It is the company’s responsibility to identify and manage its impacts – but understanding where business perceptions of significance overlap with the sustainability concerns of stakeholders through, for example a materiality matrix, can make a useful contribution to the prioritisation process.
The figure shown here is an illustration of a materiality matrix taken from Cisco’s 2010 CSR report in the form of a ‘Materiality Assessment of Issues’.The vertical axis represents the importance of an issue to society and the horizontal axis the importance to Cisco. All the issues plotted on the graph are issues that Cisco, to a greater or lesser extent, impacts through its activities.
This matrix is a comprehensive overview of the issues that both the company and its stakeholders believe are important to the company’s CR sustainability. In other words, the company can have a material impact in terms of how they are managed from the inside out (e.g. product solutions and services; digital divide), and it can be supportive of, but not directly materially affect, others (e.g. biodiversity, and concerns about water use). The impacts can be either negative or positive. The matrix assists the company to prioritise the issues it must manage, to identify and prioritise where to focus its efforts; and to explain the rationale behind the course of action it takes.
“A materiality assessment is a powerful tool to understand where business interests overlap with the sustainability priorities of a company’s stakeholders.”
Eric Olson, SVP Advisory Services, BSR
The scoring systems used in materiality matrices are also an area of continuing development. Judging materiality is relative and qualitative. The use of a table to describe different levels of impact and outcome can provide a disciplined framework for evaluating very different factors. In companies where risk management is a specialised management area, preferred approaches to scoring events – already understood and trusted by management – may be adapted for use in the SEE materiality matrix. For example, a scale that allocates values to the different levels of impact at a local, national or international level, and over different lengths of time, could be used to attribute values to different impacts.The results may then be integrated into broader corporate systems, for example, for risk management.
Learn more about scoping materiality in the How-To Guide by Mandy Cormack, How to Identify a Company's Major Impacts - and Manage Them.