Sustainability reporting: Why conduct a materiality assessment?
In the third part of edie's sustainability reporting feature series, we explore how CSR reports can be used to monitor and manage the most important environmental issues affecting your company.
So, you’ve taken the first steps in your sustainability reporting journey. You’ve read, re-read and absorbed the 10 secrets to a successful sustainability report. What next?
A key sticking point for many firms in the CSR reporting process is the materiality assessment – essentially finding out which issues are most important to your firm and its various stakeholders. A successful materiality assessment will allow a business to prioritise its environmental efforts and spend accordingly, helping to maximise return on investment.
The centrality of materiality assessments to sustainability reporting is recognised by the Global Reporting Initiative (GRI), which made changes to its reporting framework back in 2013, making it mandatory to conduct a materiality assessment.
One company that needed no such prompting is hospitality firm Whitbread, widely regarded as leader in the sustainability reporting space. Last May, the group – which owns Costa and Premier Inn among other brands – was forced to set new environmental targets, having blown past its existing ones three years ahead of schedule.
As part of the announcement, Whitbread also pledged to achieve 100% accredited supply for its critical commodities (identified from a list of cocoa, coffee, cotton, fish, meat, palm oil, soy, sugar, tea and timber) by 2020.
Whitbread's responsible procurement manager Rosana Elias’ role is to work out which of these 10 commodities needs prioritising in the short-term. She spoke with edie to explain the process and its importance.
The initial step, Rosana says, is engagement. She carried out surveys, interviews, focus groups, and other forms of engagement with key stakeholders to find out what issues matter to them.
“I’ve been looking at a whole range of stakeholder groups,” Rosana explains. “What’s the media focusing on for example – palm oil is huge with them at the moment and sustainable fish is also at the forefront.
“What do our customers care about? What do our team members care about?
“We’re looking at what our investors care about, what the government is focusing on, is there any legislation coming up, what are NGOs focusing on, what are key brands offering? Are there any priorities starting to surface across the board?"
Collecting this information is one thing, but utilising it correctly can vary based on the company.
Rosana adds: “There is a complex process in weighing whose input we value most.
“Are we doing this for commercial reasons, do we want a secured sustainable supply, are we doing it for reputation risk mitigation, or are we doing it is because it’s the right thing to do for Whitbread? For us it’s a mixture of all of those things.”
Keep it simple
Establishing these clear priorities can help simplify the tangled web of supply chains connected to large companies, according to Rosana. Her overriding message is to keep things as straightforward as possible.
“I would advise anyone embarking on their first materiality assessment to ensure they are really clear on what their overarching ambition is – what are they hoping to understand and what will they do with that information once they have their results.
“Reflecting on what you will do next while you undertake the assessment will mean that you ask the right questions and gather the right data in the analysis stage, giving you a head start when you get to strategy development phase for the material issues.
"Above all, try to keep it simple. Understand who your key stakeholder groups are, understand what drives them and ensure that you are taking time to reflect how this all relates to your overarching business vision and strategy.”
Although Rosana was focusing specifically on Whitbread's commodities, it's important to note that a materiality assessment can be used to determine any significant economic, environmental and social impacts relating to an organisation, including carbon, water and energy risks.
edie Sustainability Reporting Conference 2016
The fifth annual edie Sustainability Reporting Conference takes place on 23 February, 2016 at the Inmarsat Conference Centre in London.
At the event, Rosana Elias will lead a session dedicated to 'Including stakeholders in the materiality assessment and development phase of reporting'.