BrownFlynn will be conducting a pre-conference tutorial on materiality and reporting at the upcoming GreenBiz Forum New York.
It’s reporting season — the time of year when many corporate responsibility professionals are in conversation with top leadership to determine whether 2013 will be the year the company finally publishes its first sustainability report.
In most such cases, external reporting is an idea that’s been kicked around for a few years, but the first quarter always brings a flurry of discussion and a renewed sense of urgency around the topic. In addition to the time it will take to collect data, write copy, design, print and program, there is sure to be at least a week or two tied up with discussions of whether there should be a comma before the word "and" within a bulleted list, or a debate over whether it sounds ominous to use the term “The Company.”
Once you add in the “socialization” time needed for legal, marketing and human resources, one can decide whether to get approval to report now or wait until 2014. But even the most progressive executive sponsors want a simple calculation of return on investment in order to feel comfortable pulling the trigger, so we are often asked to help build the case for justifying reporting expenses.
How do you know whether it will be worth it? It depends upon how much thought is given to materiality. The care and attention given to materiality is a key difference between a first report that is ultimately viewed as an expense, and one with tangible returns.
A materiality assessment is a process by which a company determines which topics are addressed in a corporate social responsibility or sustainability report. The concept of materiality within corporate social responsibility gets thorough treatment in the GRI Technical Protocol and the SASB Materiality Maps. The kinds of discussions that are prompted by these materiality frameworks can serve as guideposts for determining whether the reporting process will be worthwhile. Here are a few to consider:
How are you determining report readiness? If your company’s readiness to report is being evaluated on the basis of the availability of data alone, you will likely spend most of your time shuffling information that you already have, and may or may not use. Adding this data to a sustainability report is not going to make it more useful or better managed. Consolidating old data into a new format will likely incur extra expense with little benefit. If you’re determining report readiness by assessing top leadership’s openness to feedback and transparency, or by the company’s commitment to exploring opportunities for improvement, the reporting process will be more likely to pay off with process improvements, top-line growth or improved employee engagement.
Are you only choosing data that is easy to collect? If you are already planning to cut corners when it comes to data collection, thinking it’s better to have incomplete data than none at all, your efforts may actually lead to an increased focus on your incomplete data by both your readers and your executives. If your local spending in underdeveloped countries is an important metric for your company but your report only lists local spend for your corporate headquarters, this will raise more questions than answers. But if the plan is to use the data-collection process as an opportunity to uncover innovative ways to assess performance while maintaining a clear connection to the company business strategy, the report will add value. This means not being afraid to say that material data is unavailable, but that management processes are being put into place. The management processes are what will pay off, not the numbers on the pages of a first report.
- Do you plan to use the information from the report for other communications? If the report is going to be just another page on your website, it is likely to get about as much traffic as your “partnerships” or “sponsorships” pages. Many companies are applauded for producing their first CSR report because of the statement it makes about the company’s commitment to manage environmental and social impacts. Employees and customers will take note and respond, but only if they know about it. If you are exploring other channels to communicate report content to key groups, this indicates that your report content will be relevant to your stakeholders and will serve a purpose beyond the report publication. If you think of the reporting process as an opportunity to demonstrate commitments and establish channels of two-way communication with key stakeholder groups, then the report should naturally feed other communications.
These are just a few guideposts that can be used to determine how quickly a company will get a return from the CSR or sustainability reporting process. When the process begins with a robust materiality assessment, the months spent drafting and collecting data will provide useful feedback, actionable data and strategic communications. With these benefits in tow, it’s easy to show a return on investment not only for this year, but for many years to come.