Ford, Shell and Anglo American show why materiality matters

BrownFlynn recently got a firsthand look at the G4 guidelines and summarized the top nine things one needed to know. No. 1 on this list: "Materiality is a must."

While previous guidelines encouraged companies to determine materiality, they tended to focus on the number of indicators reported on and the application level achieved. The G4 guidelines explicitly require reporting efforts to focus on materiality, with the first step in the process being a robust materiality assessment followed by disclosure of material topics.

In the wake of the release of the highly anticipated G4 guidelines, organizations have no choice but to determine what to include in a report and what not to include. Or, more specifically, they must now determine what is and is not material to their organization. The G4 guidelines aim to better answer this question, among others, and urge organizations to gain a clearer picture of what matters to them, where it matters and why it matters.

Easy, right? Not quite. But there is a silver lining. As Theodore Roosevelt famously said, "Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty ..."

So, is conducting a robust materiality exercise worth it? We assert that organizations that have undergone thoughtful materiality processes are those that are making the most progress, realizing top-line growth and bottom-line savings, gaining internal and external stakeholder trust and, ultimately, achieving superior financial results.

Reports image by Federico Rostagno via Shutterstock.

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