Materiality assessments: the what, why and how to ensure meaningful stakeholder engagement.
As part of upcoming SBC guidance on materiality assessments and stakeholder engagement, Nikki Wright of Wright Communications shares her top tips on undertaking seamless materiality assessments and encouraging meaningful stakeholder engagement.
As part of upcoming SBC guidance on materiality and stakeholder engagement, Nikki Wright from Wright Communications shares her top tips for undertaking seamless materiality assessments, and ways to ensure meaningful stakeholder engagement.
Why undertake a materiality assessment?
All organisations, from the corner dairy to the largest co-operative in the country, practice one or more forms of on-going stakeholder engagement. Many will find that a material topic assessment is the ultimate lodestar of engagement. An annual or biannual materiality assessment, based on one-to-one conversations with stakeholders, can provide market intelligence and relationship insights that day-to-day contact with those same stakeholders may not provide; particularly if the materiality interviews are conducted by independent expert interviewers.
In our experience at Wright Communications, materiality conversations can bring up material topics between the client organisation and its stakeholders (customers, suppliers, regulators, NGOs etc.) that have not yet been fully explored or resolved.
When deciding what is material, it is useful to consider this definition: an impact is material to sustainability performance if it affects or should affect the well-being of a stakeholder or the resources required for stakeholder well-being. When conducting a materiality assessment project, we look for the influence an organisation has on a topic, as well as stakeholder perspectives on how the topic impacts the organisation.
Nikki’s top tips for materiality assessments
- Budget to speak to as many people as possible from the widest group of stakeholders. We recommend up to 20 interviews. You won’t need to speak to every customer, for example, but a spread of three or four from different sectors or locations is useful.
- Employees are stakeholders too. Employee views on what is important to a business is not always in synch with the executive team. We either review recent employee engagement surveys or ensure employees are included in the interview list.
- Hold an executive team workshop. A facilitated session with the executive team can flush out a wide range of material topics and can be highly productive and useful for both materiality assessment process and for the executive team’s understanding of business risks and opportunities.
- Don’t take preconceived notions into an interview. We generally meet with a client’s executive team for a materiality workshop before conducting external stakeholder interviews, but we use that discussion only as guidance and, later, as an input into the materiality framework.
- Ask a few open questions. Before conducting interviews, we draw up a list of only four or five questions. We ask open questions with the intention of getting the interviewee talking.
- Listen closely and unpack statements as they are made with follow-up questions. As an outsider to a client/stakeholder relationship, the interviewer may struggle to understand nuances or technical terms during a phone interview. There won’t be another chance for clarification, so the best time to check meaning is during the interview.
- Record the interviews and get them transcribed. The transcriptions are gold for the materiality report and for the client organisation.
- Not all views of an organisation are equal. When assessing the importance of material topics we assign a weighting to the scores of stakeholder groups. The weighting may be determined by how close the stakeholder group is to the business and the impact they have on the organisation. The final weighted scores are used to create a materiality matrix.
- The materiality matrix should reflect the significance of economic, environmental, and social impacts on the x axis and the influence on stakeholder assessment and decisions on the y axis.
How to encourage meaningful stakeholder engagement
For many stakeholders, simply being asked to take part in a materiality assessment that goes deeper than their regular contact is a reinforcement of the importance of the relationship. Most stakeholders asked to take part in a materiality assessment will happily give up their time to talk about their views on material topics impacting the organisation, and topics that the organisation has an impact on. Likewise, giving stakeholders consistent and frequent feedback on progress made with their participation is a great indicator that their feedback has been considered and respected.
Nikki’s top tips for meaningful stakeholder engagement
- Don’t wait for perfect conditions; start engagement early. Key stakeholders appreciate being consulted early as it demonstrates respect and intent to consult properly going forward.
- Identify and categorise these key stakeholders. Create a comprehensive matrix divided into quadrants: Partnership, Active Consultation, Maintain Interest, Keep Informed.
- Hold in-person briefing sessions with key stakeholders. Talk to people, face-to-face if possible to quickly and efficiently allay concerns.
- Share information and be clear about early or draft designs for planned developments.
- Be open and listen; what do stakeholders expect or want?
- Be prepared to act on stakeholder advice or concerns. Taking a collaborative approach can dispel concerns and bring stakeholders onside early in the process.
- Use technical experts to brief stakeholders. Independent technical experts can carry more weight with stakeholders than a company briefing.
- Communicate progress consistently and frequently. Don’t expect one communication to be fully understood, read or absorbed; repetition may be less necessary for internal stakeholders but is essential for external stakeholders.
- Follow through on promises to the community and neighbours. Unfulfilled or broken promises can quickly destroy community trust.
- Avoid ‘buying’ support through niche sponsorships.
Nikki Wright (APR, FPRINZ) is Founder and Managing Director of Wright Communications. She is one of New Zealand’s top communications practitioners, with expertise across the consumer, corporate, government and not-for-profit sectors with expertise in sustainability storytelling and reporting. Nikki is an active member of the Sustainable Business Council and signatory to the Climate Leaders Coalition.
Contact: Nikki Wright, CEO Wright Communications