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Quarterly/Summer 2016

Inside

Using materiality to drive outcomes


not outputs

Wheres it all going wrong? Five


fundamentals for effective outcomes

:
Y
T
I
L
A
I
R
MATE NG OUT OF THE
BREAKI

MATERIALITY: BREAKING OUT OF THE STRAITJACKET

WHERES IT ALL
GOING WRONG?

Huw Maggs
Strategy Director,
Salterbaxter

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.
Theres too much emphasis on GRI boxticking 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.

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.
Lack of context:
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.
Silver bullet:
Others expect too much. Materiality is a useful tool but it
cant solve everything all at once. Being realistic about what
you can achieve and what you cant 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.
No red-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.

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.

James Pitcher
Corporate Social Responsibility
Director, Premier Inn

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.

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.

Neil Burns
Group Head of Sustainable
Development
Mondi

2.SEE THE
BIGGER PICTURE:
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 cant it do? What else
do you need to build around it?
Thinking this through is critical
and should guide your
approach.

1.FOCUS ON
CHANGE:
First and foremost materiality
should help drive a change in
the status quo. At its core its
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
its viewed in this way,
opportunities open up.

3.SET CLEAR
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 youll be
much more likely to achieve
what you set out to.

4.THINK
CREATIVELY:
Think from the point-of-view
of the people involved. What
do you want from them, and
what do they need to think,
feel and experience? Then
identify the approaches and
tools youll need to succeed.
Think, what approaches will
work and not what can we do
using standard approaches.
We think theres huge scope
for creative thinking here.

5.INVOLVE THE
BEST PEOPLE:
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. Theyll help you
capture and contextualise
real insights and grab the
attention of colleagues.

And dont 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 theres
a sufficient balance of
inputs including the types
of stakeholders you engage
and a sound process for
prioritising issues then youll
still get your rubber-stamp.

REFLECTIONS FROM DR. ERIC W. BISCHOF,


VP CORPORATE SUSTAINABILITY, 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
isnt 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? Its 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 weve made a step forward. Thats where I think we can get more value, by
provoking insights and triggering deeper engagement within individual departments.

HOW MATERIALITY CAN DRIVE


VALUABLE OUTCOMES
Below are the main outcomes we think
materiality can help to achieve. These
may seem obvious but its surprising
how infrequently they are prioritised.

It helped us to surface important


conversations with stakeholders
we had not engaged enough with
previously on sustainability,
in particular investors.

Caroline Hill
Head of Sustainability
Land Securities

More challenging outcomes


Gaining scarce knowledge: 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.
Accelerating integration: 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.
Breeding internal collaboration: 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.
Building confidence with financial stakeholders: 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.

More Common Outcomes


Focusing minds and resources: 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.
Informing sustainability strategy: Materiality is often used
to evolve or shape new sustainability strategies, testing key
priorities and opportunities, and testing ambitions relative to
peers. But its not the final word on strategy. The companys
unique identity and strengths, corporate strategy and brand,
and wider operating context need to be considered in parallel.
Heightening executive level awareness: 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.
Improving stakeholder relationships: 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.
Informing messaging and communication: 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.

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.

Matthew Swibel
Director, Corporate Sustainability
Lockheed Martin

About Salterbaxter
Wehelp 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 its communicating to
investorsor opinion formers, engaging
employeesor 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 betterperformance
and communicationsto make this
performancetransparent 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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