Do a materiality assessment
The first of our “Nine Secrets of Integrated Reporting Success”
A good materiality assessment is the foundation of all integrated strategy and reporting. Its objective is to uncover the non-financial risks and opportunities most important (i.e. material) to your business and stakeholders.
Other benefits include:
- providing the structure for a focused integrated report. By identifying and prioritising your ESG topics, a good assessment allows for the drafting of a more focused and interesting report, which is more likely to be read.
- responding to stakeholder expectations. Stakeholders, particularly investors, want to understand which ESG topics are most important to your business. The assessment process gives you a clear framework to better align your efforts and resources with their expectations.
- identifying the ESG risks and opportunities yet to appear on management’s horizon. A good assessment, focused on stakeholder engagement and research, will uncover horizon risks and opportunities not readily apparent on the balance sheet.
- emphasising the strategic value of sustainability. Sustainability is still seen by some as supplementary to ‘real’ business strategy. Materiality, done well, adds credibility to your integrated report and broader ESG agenda, and encourages company-wide buy-in and alignment.
- securing senior management buy-in. Your CEO and senior leadership team should be directly involved in assessing and prioritising your material topics. But don’t let them get away with a laundry list – ask them to prioritise three or four topics only. Your integrated report should then explain to stakeholders why you’ve prioritised these topics and how you’re responding to them.