Materiality - identifying and prioritising the issues most prevalent for your business, should be the guiding light for your sustainability strategy. A well designed materiality process also supports sustainability reporting, ensuring you are communicating your response to issues most relevant to your stakeholders.
Yet, too many companies miss issues, don’t prioritise correctly, overlook the link with other activities already established in the business and only apply materiality as a sustainability reporting process.
So, what are the keys to success?
Be inclusive - balance the stakeholders represented to ensure you capture a broad range of opinions. Don’t exclude topic experts relevant for your business, they are often the best source of issues on the horizon that you haven’t considered. Include your own senior management, they usually have the best broad oversight across the business.
Capture current activities in your business that provide insight. What is the Board's perspective on business risks? What do your sales and marketing teams know from engaging with customers? What types of enquiries are coming through investor or customer questionnaires? What are the hot issues arising from contact points with local communities and NGO’s? These are just some examples of where useful data may be available to feed into a materiality process, without duplicating effort.
Pick the external frameworks that are most appropriate for your business, but don’t expect them to capture all the issues as they too can be slow to respond to emerging issues. Looking at sector peers and recognised leaders are a useful benchmark.
Develop a regular review process. A light touch revision is appropriate, if you are prepared to revisit for a more in-depth update at least every 2-3 years.
Don’t be frustrated when issues arise so quickly that you appear to have missed them. Single use plastic is a recent example. Few could have predicted the speed at which this became such an emotive issue and how quickly companies have had to respond.
Make the outputs relevant. A materiality matrix may be better suited to the boardroom and as an internal planning tool, not your report audience who may prefer ‘the issues that are most important to us’ described in the report. But don't shy away from explaining the materiality process, it can be interesting to readers and demonstrates commitment.
Finally, provided the process is robust and you have confidence in it, decide what 'not' to report. Have a clear idea of those issues you may continue to manage but not report in detail (or at all). Don’t fall into the trap of adding content to your report but not reducing coverage, or removing completely, if issues have reduced in relevance.
Doing materiality right keeps you focussed on what matters and supports not only effective reporting, but also the wider sustainability program.