Corporate Australia Must Rethink Materiality - Report

Corporates should rethink their approach to identifying the issues that are ‘material’ to their business in sustainability reporting, argues a new white paper from the Australian Centre for Corporate Social Responsibility (ACCSR).

Material topics for an organisation preparing a sustainability report are those that have a direct or indirect impact on an organisation’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society.

According to ACCSR, the white paper, Reclaiming what’s material: A fresh approach to materiality analysis for reporting, strategy and business model appraisal presents a new approach to materiality, calling for a broadening of its scope and the creation of more meaningful connections between business strategy and material issues.

“Materiality essentially means getting to the core of what matters most to an organisation and its stakeholders, and then using this information to interrogate current business models and strategies and to embed appropriate responses,” Dr Leeora Black, Managing Director of ACCSR, said.

“In our regular discussions with clients, we see that this really isn’t happening, which devalues what should be an incredibly worthwhile business process.”

The paper outlines common materiality pitfalls, such as limiting the scope to simple data provision for sustainability reports, unintentionally “shoehorning” the process to fit a desired outcome, or not going deep enough in analysis.

It suggests a more robust approach to materiality, which ACCSR calls a “value chain approach”. This is achieved by mapping the entire value chain, including the supply chain, so that business-critical impacts are not left out of the analysis.

ACCSR said its recommended approach was consistent with international frameworks including GRI, Integrated Reporting, and AA1000. The paper also includes ACCSR’s top implementation tips.

“With some guidance, re-focusing and a slight change in approach, we believe organisations will get far more out of the materiality process. We should all want to get to the heart of what truly matters to our organisation and its stakeholders because, in the end, that’s what’s going to increase social capital in the short and long term,” Black said.

The paper is available free with registration here.