2014-10-31-KPMG_China-可持续发展新思维_重要性评估的关键_19页_1mb

Summary of KPMG's Sustainable Insight: The Essentials of Materiality Assessment

Core Content

Materiality assessment is a critical process for identifying the social and environmental issues that significantly affect a business and its stakeholders. This guide provides a structured approach to conducting a materiality assessment, aligned with global reporting frameworks such as GRI G4, IR Framework, and SASB, and offers both basic and advanced strategies for improving the process.

Main Points

• Materiality as a Strategic Tool: Materiality assessment should be integrated into broader business strategy and enterprise risk management, not treated as an isolated exercise.
• Stakeholder Engagement: Engaging stakeholders is essential for identifying and prioritizing material topics. However, many companies fail to explain how this input is used in their materiality processes.
• Challenges: Common challenges include isolating the process from the rest of the business, lack of senior management involvement, complexity of large organizations, time and cost of stakeholder engagement, broad or overlapping topics, and managing too many material issues.

Key Steps in the Materiality Process

Phase 1: Define Purpose and Scope

• Identify the objectives of the materiality assessment.
• Define the audience for the outcomes.
• Clarify what materiality means for the organization.
• Set the scope of the assessment, including geographical and operational boundaries.
• Decide on the type of reporting (standalone or integrated).

Phase 2: Identify Potential Topics

• Collect a long-list of potential topics from various sources such as media, internal data, peer reviews, and stakeholder feedback.
• Include both risks and opportunities.
• Consider the impact of stakeholders on the business and vice versa.
• Involve cross-functional teams for broader insights.

Phase 3: Categorize

• Cluster topics into higher-level categories.
• Ensure categories are consistent and not overly granular.
• Align topic names with existing company terminology and strategy.

Phase 4: Gather Information

• Assess the relevance of each topic to the business and stakeholders.
• Define a methodology for scoring topics based on strategic importance and impact.
• Evaluate actual and potential economic, social, and environmental impacts.

Phase 5: Prioritize

• Use a scoring methodology to prioritize topics.
• Set a threshold for determining material topics.
• Ensure the prioritization reflects both stakeholder importance and business impact.

Phase 6: Engage Management

• Obtain sign-off from senior management to validate the materiality assessment.
• Present outcomes to the Board of Directors and recommend actions.
• Integrate materiality results into broader corporate strategy.

Phase 7: Seek Stakeholder Feedback

• Identify and engage stakeholders to review material topics.
• Document stakeholder input and its impact on future reporting.
• Consider setting up a stakeholder panel for ongoing feedback.

Key Information

• Global Trends: 80% of the world's largest 250 companies identify material sustainability issues in their reporting, but many do not clearly explain the process or stakeholder input.
• Regulatory Drivers: New regulations like the European Directive on non-financial reporting and stock exchange requirements for ESG risks are pushing companies to refine their materiality assessments.
• KPMG's Toolkit: The guide includes 11 strategies and a 7-phase process, with a Materiality Toolkit and Methodology for practical application.
• Value Creation Focus: Materiality should be viewed through the lens of value creation, helping to bridge the gap between different reporting frameworks.

Advanced Considerations

• Systemic Risk Mapping: Linking topics to external trends and identifying interconnections can enhance the strategic value of materiality assessments.
• Continuous Process: Establish a continuous process for updating material topics based on emerging issues and long-term trends.
• Digital Integration: Use digital tools to collect and store evidence, improving efficiency and transparency.
• Embedding in Strategy: Materiality should be embedded in business planning, risk management, and performance tracking.

Conclusion

A robust materiality assessment process is essential for aligning sustainability efforts with business strategy and stakeholder expectations. By following the 7-phase guide and addressing common challenges, companies can ensure their materiality assessments are comprehensive, credible, and impactful.