Trends in corporate reporting 3

Trends in corporate reporting 3

TREND 3: Materiality analysis 27-05-2014

Materiality analysis: CSR MRI of organisation

Global Reporting Initiative-3 (GRI-3) and especially the extensive GRI-4 make it necessary for companies and non-profit organisations to make choices as regards the CSR core subjects and CSR issues that they want to focus on strategically. In the process, organisations must observe all core subjects and subsubjects (including their mutual dependence) and not concentrate on one sole subject. Needless to say, this varies per organisation and per strategy that these organisations embrace. The materiality analysis can be of tremendous help in this CSR selection process.

 

Relevance, significance and influence

The materiality analysis is like an MRI scan which provides insight into the consideration between relevance, significance and influence. What CSR subjects should the organisation focus on? And how will this be turned into operational policy with objectives and measuring points? What is the CSR ambition of an organisation?

Of vital importance, of course, when it comes to sustainability activities and reporting, is to focus on those elements that are the most relevant to the organisation and the affiliated stakeholders concerned. In addition to the materiality analysis, stakeholder research and dialogues are also important, as well as the company’s own analysis of risks and opportunities plus the impact of core processes and core activities. What helps is to use the following criteria as the starting point:

  • Which themes do the stakeholders find important?
  • What are the relevant societal developments considered urgent for the company?
  • Is there a good balance between social, environmental and economic subjects?
  • Has the extent of strategic importance for the relevant organisation based on a self-assessment been reviewed for relevance to and effect on day-to-day operations?

Materiality analysis approach

With the aid of a step-by-step plan, the materiality analysis can be executed in a compact and engaging manner.

Step 1: take stock of themes per stakeholder group

A questionnaire can be used to weigh themes that are important to stakeholders in terms of relevance. Round-table conversations might be useful to that end.

Step 2: determine the most important themes of stakeholders

The most important themes can then be determined for each type of stakeholder. Based on a ten-point scale, a prioritisation can be determined, with the highest priority worth 10 points and the lowest 1 point. If important themes are given a high score by several stakeholders, their rankings will, of course, be higher. This method does justice to the various perspectives of stakeholders and their interests.

Step 3: set your own priorities

Needless to say, aside from an external analysis, personal opinions and views concerning the CSR policy of organisations are also valid. That is why it is recommended to review the themes selected by the stakeholders on the basis of a self-assessment for materiality and the impact on your own organisation. Relevant subjects can also be added to the list. It is further prudent to record the results of the self-assessment and to have the highest management body, for instance the Management Board, approve the results.

Step 4: prepare a materiality index

The themes with the highest average score per type of stakeholder can be incorporated into the materiality chart. On this chart, the stakeholders’ score is displayed on the Y axis. The impact score is displayed on the X axis and is determined by the self-assessment of the organisation. The materiality chart consequently provides a good representation of relevance, significance and those CSR subjects that are of influence.

Step 5: specify the goals

For each material CSR subject, strategic CSR goals can then be formulated with clear marker posts in time. A baseline measurement helps in realising these goals clearly. What is an organisation’s position at this point in time? And what is its ambition for the next few years? The goals are specified in part on the basis of the GRI index that is linked to the relevance, significance and those CSR subjects that are of influence.

Backgrounds, principles and considerations for CSR choices are consequently considered in conjunction with the stakeholders and the strategy of the company. Thus, the CSR process has come full circle.

Visualisation

Nowadays nobody is satisfied with just text; the message is simply not conveyed. That is why in addition to the substantive analysis it is certainly desirable to be able to clearly visualise information through the use of dashboards, infographics, scorecards and illustrations. Needless to say, these should also be used in connection with a clear visualisation strategy.

Contact: 
For more information please contact: 

Pieter Koenders

Managing director, C&F Report
T +31 20 691 31 44

Bob van der Lee

Managing director, Total Identity
T +31 20 750 95 58