Introduction
Sustainability issues and topics vary across
business industries. Sustainability professionals within companies or external,
advocate the risks and opportunities arising from sustainability topics to pave
way for better sustainability strategies, management, performance and reporting
that would benefit companies, internal and external stakeholders.
In order to do so, sustainability professionals
conduct sustainability materiality assessment guided by related established national
and regional standards to prioritise the most important sustainability risks
and opportunities to the business as well as stakeholders.
The question is, what are the basics to ensure
an effective materiality assessment?
Sustainability 101: How to Conduct an Effective Materiality Assessment
1.
Select
Both internal and external stakeholders present
valuable and diverse insights for the business, especially from key
stakeholders that have high influence and dependence on the company. Hence, it
is important to first, create a list of all relevant stakeholders of the
company (e.g. Board members, Senior Management personnel, Heads of Divisions,
etc.) and across the value chain (e.g. suppliers, customers, regulators, etc.)
and identify the personnel or groups of stakeholders that understand the
company and its operations so that their feedback would be credible and
holistic. That being said, selecting personnel or groups of stakeholders that
have historical and frequent engagements with the company, would be a good
starting point.
2.
Initiate
After identifying who to engage with, it is
best to set a time to discuss on their participation as well as the objective
of the engagement. During this stage, the communication should be concise and direct
for the stakeholders to understand what is exactly needed from them and how
their input would help with the outcome of the materiality assessment.
Depending on the stakeholder category, it does not have to be a formal meeting,
but could also be done via casual talks and discussions.
3.
Topics
There are many ways to identify sustainability
topics. International guidelines and standards have set various approaches for
companies to consider when selecting the topics that are relevant to the them
and industry as a whole. Companies may also refer to publicly available
information such as peer reports and the media to identify the topics and
issues that are applicable. At the end of day, upon coming up with the list of
topics, companies should ask themselves, “Are these topics relevant to us? Are
these topics relevant to us now and in the future? Are they important to our
stakeholders? Do we have great impact on each of the topics?” These are some of
the few questions that can guide companies to ensure the topic selection
process in on the right track.
4.
Prepare
Ideally, materiality assessment is best to be
done formally or via direct engagements with the stakeholders. This provides
the time and attention to gauge their perspective that is strategic and
specific that is difficult to obtain if done via surveys or informal
Q&A.
At the same time, the discussion points must be
made simple and clear (as well as examples) so that stakeholders are fully
aware of the topics being discussed. The reason for this is that we need to
understand that not all of them understand the entire sustainability topics or
even understand sustainability risks and opportunities as a whole, that could
beat the purpose of obtaining their valuable insights in the first place.
5.
Engage
Once the materials are prepared and reviewed,
it’s first good to conduct a test run of the stakeholder engagement amongst some
internal stakeholders first. This will help to get their feedback for
improvements that may have been missed out on, before wider stakeholder
engagement is initiated. This is also a good practice to have the stakeholder
engagement coordinators to be fluent or find the right rhythm during the actual
engagement. The coordinators may also find it useful as they would obtain the
types of questions from the stakeholders arising from the survey so this will
help them to anticipate and respond to them during the real engagement.
Companies should allow for the stakeholders to
allocate some time to participate and respond to the survey or questions. They
should also be allowed some flexibilities in providing their answers and may
extend some additional comments on any sustainability related matters they deem
necessary. This is because occasionally, the survey would not cover all areas
of sustainability that cater to all stakeholders.
6.
Analysis
Collecting the survey from stakeholders might
be a long process. Some would not even revert with the response. That is why
coordinators need to reach out to larger groups of participants to have better
chance of having good sample size of the completed survey.
Once there is adequate sample size, it is time
to carefully derive the responses. Results of the engagement could be drawn
collectively as a whole as well as a more detail comparison of different
stakeholder categories such as Employee vs Board of Directors, Suppliers vs
Customers or even internal stakeholders vs external stakeholders, or could be
further detail such as Suppliers by age, or region.
The important aspect is to gauge what are the
most common topics and issues these stakeholders have and what do they expect
in the future. This will help companies to see where they can meet the demands
by stakeholders with the business readiness and capabilities, and ways to
improve to achieve mutual gain.
The overall results could be presented in
various ways and charts. The importing thing is to present it in a way that
shows clear rankings of each matter. Factors and professional assumptions to
reflect the rankings (based on the feedback from stakeholders) should further
support the result when being presented.
7.
Respond
Once the result has been discussed and
presented in companies’ websites or public reports, it does not mean that it is
the end of the process. The true motivation for the engagement is so that
companies have a better understanding of what needs to remain, change, improve
on or even discard in their current services and practices to have a more
sustainable operation.
It is a good opportunity to integrate the
feedback from the engagement into business and sustainability strategies,
policies and initiatives. At least there is a stronger basis of why changes are
being made to ensure value creation for the company.
Conclusion
Materiality assessment can be time consuming
and requires a lot of effort, resources and expertise. However, it also provide
great insights for companies to improve in their business and sustainability
management. At the same time, it will also create stronger ties between
business and its stakeholders from the engagements conducted.
All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation
