Sustainable Business 101: What is Materiality?

395 of S&P 500 companies (78%) issue sustainability reports each year and organizational leaders are often looking for ways to encourage employees to participate in environmentally friendly practices.  One way to link organizational goals to employee behaviors is to focus on materiality. 

What is Materiality?

Materiality goes beyond listing company values and compliance statements, but like these two business elements, ESG considerations and GRI filings are beginning to be expected as ordinary business activities, and are no longer just a separate function within the organization.

Materiality defines a statement of what the company sees as important to control and monitor.

Sustainable Business 101:  Water & Data Security

An example of this would be a comparison of a bank and a brewing company, like Molson Coors. While both should incorporate the ESG considerations of water stewardship and data security in their operations, failures of governance around data security are far more harmful, or material, to the underlying business of the bank than to the brewing company since a breach of data security can lead to a substantial loss of customers for the bank. Conversely, while every employer should seek to reduce water consumption, it is a far more material consideration to the operations of a brewing company than to the bank. Once they have defined what the material considerations are, companies ideally will incorporate such considerations into everything they do to ensure sustainable business operations, a sustainable planet, and a sustainable economy.

Learn more: Working Paper, Materiality and Sustainable Business

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