MATERIALITY IN SUSTAINABILITY – PART 1

In this and in upcoming newsletters, we’ll be talking about the importance of ‘Materiality’ in sustainability.

Most internationally recognised sustainability frameworks, from the Global Reporting Initiative (GRI) Standard for sustainability reporting through to the Sustainability Accounting Standards Board (SASB) recognise the importance of the concept of ‘Materiality’. It is a way for companies to focus their management efforts and responses to the wide range of challenges and opportunities presented by environmental, social and governance related extra-financial factors that impact long term performance.

For Part 1, we’re sharing a client example where we supported a materiality assessment process that was primarily focused on meeting sustainability reporting requirements.

Investors demonstrate their commitment to sustainability by becoming signatories to the Principles for Responsible Investment and joining collaborative sector-based initiatives such as the Responsible Investment Association Australasia, Investor Group on Climate Change and the Climate Action 100+. Another way they show leadership is by practicing what they preach! One of our clients, U Ethical, is one such organisation.

U Ethical engaged Point Advisory to help them apply the GRI Standards, performing a materiality assessment to inform their first Annual Sustainability Report released for their 2019 reporting period. U Ethical said that they “conducted a materiality review to ensure we balance our stakeholders’ views with an ever-evolving set of ethical demands.” The Point Advisory team assisted in the process by developing a ‘universe’ of 38 topics, refining the list by placing them within the 10 categories, and helped U Ethical to plot the 10 topic categories based on their relative importance to stakeholders and to the organisation. The summary of their materiality assessment is available on page 16 of their Annual Sustainability Report 2019 and shown below.

For most companies, we recommend that materiality assessments are refreshed at least annually for reporting purposes, with detailed refresh cycles performed at least every 3-5 years for strategic purposes.

Please contact Alan Dayeh, Principal at Point Advisory, to discuss how materiality assessments can be best designed and applied for your organisation.