How to engage stakeholders?
The GRI G4 guidelines state that the process for defining report content should include stakeholder views. However, stakeholder views are many and varied, and without careful planning a stakeholder engagement exercise could easily end up simply reflecting the views of those stakeholders that are most vocal or easiest to engage. Plus, of course, stakeholders are likely to be geographically diverse. One emerging solution is online engagement, using a platform such as StakeholderTALK, which allows a large number of stakeholders to contribute their views, regardless of location, and permits each respondee an equal voice. For example, a recent stakeholder engagement exercise by Bouygues Energies and Services supplemented traditional face-to-face engagement of key UK personnel with online engagement of all its UK staff and specific external stakeholders. A further challenge is to take into account the relative importance of different stakeholder groups before a final assessment of materiality is made.
Material to which part of the business?
Many businesses offer a diverse range of products and services in a range of territories, yet produce a consolidated sustainability report. If a materiality assessment is being carried out as part of the reporting process, then the emerging need to identify a single set of material issues at Group level could mask important differences in what is material for different parts of the company. Initially, at least, we would expect to see large companies retain a single consolidated report based on a single set of material issues. However, moving forwards we would not be surprised to see companies address this challenge by moving towards more localized and business function-specific materiality assessments and sustainability reports. In terms of making reporting more relevant and useful to a range of stakeholders, this can only be a good thing. For example, both Saint-Gobain and Bouygues Construction – two large multinational companies headquartered in France – have in recent years started to produce sustainability reports specific to their UK markets.
What threshold?
Once stakeholder input has been used to prioritize relevant sustainability issues and impacts, the next challenge for companies is to decide where the materiality threshold lies. In other words, which issues are sufficiently important to be reported? A ‘materiality matrix’ is a useful way of plotting relevant issues and impacts based on impact to the business and importance to stakeholders. This way of visualizing the prioritization highlights not only the relative priority assigned to all issues and impacts, but also the extent to which there is a disparity between the views of the business itself and the views of its stakeholders. Typically, issues that appear in the upper-right hand part of the matrix would be deemed as most important to report. However, the fact remains that there is no absolute measure of materiality and no ‘correct’ number of material issues, meaning we are likely to see different companies set the materiality bar at very different heights.
