With new European regulation just around the corner on capturing a company’s impact on people and planet (CSRD), materiality assessments can be a useful tool. A materiality assessment is the process of identifying, refining and assessing a number of sustainability issues and capturing how important these are for various stakeholders, beyond investors and shareholders, to include, for instance, employees, suppliers and others.
The result is a comprehensive analysis of which issues (such as climate, biodiversity, water, gender, diversity, etc.) are important, or material, to the company and its stakeholders, and to what degree and why. This analysis can inform a company’s sustainability strategy, translate into specific targets and timelines and be an integral part of a company’s sustainability journey. It can also help company executives prioritise, create plans and roadmaps and report back against those plans.
Central to our materiality assessment process at Black Sun is a series of internal and external stakeholder interviews. Beyond expanding our knowledge of a business and its relationships, these interviews reveal a very rich level of insights and perspectives around the needs and interests of the most important and influential stakeholder groups – and these insights can bring value to your business beyond your sustainability strategy and roadmap.
Stakeholder insights are the secret sauce to communication and engagement activities that truly capture the imagination of your stakeholders. Your company can use them as the basis of all your communication strategies, from a corporate level to Investor Relations to marketing. Or as creative inspiration around new engagement tactics for building stronger connections to your stakeholders. There’s almost no limit to the mileage your company can get from a materiality assessment when it comes to building meaningful stakeholder engagement.
Often, the starting point of conducting a materiality assessment is regulatory pressure. CSRD impacts European but it also applies to UK companies with significant operations in the EU. The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.[1]
However, companies who have been topping the sustainability charts have been conducting materiality assessments for years now. Best practice says that materiality assessments should be conducted every 3 years, with interim reviews in the between years. This enables companies to accurately track how their stakeholder needs and interests are changing, and to evolve their communication strategies and engagement activities accordingly.
Companies are increasingly pressured by civil society and regulators to be part of the solution when it comes to the impacts that economic activity is having on people and planet. This is part of a wider conversation that calls for companies to move beyond quarterly financial returns to longer-term value creation, within the wider “stakeholder capitalism” debate. A materiality assessment can be a significant step forward in becoming a more responsible and sustainable business, and to help you create a more meaningful, productive and continuous dialogue with your stakeholders.
Want to find out more about how materiality assessments can strengthen stakeholder engagement? Get in touch.
Black Sun is a global group of strategic advisors, consultants and stakeholder engagement specialists. We believe that brands and businesses can have a big impact on our society – they can shape more ethical practices, build more inclusive communities and deliver more sustainable performance. Ultimately, they can spark positive change in the world.
We partner with visionary companies to define and communicate their purpose, strategy and culture and bring to life their value creation story. Our services and solutions directly address the business-critical concerns of today; best-practice disclosure and accountability through reporting; protecting reputation and building trust with digital communications and helping businesses to effectively communicate their long-term responsibility and sustainability story.
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