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So, you've heard of a "materiality assessment," have you? Sounds like a bit of corporate jargon?
Well, fear not, fellow planet saver, because I'm here to break it down for you in a language we can all understand (sort of).
A materiality assessment is a fancy way of saying that a company must figure out what matters.
You know, the big stuff. The stuff that could make or break their reputation, finances, or ability to reach their goals.
To do this, you've got to gather information from all sorts of places:
- Financial data
- What customers are saying (often bluntly)
- What employees really think
- Your supplier's challenges
- What's going on in the industry at large
Take all that info and determine the most pressing and essential issues. Yeah, it's not that easy, but also not an impossible task.
By doing a materiality assessment, you can determine what really matters to the people who matter to you (follow?). That means they can prioritise and focus on what's important and not waste time on the small stuff.Getting other people's points of view is seriously important in this stuff.
If you don't you risk the "false consensus effect". Thinking you know what your stakeholders want without asking is like serving tea with milk to a vegan mate - you won't be friends for much longer. A more relevant example is assuming customers want a particular product without conducting market research, leading to wasted resources and missed opportunities.
Capturing stakeholders attention
With each source, there will be a variety of ways you can gather insights. When collecting data, ensure that you take the most feasible approach for your company. Remember you want to be as effective and thorough as possible, but you also do need to finish the thing.The three main ways of collecting data are:
1) Surveys - they can be used for all sorts of stakeholders and can be sent on mass, so in theory, you can get a lot of opinions in a short space of time
2) Interviews - these don't have to be formal, awkward 5 min preamble style interviews. Make it relaxed, and utilise the relationships you've built to date with your stakeholders to get their honest opinions on things. It could even be done in a pub (I recommend capturing the data before you start that third drink).
3) Desk research - those white papers won't read themselves. There is so much research at your fingertips produced by industries and organisations alike that can help inform your materiality assessmentYou may have other ways of collecting data, and as long as you're confident in the source and method collection, let rip!
Fancy cheating?
Well, it's not cheating, but the resource is so valuable, it can feel like it.The fine people of the SASB (Sustainability Accounting Standards Board) have created a materiality finder. It showcases the key issues identified already within your industry.Now, please make sure you still get information from other stakeholders, but the above will help you get the ball rolling.
There are a few steps you need to follow any for each company it's different, but the general rules apply:
1) Define what you're looking at - who are the stakeholders you need to consider, and what time period are you looking at?
2) Figure out what the key issues are - research, crunch some numbers, and talk to the people who matter.
3) Evaluate those issues - which ones are the most important and which ones have the potential to cause the most problems.
4) Prioritise - figure out which issues need the most attention and which can wait until later. That's where the materiality matrix comes into its own.
5) Make a plan - now that you know what really matters, it's time to devise a strategy to tackle those issues head-on.
Think of it like a chart that helps companies determine the most important issues to their stakeholders. The matrix plots these issues based on two factors: how important they are to the company and how important they are to the stakeholders.By using this matrix, companies can see which issues they must focus on the most. It helps them prioritise what they need to tackle first and what they can work on later.But the best part? It's not just some boring old chart. It's a visual representation that anyone can understand. You don't need a degree in finance to figure out what's going on. And that means everyone
- from the CEO to the intern
- can get on board with the plan and work together to make a difference.
Some examples of these can be found here:
- Hubspot
A materiality assessment might sound like another one of those forgotten corporate exercises that take up more time than it’s worth, but at the end of the day, it's just a way for companies to figure out what's important and focus on what really matters. And who knows, maybe if more companies did this sort of thing, the world would be better.
If you're still unsure, reach out to the team today to understand more and learn how Futureproof can help with this and your other sustainability needs.
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