2014: The Year of Materiality and Streamlined Reporting?

The sustainability reporting world has changed significantly; however, over the last few
years it seems like things have significantly evolved with new standards, guidelines and
updates, including the International Integrated Reporting Council, the GRI G4, the
Sustainability Accounting Standards Board, Global Initiative for Sustainability Ratings, CDP
Water, Forests, and Cities, as well as the DJSI Index Rules Enhancement

Based on this reporting evolution two things have become clear:

1. Materiality is becoming a major factor in reporting AND strategy: Many reporting
standards are using materiality testing to focus reporting efforts and to align with more
traditional financial reporting requirements. However, there is a lot of interpretation of
was constitutes “sufficient” materiality testing. There are five factors which are
important to look at when defining your company’s materiality: material issues for all
organizations, material issues for your sector, unique material issues to your business, an
understanding of what is the business impact by each issue, and the level of importance
each issue is to your key stakeholders.

2. Streamlined reporting will be the responsibility of each company: With all of these
guidelines, standards, and rating initiatives it is difficult to see how the burden of
sustainability reporting is being reduced. In reality, it many companies are spending a
significant amount of time and resources on multiple reporting mechanisms. Even though
many organizations are now cooperating and harmonizing (e.g. CDP, GRI), at the moment
it is unclear whether there will be one global reporting standard that will emerge in which
all corporations will subscribe to. It also seems as if more stakeholder specific reporting is
on the horizon. In this current scenario, it is most likely that streamlined reporting will be
the responsibility of the company in the short term.

If there is one thing your company prioritizes in 2014, if it hasn’t already, it should be to
gain an understanding of your core material sustainability issues, as well as look across all
reporting schemes to see how your organization can streamline reporting efforts.

By Steven Pacifico, spacifico@delphi.ca  

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