2. MATERIALITY: BREAKING OUT OF THE STRAITJACKET
Narrow-minded:
When reporting is the main focus materiality almost always
disappoints. For it to be valuable there has to be more to
it than reprioritising topics. At the same time, too many
companies view materiality as a way of justifying business as
usual. This only reinforces the use of ever more narrow and
formulaic approaches, and engagement with the same types
of stakeholders. This inevitably gives the same answers.
Innovation is stifled and important signals are ignored.
Lackofcontext:
Not enough companies ground materiality in a consideration
of where they are on their wider sustainability journey and
where they are trying to get to. Even fewer embed this
cleverly into their approach to drive real progress.
Silverbullet:
Others expect too much. Materiality is a useful tool but it
can’t solve everything all at once. Being realistic about what
you can achieve and what you can’t in the context of a single
materiality project is more likely to yield results. Specific
objectives can, and should, change each time you do it.
Nored-thread:
Very few companies set objectives, design an approach
that can deliver, and assess whether objectives have been
achieved. Materiality is a skill that should be developed over
time. This means continually refining your approach.
Materiality can help to deliver a range
of valuable outcomes, and while we see
great examples all too often the process
ends up being nothing more than a costly
rubber-stamp.
Of course, many businesses manage to use
the materiality process as a useful way of
managing risk – getting a head start on
emerging topics or uncovering blind spots.
But we think it can, and should, do more
besides.
There’s too much emphasis on GRI box-
ticking and not enough on the wider
opportunities the materiality process
presents. The result is often tactical
outputs rather than valuable outcomes,
and while many companies continue to
feel constrained by reporting standards
we think there are ways to break free from
the materiality straitjacket.
WHERE’S IT ALL
GOING WRONG?
HuwMaggs
Strategy Director,
Salterbaxter
The world of sustainability is dynamic
and constantly changing. An effective
materiality assessment will not only
focus attention in the right areas but also
help to identify the emerging risks, issues
and consumer trends which could have
reputational impact for a brand.
JamesPitcher
Corporate Social Responsibility
Director, Premier Inn
3. 2.SEETHE
BIGGERPICTURE:
Start with a wide-angle lens.
Think carefully about where
the business is and what
challenges and opportunities
lie in front of you. Do this
forensically. What outcomes
do you want to achieve? What
role can materiality play?
What can’t it do? What else
do you need to build around it?
Thinking this through is critical
and should guide your
approach.
The materiality process needs to be
relevant to where you are on your
sustainability journey otherwise you get
a disconnect with the business. You can
completely overwhelm the organisation.
NeilBurns
Group Head of Sustainable
Development
Mondi
1.FOCUSON
CHANGE:
First and foremost materiality
should help drive a change in
the status quo. At its core it’s
about translating a dynamic
external landscape into
prioritised action, but it can
also be used to shift internal
thinking, strengthen external
support, accelerate
integration into the business,
and much more. The minute
it’s viewed in this way,
opportunities open up.
3.SETCLEAR
OBJECTIVES:
Once you know what you
want to achieve, actually
formalise a small number of
objectives for the process.
This may seem obvious but
so few companies do it. It will
encourage greater scrutiny of
the approach and you’ll be
much more likely to achieve
what you set out to.
BREAKING
FREE
So, how to make materiality more effective
without adding more and more workload on
top of an already resource intensive process?
Below are five fundamentals to bear in mind
– important considerations that can help
improve results no matter where a company
is on the journey.
4. REFLECTIONSFROMDR.ERICW.BISCHOF,
VPCORPORATESUSTAINABILITY,COVESTRO
“The whole idea of a materiality assessment really makes sense. That being said once you have
narrowed down topics to a few high priorities, you may find that from one year to the next there
isn’t a big difference. The world is changing fast but within the same topics. So where are we
getting value if we are just going through the motions of ticking the box?
So we think, how can we use it to create additional value? It’s about bringing
the right people into the room, people who can give you that next level of insight about
opportunities, about risks, about blind spots, and then brainstorming on where we can really
make a difference as a company. This will result in a meaningful adjustment of the materiality
assessment at a company level, but more importantly, it will start a thought process at a more
detailed level.
Looking ahead, I want to see more creativity in materiality workshops. I want colleagues to have
that light-bulb go off and say “Next year I want to go deeper, because I get value out of the
process itself”. Then we’ve made a step forward. That’s where I think we can get more value, by
provoking insights and triggering deeper engagement within individual departments.”
4.THINK
CREATIVELY:
Thinkfromthepoint-of-view
ofthepeopleinvolved.What
doyouwantfromthem,and
whatdotheyneedtothink,
feelandexperience?Then
identifytheapproachesand
toolsyou’llneedtosucceed.
Think,“whatapproacheswill
work”andnot“whatcanwedo
usingstandardapproaches”.
Wethinkthere’shugescope
forcreativethinkinghere.
5.INVOLVETHE
BESTPEOPLE:
Find the best possible people
internally and externally
with the most knowledge,
influence and credibility.
Focus most effort on those
external stakeholder groups
who have the greatest
influence on the business –
often customers and
investors. They’ll help you
capture and contextualise
real insights and grab the
attention of colleagues.
And… don’t stress, GRI
allows for a range of
methodologies to be used
so there is the flexibility
to apply the fundamentals
above, and as long as there’s
a sufficient balance of
inputs – including the types
of stakeholders you engage
– and a sound process for
prioritising issues then you’ll
still get your rubber-stamp.
5. It helped us to surface important
conversations with stakeholders
we had not engaged enough with
previously on sustainability,
in particular investors.
HOW MATERIALITY CAN DRIVE
VALUABLE OUTCOMES
Below are the main outcomes we think
materiality can help to achieve. These
may seem obvious but it’s surprising
how infrequently they are prioritised.
CarolineHill
Head of Sustainability
Land Securities
MatthewSwibel
Director, Corporate Sustainability
Lockheed Martin
More Common Outcomes
Focusingmindsandresources:Identifying and committing
to a small number of priority topics will focus your efforts
on ‘fewer, bigger, better’, deepening integration, driving
momentum, increasing return on investment, and impact.
Informingsustainabilitystrategy:Materiality is often used
to evolve or shape new sustainability strategies, testing key
priorities and opportunities, and testing ambitions relative to
peers. But it’s not the final word on strategy. The company’s
unique identity and strengths, corporate strategy and brand,
and wider operating context need to be considered in parallel.
Heighteningexecutivelevelawareness:Materiality can help
demonstrate the strategic importance of priority issues and
be used as a trigger for ongoing dialogue at the executive level.
This can build the knowledge of top management and improve
corporate governance.
Improvingstakeholderrelationships:Materiality can
be used to establish new connections or evolve existing
relationships. This can strengthen stakeholder support,
surface new opportunities for partnership, and highlight
groups or issues where ongoing engagement is required.
But the experience must be meaningful, positive and
rewarding from start to finish.
Informingmessagingandcommunication:Designing
in insights on the needs, expectations and knowledge of
important external stakeholder groups can help inform
communications planning – target audiences, channels,
approaches, and key messages.
More challenging outcomes
Gainingscarceknowledge:Surfacing information and
insights on important new risks and opportunities can
provide a head start on competitors. Directly linking the
right external stakeholders with internal colleagues can
help speed-up thinking and translate insights quickly
into new ideas.
Acceleratingintegration:Embedding the materiality
process into risk management and corporate strategic
planning can accelerate the integration of sustainability
into the business. Using materiality outputs to engage
directly with other departments such as investor relations,
supply chain or human resources can also build capacity.
Breedinginternalcollaboration:Facilitating collaboration
between departments as part of the process can foster
internal alignment on priorities and speed up problem
solving on key challenges and solutions. Over time this
can translate into a hard-to-imitate capability.
Buildingconfidencewithfinancialstakeholders:Using
materiality to demonstrate an awareness of priority ESG
topics and their integration into business planning can
breed confidence amongst shareholders and other
investors, including SRI investors.
Now that we have gone through a core
issues assessment and examined data
that shows the sense of urgency and
difference between topics we have
channelled staff efforts and capital
accordingly.
6. About Salterbaxter
We help businesses and brands step
up to the challenge of the changing
relationship between business and
society. We combine smart strategy,
sharp insights and creativity to help
purpose-led businesses succeed.
Whether it’s communicating to
investors or opinion formers, engaging
employees or changing consumer
behaviour, our work delivers for our
clients in three key dimensions:
1. Purpose
Creating, defining, understanding and
building more purposeful organisations,
strategies, brands and communications.
2. Performance
Strategies to drive better performance
and communications to make this
performance transparent and trusted.
3. Transformation
Helping businesses and brands to
reinvent, find new models and drive
the changes needed to fulfil the new
contract between business and
society.
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CONTACT US:
Samuel Griffin-Flynn | Business Development
samuel.griffin-flynn@salterbaxter.com
Purpose
Performance
Transformation
Strategy
Communications
Stakeholder analysis
and engagement
Benchmarking
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management
Influencerengagement
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Campaigns
and content
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frameworks
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Boards
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frameworks
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development
SALTERBAXTER MSLGROUP
82 Baker Street
London
W1U 6AE
Tel +44 (0)20 7229 5720
www.salterbaxter.com
@salterbaxterMSL
