Materiality was made a staple component of the Global Reporting Index’s latest guidelines in June of this year to emphasise the growing importance of non-financial data in corporate reporting, big data that holds the key to unlock a multitude of efficiencies according to a new report.
AccountAbility is an organisation that aims to mainstream sustainability strategies into all facets of business, and it has released a report which will form a series of publications on the topic of materiality, to advice business on how to incorporate it into corporate reports and data tables.
The report attempts to redefine the traditional meaning of the term, and move ‘materiality’ away from the accepted monetary connotations and towards a more inclusive term that encompasses risk disclosure, challenges brought by climate change, and board accountability on overall business sustainability.
The report states that materiality can represent up to 80 per cent of a company’s value, which is why a mandatory framework for corporate disclosure is becoming an increasing possibility. The report reads;
‘New materiality management in a Big Data era also calls for the application of rigor and discernment on priority issues to avoid getting lost. This means smart deployment of Big Data platforms, to solve and manage crucial problems [such as] “What’s going on in our supply chains?” and assure accurate disclosure to different stakeholders; “This is the actual impact on the environment of our material sustainability commitments”… The key question facing corporate (and investor) leadership is: how ready are you to incorporate these responsibilities for externalities and transform them into assets?’
To be able to affectively handle this new definition of materiality, AccountAbility states that companies must be able to discern which material issues are of most importance to that individual business, and how any resultant actions will affect internal procedures and the external environment.
Businesses must develop a big data strategy around this according to the research; a strategy that has the flexibility to grow and develop as the company learns and as priorities shift. AccountAbility (as suggested by the name) is a strong advocate of transparency, and in the report it advised that transparent disclosure of sustainability commitments from the offset is of upmost importance. This is so that the ripple effects can be seen, and the resultant positive effects in the wider context can be properly accredited.
Head of Global Research and Development at AccountAbility, Ted Grant said: “The boundaries between corporations, the environment and society continue to blur, this blurring has made identifying and focusing on what is truly important to long-term company performance, impact and sustainability even more critical as a governance and management discipline.”
August 13th, 2013
Tags: accountability, big data, business, corporate reporting, Data, governance, open data, report, reporting, research, risk, risk management, supply chain, supply chain management, Sustainability, transparency