Corporate responsibility (CR) is becoming an increasingly important matter of concern for large companies across the globe, as the corrupt are lambasted in the Press media and sued into oblivion. Business ethics, environment, society, and employment are considered now essential parts of the quadruple-bottom-line in operating successfully i.e. sustainably in the modern business environment.
A key precept of building sound CR practices is how an organization defines and provides for its Key Material Sustainability Issues (KMSI).
Firstly, let’s define “materiality.” According to me, it is “the state or quality of being material.” Another more precise source says, “An issue or concern is material if it could influence the decisions, actions and, behavior of stakeholders or the organization.” Materiality hence relates to tangibility. When problems have high materiality they’re meaningful to the sustainability of the company.
Furthermore, issues are ‘material’ to an organization if they’re both appreciably relevant (what matters) and important (how much it matters) as commonly defined by an account of all stakeholders and the business itself. Materiality is measured by the stakeholders: 1) influence on sustainability, and 2) impact on the industry.
Fundamentally, a business must know what its stakeholders care about i.e. know what is material for them, and put this together with the strategic impact of individual stakeholders on that business or business area i.e. their impact and influence.
This information gives a business with direction or rules with which to guide and govern judgments, determination making, and action. Underpinning and further directing this detailed corporate knowledge is Sustainability or Business Principles. These are broad business values, for example, “We create and maintain a working environment where people are summoned to do their best.” This would be a fitting Business Principle supporting the ’employment’ section of the quadruple-bottom-line.
In sum, sustainability is accomplished through stakeholder involvement and the embracing of the Principle of Inclusivity. Carrying this principle of inclusivity (i.e. breadth) are three others: Materiality (i.e. realness), Completeness (i.e. accuracy) and Responsiveness (performance-based on reality)
At the end of the day, business needs to attempt to do whatever it can to protect its ultimate interests; the only way a company can do its best to ensure its future, or provide for its sustainability, is to heed all stakeholders’ input and weigh it with possibilities, and against the perceived threats, to its business. This is sustainability.