How to Conduct Your Materiality Analysis Right While Maximizing Its Benefit
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Materiality analysis is the cornerstone of sustainability reporting. Focusing on what is material and presenting your company’s performance on material topics, is really the key to good sustainability reporting. So, defining what is important/material is perhaps the single most important step during your sustainability reporting process and rightly warrants a significant level of attention.
International standards such as GRI and SASB do not define every step a Sustainability Reporting Manager should take in order to conduct the materiality process in the “right” way, but instead leave some space and freedom to design it in a tailor-made way while making it meaningful for your company and your needs. But this freedom is a double-edged sword since executives responsible for sustainability reporting are often left wondering what is right and what is wrong; what is a best practice approach for materiality analysis; and what should be done and how.
Based on our experience, here are some tips that will help you gain the most out of your process – both for you and your company:
Design your materiality analysis process beforehand.
Important questions to ask as you plan your materiality analysis include:
What claim do you wish to make: Comprehensive, Core or Referencing GRI?
Which sustainability standards will you implement?
How will you implement those standards?
What steps will you follow during the process?
What is your target and what do you want to achieve?
Who will you involve during the process and why?
Will you receive external support?
Of course, you may not know all the answers beforehand, but the point here is to prepare and begin to address these questions before you start so that both the process and the outcome will produce the maximum benefit for your report, your company, and your role as a Sustainability Reporting Manager. In order to produce an outstanding sustainability report, you need to give your full attention to this key step during the sustainability reporting process.
Break down the process in small steps.
Materiality analysis can vary from very complex to very simple. It is all about what you would like to achieve and how you plan to achieve it. If you think of it as one large task, it may look a bit overwhelming. But breaking it down into clear small steps will help you simplify it and give you the maximum control over the entire process and the final outcome. You may find the help of a third party like KERAMIDA, who knows the reporting trends and material topics for your sector, a welcome relief to navigating the universe of standards and topics.
Include your stakeholders’ opinions.
When conducting your materiality analysis, it is very important to include your stakeholder’s opinions on the topics included in your materiality matrix and ultimately in your report so that you include what your internal and external stakeholders believe is important. Having a clear understanding of what your investors, shareholders, customers, and partners consider to be important and what they would like to read about, is vital for your business’ success.
There are many ways to include this information during your materiality analysis process and you should select the way that best suits your needs, budget, and time requirements. Some companies choose to conduct interviews with key stakeholders or develop questionnaires and collect thousands of replies, while others opt to conduct it in a more minimal way. You may hire a third party like KERAMIDA to conduct a customer and/or peer benchmarking analysis. Again, there is much freedom given in the way you conduct it, but therein also lies the challenge as well. Doing it in the most meaningful way and maximizing the value for your company and reporting efforts should be your north star.
Involve your upper management in the process.
The more you include your company’s senior management in your materiality analysis, the greater the benefits will be for your report and overall, to your company’s approach to sustainability. Do it and you won’t regret it. Sustainability reporting and sustainability strategy have only been incorporated into business school curriculums in the last few years, so it is very likely that the more senior your supervisor is, the higher the chance that their exposure and understanding of sustainability is limited or completely absent. The more you involve your company’s top management, the more they will understand it. Once they understand the benefits, the more they will embrace it and act as enablers and sponsors.
Use the outcome to influence your sustainability strategy.
Conducting your materiality analysis is a necessary step for your report, but why not further utilize it as an input in your sustainability strategy as well? Since the materiality analysis indicates the topics that are the most important/material for your company, it makes sense that they should also be included in your company’s approach to sustainability. In case you have not yet developed a sustainability strategy for your company, you may use the outcome of this process as a starting point and go forward.
Revisit annually or bi-annually.
Conducting your materiality analysis is both important and necessary and for this reason, should not be conducted just once and then left forgotten. Best practice says that you should revisit it on an annual or biannual basis, aiming to include newest trends, emerging issues, new topics introduced by peers and sector, and possible changes to your business. Of course, huge changes are not expected in your material topics between two consecutive periods, but those incremental changes are the ones that will drive the progress of your report and increase the benefits for your company.
Ask the experts, but select carefully.
You may have already realized that there are a lot of standards out there, different approaches and practices, emerging trends, and different needs and requests from various stakeholders. Using external support and guidance from a trusted sustainability consulting firm will save you time and let you focus on what is important while safeguarding a better outcome. But in order to achieve this, you should select your consultant wisely. KERAMIDA is a GRI Certified Training partner with extensive experience in sustainability reporting and management, and our professionals are ready to support you during your sustainability reporting journey. For immediate assistance, please contact us or call us today at (800) 508-8034 to speak with one of our professionals.
Blog Author
Giorgos Iliopoulos, M.S.
Senior Project Manager,
Sustainability Services
GRI Approved Trainer
KERAMIDA Inc.
Contact Giorgos at giliopoulos@keramida.com.
