruption & bribery nutrition labeling food safety & quality sodium food access added sugars tail docking human rights energy management human right to water raised without antibiotics food waste political advocacy pesticide use indigenous rights diversity & inclusion traceability responsible marketing conflict minerals methane deforestation talent management GMOs forced labor privacy trans fats PHOs executive compensation cage-free employee health & safety community involvement climate risk gestation crates land use ISSUES IDENTIFICATION listen to the world around you

water scarcity anti-corruption & bribery water quality packaging waste dehorningreduction nutrition labeling food safety & quality sodium food access added sugars human rights energy management tail docking food waste human right to water raised without antibiotics political advocacy pesticide use indigenous rights diversity & inclusion traceability responsible marketing conflict minerals methane deforestation talent management GMOs forced labor privacy trans fats PHOs executive compensation cage-free employee health & safety community involvement climate risk gestation crates land use ISSUES IDENTIFICATION consolidate issues into themes

ANIMAL WELFARE ENVIRONMENT ETHICS & INTEGRITY PEOPLE & CULTURE PRODUCT INTEGRITY SOCIETY ISSUES IDENTIFICATION consolidate issues into themes

ISSUE IDENTIFICATION tips & insights Cast a wide net. You probably already have a lot of good references. Don t confuse issues with opportunities (i.e. climate change vs. renewable energy) Categorizing issues into themes pays dividends later in the process.

MATERIALITY ASSESSMENT PROCESS Issue Identification Assessment of Business Impact Stakeholder Engagement Issues Prioritization

Important Strategic Critical Importance to the Business ASSESSMENT OF BUSINESS IMPACT likelihood + impact + severity

Important Impacts business strategy for a small part of operations, products, or supply chain Importance to the Business ASSESSMENT OF BUSINESS IMPACT likelihood + impact + severity

Strategic Impacts business strategy for a significant part of operations, products, or supply chain Importance to the Business ASSESSMENT OF BUSINESS IMPACT likelihood + impact + severity

Critical Impacts business strategy for a majority of operations, products, or supply chain Importance to the Business ASSESSMENT OF BUSINESS IMPACT likelihood + impact + severity

society animal welfare people & culture environment ethics & integrity product integrity Importance to the Business ASSESSMENT OF BUSINESS IMPACT evaluate relative importance of themes

pesticide use packaging water quality environment energy management food waste water availability climate change Importance to the Business ASSESSMENT OF BUSINESS IMPACT and relative impact of specific issues

pesticide use packaging talent management diversity & inclusion water quality people & culture environment energy management food waste water availability climate change employee health & safety Importance to the Business ASSESSMENT OF BUSINESS IMPACT and relative impact of specific issues

ASSESSMENT OF BUSINESS IMPACT tips & insights Leverage enterprise risk management expertise Rely on experts to inform relative importance of specific issues Determine relative importance of categories through cross-functional dialogue

MATERIALITY ASSESSMENT PROCESS Issue Identification Assessment of Business Impact Stakeholder Engagement Issues Prioritization

STAKEHOLDER ENGAGEMENT where, who & how 1. Value Chain Mapping 2. Stakeholder Identification 3. Stakeholder Prioritization 4. Meaningful Engagement

VALUE CHAIN MAP see end-to-end @ HDR

VALUE CHAIN MAP see end-to-end @ food industry

STAKEHOLDER IDENTIFICATION & PRIORITIZATION Employees Customers Consumers Competitors Communities Investors Industry Organizations NGOs Suppliers Regulatory Agencies How much influence do they have o on the industry? o on your business?

STAKEHOLDER PRIORITIZATION develop a weighting methodology before engaging stakeholders Customers Competitors Consumers Employees Investors NGOs Regulatory Agencies Communities Industry Organizations Suppliers 5% 5% 5% 10% 10% 10% 10% 25% 10% 10%

STAKEHOLDER PRIORITIZATION develop a weighting methodology before engaging stakeholders Customers Competitors Consumers Employees Investors 5% 10% 5% 5% 25% 20% 30% 50% Retail Restaurant Food Service NGOs Regulatory Agencies Communities Industry Organizations Suppliers 10% 10% 10% 10% 10%

STAKEHOLDER ENGAGEMENT find the right mix Desktop research Online surveys Roundtable discussions Interviews an

STAKEHOLDER ENGAGEMENT tips & insights Solicit feedback from across the value chain. Get alignment on stakeholder prioritization and weighting methodology. Generally people appreciate the opportunity to provide input. and... This is the best part.

MATERIALITY ASSESSMENT PROCESS Issue Identification Assessment of Business Impact Stakeholder Engagement Issues Prioritization

Importance to Stakeholders Low Infrequently featured in the media; raised by few stakeholders, not specifically included in sustainability benchmarks Low Impacts business strategy for a small part of operations, products, or supply chain Importance to the Business

Importance to Stakeholders Medium Occasionally featured in the media; raised by a few stakeholders, included in some sustainability benchmarks Low Infrequently featured in the media; raised by few stakeholders, not specifically included in sustainability benchmarks Important Impacts business strategy for a small part of operations, products, or supply chain Strategic Impacts business strategy for a significant part of operations, products, or supply chain Importance to the Business

Importance to Stakeholders High Frequently featured in the media; raised by multiple stakeholders, included in many sustainability benchmarks Medium Occasionally featured in the media; raised by a few stakeholders, included in some sustainability benchmarks Low Infrequently featured in the media; raised by few stakeholders, not specifically included in sustainability benchmarks Important Impacts business strategy for a small part of operations, products, or supply chain Strategic Impacts business strategy for a significant part of operations, products, or supply chain Critical Impacts business strategy for a majority of operations, products, or supply chain Importance to the Business

High ANIMAL WELFARE ETHICS & INTEGRITY ENVIRONMENT PEOPLE & CULTURE Importance to Stakeholders Medium Low PRODUCT INTEGRITY SOCIETY Important Strategic Importance to the Business Critical

ISSUES PRIORITIZATION tips & insights It s more about the process than the matrix. It reflects a snapshot in time. It s not perfect, and that s okay.

WHAT NEXT? Issue Identification Assessment of Business Impact Stakeholder Engagement Issues Prioritization

ROADMAP FOR IMPACT risk management & strategic planning Identify key measures for all critical issues Set goals for performance Communicate o Context o Management approach o Performance & progress towards goals

SHARE YOUR STORY see what transparency can do Who stakeholder engagement What issues you discussed When assessment was complete How materiality process overview

FOR CONSIDERATION GRI materiality disclosure service Materiality focus will make reports more relevant and more credible GRI verification that the General Standard Disclosures are in the content index and the text. Does not replace report assurance or verify performance.