In sustainability management, materiality describes the principle that a company should focus on issues that are of particular importance to the environment, society and the company itself.
The background to this is that sustainability is often complex for both the company and external stakeholders and encompasses a wide range of topics. The systematic development of the "material topics" therefore helps as a comparison. This makes it possible to assess whether a company is working effectively, i.e. profitably, on its sustainability performance.
If a company works primarily on sustainability issues that are not essential for the company, it runs the risk of greenwashing.
Examples of materiality
To make it clearer what is meant, here are a few examples:
- For an oil-producing company, the climate-friendly restructuring of the business model, the safety of employees and the prevention of environmental damage are probably essential, while gender equality and sustainable procurement should probably be of secondary importance.
- For a ministry, sustainable procurement and employee training are probably essential, and water consumption or job security are secondary.
- For an IT service provider, a green IT infrastructure and health in the workplace are probably essential, while biodiversity and corruption are probably secondary.
Significance in CSR reporting standards
The most widely used standards for sustainability reporting - the GRI Sustainability Reporting Standard (GRI SRS) and the German Sustainability Code (DNK) - are build on a materiality analysis. Reporting companies should show which sustainability aspects have been identified as material and how they were addressed. The sustainability report should then prioritise those material aspects in more detail - what measures have been taken, what changes have been achieved, what targets have been set.
Significance for sustainability strategies
Identifying key sustainability topics makes it possible to allocate available resources to those topics that have the greatest impact on sustainability performance. The company is given a clearer orientation and the sustainability measures can be bundled.
In addition, internal and external stakeholders can be given reasons as to why which measures are implemented and why others take a back seat.
Determination of materiality
Depending on the model, 2 to 3 dimensions are considered to determine materiality:
- How strong is the company's influence on the environment, society or the economy with regard to the topic?
- How important do the company's stakeholders consider the topic to be?
- How important is the topic for the economic development of the company?
A detailed description of how materiality is determined can be found in the "Guidelines for effective materiality analyses„
Another helpful source is the article on "Creating the basis for a sustainability strategy„
The materiality matrix as a result
It has become established practice to present the results of materiality analyses in a so-called materiality matrix. The 10 to 20 most important sustainability aspects are arranged in a matrix that shows the relevance of the dimensions described above.
