What if we applied materiality to entire industries?
Materiality has been a big buzzword in the sustainability community for the last few years.
The concept is solid: focusing attention where it is most needed. Materiality analyses strive to include the perspectives of many stakeholders, and start a process of identifying and responding to an organization's most pressing sustainability issues.
But often, the usefulness of this exercise never extends beyond internal strategy and reporting.
Contextualizing progress and metrics at the individual company level with respect to global sustainability issues can be challenging or nearly impossible. In order to work toward solving real-world, complex sustainability problems, we need an approach that will transcend the tracking of individual company performance.
Sustainability requires collaborative effort. Having one small group of high performing sustainability companies — with the majority continuing down the path of business as usual — will not be enough to get us to where we need to go.
Sustainability needs to become further entrenched into the fabric of everyday business for every company operating in a given industry. Every industry still has a lot of work to do in this area.
That challenge raises an interesting question: Can materiality be used in a broader sense to understand sustainability issues across an entire value chain?
Sustainability professionals often promote sector-based approaches to sustainability. These programs serve a much needed role, benchmarking competitors and fueling operational changes within a particular sector.
But what also may be necessary is an approach that cuts across a value chain, which may include a number of sectors.
In the recently released 2015 Sustainability Report for the cleaning products industry, "Understanding Today, Impacting Tomorrow," the American Cleaning Institute (ACI) attempted to apply the concept of materiality at a new level.
One of the first of its kind to analyze an industry sector, ACI’s materiality assessment focuses on the issues of the industry as a whole, across the entire supply chain. The analysis, conducted by sustainability analytics firm Framework LLC, was completed by assessing key issues at each identified stage of the value chain.
Using a series of interviews, surveys and document reviews, the relative importance of issues to both industry members and external stakeholder groups were determined. The results of assessment at each stage were synthesized into a matrix for the cleaning products industry as a whole.
Here are a few examples of why it makes a difference to consider materiality at scale.
Identify 'joint issues of concern'
One key element of a materiality assessment is synthesizing weak spots throughout value chain stages, creating joint issues of concern. The ability to point to joint issues of concern within a supply chain can be valuable to business-to-business partners.
It places buyers and suppliers (at all levels of the supply chain) on the same page with regards to sustainability issues, which are becoming more commonplace in B-to-B relationships. And in the case of industry groups such as ACI, collaboration can being to flourish in a pre-competitive space.
Spur sustainability at more companies
As a business, the process of beginning to integrate sustainability into your organizations business practices can be a daunting and overwhelming task. Where do you start? What does "sustainability" even mean? Do I need my own definition? How much money do I throw at it? Who has any spare time to take this on?
But in today’s business landscape, sustainability, in some form or another, increasingly has become a requirement of playing the game. It is no longer only a strategy for niche pro-active leaders.
A company’s many stakeholders, investors, business customers, consumers and employees may be asking questions related to environmental, social and governance topics. An industry materiality assessment can act as a starting point for organizations just beginning their sustainability journey.
Having a short, agreed-upon set of value chain issues becomes a starting point for smaller organizations with limited resources and bandwidth. And getting such companies onboard is key to unlocking a sustainable future.
Contextualize issues and improvements
Industry-level materiality assessments also can unlock the potential for a new level of performance and goal setting, beyond what can be provided by traditional CSR reporting.
Performance can be looked at across value chain stages or the entire value chain. Reporting at this level can provide more context to the progress being made on key issues. And it could lead to the adoption of more powerful sustainability goals.
Innovation and change are requirements in the development of our sustainable world. As we move closer to our goals, the systems we use to address our progress may need to innovate and change in a parallel fashion.