In the second day of the week-long Materiality ThinkTank, sustainability experts delved deeper into the question of how to define appropriate stakeholders for giving input on companies' materiality determinations. Participants generally agreed that companies need to synthesize and transcend the prevailing standards to come to their own choices of relevant stakeholders.
“It is appropriate to define stakeholders based on GRI, IIRC, and SASB criteria, but be careful about hewing too closely to any one of those definitions – each company needs to define its own stakeholder universe based on its unique business impacts,” said Kathee Rebernak, CEO of Framework LLC, which is hosting the dialogue. “I strongly agree – companies should define their stakeholders that are associated with the direct impacts of its decisions and operations” as well as “those that should be targeted for business communication through sustainability reporting,” said Alberto Esteban of CapacitaRSE in Chile.
Facilitator Aleksandra Dobkowski-Joy, President and COO of Framework, seeded the conversation with links to the varying definitions of stakeholders by the predominant sustainability standards: GRI (page 9), IIRC (page 5), and SASB. She also linked to a provocative blog by Elaine Cohen entitled “The Commoditization of Materiality Feedback.” These resources encouraged participants from SASB, FedEx, Pfizer, Henkel and other organizations to dig deeper.
“I think one of the most significant challenges is identifying how their concerns (and the ability or inability to address them) impact value creation--in other other words, understanding the interconnectedness among various stakeholder groups,” Rebernak added.
Responding to a prompt by conversation curator Bill Baue, Co-Founder of Convetit (the online stakeholder engagement platform where the dialogue is taking place), IIRC Technical Director of Guidance and Practice Lisa French made an important clarification: while shareholders (and other providers of financial capital) are the primary audience, integrated reports need to account for material impacts on capitals that affect stakeholders.
“For example, will innovation (intellectual capital) play a critical role in weaning the company off the dwindling resource (natural capital)? Will inaction impact its reputation, brand and social license to operate (social and relationship capital)? What are the financial consequences (financial capital) of finding suitable alternatives?” French asked. "My point: All roads in the integrated report point to future value creation (or erosion). And it's this mindset that should guide the materiality determination process.”
Day3 (Wednesday March 19) examines Stakeholder Fatigue
Day4 (Thursday March 20) grapples with Practical Dilemmas.
Day5 (Friday March 21) looks ahead to The Future of Feedback.