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Issue Scoring

What type of data and methodology are used to score the issues? The more information provided on how issues are scored, including both the type of data and the methodology used to collect and aggregate it, the more useful the matrix becomes for the reader. Without this information, the reader only learns the company's point of view about the relative significance of each issue. While useful, it is equally, if not more, useful to understand how the company came to this point of view. As with the above aspects of constructing a materiality matrix, most companies provide little to no explanation about how issue scoring is done, with only 8% providing even a modicum of explanation. Generally, little to nothing is said about the algorithms used to score an issue.

Regardless of the algorithms used, companies vary in terms of the precision with which issues are placed in the matrix. Three basic methods were observed: (1) numerical labels on the axis (e.g., 1 through 5), (2) word labels (e.g., high, medium, and low), and (3) no labels (with implied low to high).36 For each, companies create cells in the matrix or used "isobars" to represent materiality "boundaries."

Still, some companies clearly articulate their scoring method and provide qualitative interpretation. UBS, with axis units of 1-100, breaks down the scoring into five different areas.37 Royal DSM uses a numerical scoring system along the axis and segments its matrix into four quadrants with different descriptions.38 However, no companies in our sample explicitly state how their stakeholders are weighted or how their views are aggregated on the Y-axis.39

Interactivity

Finally, we examined creative ways in which the company was leveraging online tools, a topic discussed more generally in Chapter 8. On their websites, companies can address some of the limitations we observed in the above aspects by making their materiality matrix more interactive. Some have an interactive materiality matrix that provides the user with an additional layer of data. These typically appear on the company's website with "clickable" issue points that direct the user to a page that explains the issue in more depth and details the company's response. Clicking on the issue "resource scarcity" on the German chemical company BASF's materiality matrix, for example, takes the user to a page addressing BASF's different strategies for resource efficiency and renewable raw materials.40 Other interactive matrices allow the user to change the perspective along one or multiple dimensions. Cisco, for example, has an interactive materiality matrix that allows the user to populate the matrix with only one issue category (Society, Environment, or Governance) or based on the level of control the company had over the issue (High, Moderate, or Low).41 Campbell's Soup, on the other hand, allows the user to populate the matrix with one of four different issue categories.42

Uses of the Matrix

As with the construction and presentation of the matrix itself, in our study of 91 companies we found substantial variation in the relative emphasis companies accord to reporting, stakeholder engagement, and resource commitment, and the degree to which the company explains how it uses the matrix for these purposes. In most cases, its main implied use is for the sustainability or integrated report, yet very few companies clearly link the entries in the matrix to the content of the report. Exceptions include Samsung Life Insurance and GS Engineering and Construction, which provide page numbers for the material issues prioritized in the matrix.43 Similarly, companies rarely discuss engagement in use and, as described above, we noted tremendous variation in the amount of disclosure about engagement for construction. From an audience perspective, the most opaque use of the matrix by companies is for resource commitment decisions. One exception is Mountain Co-op's explanation of its materiality analysis: "At MEC, we use materiality analysis in two ways: to inform sustainability strategy by highlighting issues that matter to stakeholders and the organization, and to inform reporting to ensure transparent communication about material issues. By understanding what is material to our organization and our stakeholders, we can prioritize our strategy and our report accordingly."44 This simple statement makes clear that the company believes more emphasis should be put on reporting about issues that have significant resource commitments.

 
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