Now that we have shared our vision on the impact of the latest GRI revisions on how we use materiality in organizations, the impact of COVID-19 on the (re)implementation of the materiality assessment and the potential of materiality in alignment with strategy and risks (see ‘The potential of materiality: part 1 to 3), it is now time for the big question: how do you make materiality part of your strategy in a sustainable way? In this fourth and final blog of our tetralogy on materiality, we outlined this for you in three steps.
Step 1: Analyze the internal and external environment of the organization (foresight)
As we mentioned in our previous blog, both the material topics and the strategy identify what is important for an organization and what direction the organization should take. It is therefore important to get a proper understanding of the internal and external environment of the organization, for example through a (desktop) analysis. The organization uses internal strategic documents, investigates trends, and developments within the sector, and looks at available publications of peers and supply chain partners regarding strategy and materiality. The outcome of such an analysis provides a list that gives insight into the material topics identified by internal and external stakeholders. To critically analyze the outcome, we often limit such a list to 15 to 20 topics. We also ensure that the topics are of the same level of aggregation, so that “green and mature” are separated from each other.
Before the list of potentially relevant topics can be presented to internal and external stakeholders, it is already possible for the organization to make an initial grouping of the various topics.
Step 2: Drawing up a strategic framework around outcomes of materiality analysis (focus)
After internal and external stakeholders have determined the most fundamental material topics, a strategic framework is drawn. When drawing up such a framework, it is important that the organization brings the material topics together in a balanced way. We often see that organizations opt for a division based on traditional ESG (Environment, Social, Governance) or PPP (People, Planet, Profit) lenses. But you can also choose to link your material topics to an existing business-strategic framework or specify them in a stand-alone sustainability framework. The value creation model is a good example that lends itself well to this. In addition, other lenses can be used to set up the framework, such as license to grow versus license to operate or control versus guide, versus influence. In this way, a strategic framework consists of pillars in which the material subjects pursue the same goal or impact and can therefore reinforce each other. Ambitions are then determined for each of the pillars, which give direction to what the organization wants to achieve with its strategy. These can be qualitative or quantitative, ideally formulated SMART. However, this does not fit every organization and is highly dependent on the maturity of the organization in the field of sustainability.
Step 3: Investing responsibilities within the organization (alignment & autonomy)
Now that the material topics have been integrated into the strategic framework and the ambitions have been determined, the organization needs to get a clear overview of what they need to do and/or what they need to be good at in order to achieve their strategic ambitions. Representatives from different departments should be determined together in which material subjects the organization should excel in order to achieve the desired results. These aspects are also known as value drivers or critical success factors. Whatever label they are given; as long as it is clear that it concerns an activity.
By carrying out this exercise internally and involving various departments for input to provide, a widely supported outcome is achieved. This makes it easier to assign the final responsibilities for the various material subjects to the various departments or people with final responsibility.
This way, the organization can build materiality into the strategy in a sustainable way and focus is created for the various departments.
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