Materiality is another term related to ESG that can cause confusion for corporate organisations, leaving them wondering once again how to tackle this octopus-esque agenda, which has many arms and is all-moving.
So, how do we wrestle the octopus and perhaps calm it into working for us, rather than against us? Conducting a good quality materiality exercise should give your organisation a clear understanding of which areas of ESG (the arms) you need to prioritise and why – from a financial, risk and growth perspective. It allows you to prioritise the work you need to deliver, link this work clearly into different business functions and engage your leadership team in the right way.
How, you might be wondering? By using clear data and evidence. The stakeholder consultation work that sits behind a materiality exercise gives you qualitative and quantitative data evidencing the areas of ESG that impact your business the most and those your business has the biggest impact upon. Presented clearly, this evidence can brief your Board on what next and why, gaining buy-in to align business functions around the exploration and improvement programmes that will naturally follow.
This excellent article from City AM outlines a few different ways in which materiality can be undertaken and some thoughts around how to get started. If you are unsure how your business should be approaching ESG my top tip is – start with materiality and look that octopus square in the eye.
ESG: What’s material about materiality?