If you are planning to create a CSR strategy, a materiality matrix is an essential tool for building the strategy’s guidelines. You might be wondering what a materiality matrix is for and how to use it. We’ll explain all in this article.
What is a materiality matrix?
The purpose of a materiality matrix is to assess CSR issues in terms of their importance to stakeholders and to an organisation’s success. From a CSR perspective, the matrix helps to rank and prioritise a company’s CSR issues.
These issues are ranked in order of priority and by topic (social, societal, environmental, governance, financial, business, etc.).
We talked about stakeholders and their importance in last month’s article. To quickly recap, a company’s stakeholders can include employees, shareholders, investors, customers, suppliers, public authorities, and NGOs, among others.
What is its role in CSR strategy?
Generally speaking, a materiality matrix helps to firmly establish your approach to CSR. A materiality matrix will propose tangible actions for setting up a CSR policy based on teamwork and collaboration. This approach will help you create meaning and uphold your company’s values.
Collective intelligence is at the very core of the materiality matrix. You can use the matrix to build a clear and shared vision of your company’s CSR strategy.
Understanding
In July’s article we explained the importance of stakeholders in a CSR strategy. Your company interacts with stakeholders both directly and indirectly, and their expectations of how you manage your impact are equally important.
The matrix enables you to understand their expectations and to build a sustainable strategy that reflects their views while also incorporating the company’s internal concerns.
Transparency
Transparency is another key element of corporate responsibility. By being transparent, a company can assume its responsibilities, assert its commitments and raise awareness in its community.
The matrix is a visual tool that enables companies to present their CSR strategy to all stakeholders and ensure consistent understanding.
Compliance
Your stakeholders are increasingly aware and knowledgeable about social and environmental issues. As their demands change in light of this, the matrix helps you to evolve accordingly.
New legislation is being created at all levels of government. Integrating these new regulations is crucial to ensuring that your business thrives.
As the market continues to grow and innovate, more and more companies are making sustainability part of their DNA. These companies will account for an increasing share of the market as times goes on. If you want to keep up with the trend and sustain your business partnerships, integrating their requirements into your strategy will become a necessity.
How to proceed?
A materiality matrix – whether in the form of an Excel table or a map – normally consists of two entries which can be positioned on a graph along the x-axis and y-axis. Each stakeholder grades the issues from their perspective, to then compare with the company’s assessment of its performance and value creation.
Here are the different steps for creating a materiality matrix:
Define your stakeholders
In July’s article, we explained just how important stakeholders are for a responsible company. Identifying an organisation’s stakeholders is the first step towards establishing a CSR strategy. Once your stakeholder map is created, you can list who the recipients of the matrix should be.
Define the important issues for your company
There are a multitude of issues related to a company’s CSR strategy. In our article on the pillars of CSR, we talked about 3 main topics: social, environmental and economic, notably through governance.
Implementation of a CSR strategy depends on a company’s human and budgetary resources. In all cases, it is important to define priority topics and create the main guidelines of the CSR strategy. To do this, the project team and managers need to get together and brainstorm on the issues specific to the company and which represent the most important area of impact.
Prepare the matrix questionnaire
Once the topics have been defined, a questionnaire needs to be prepared and sent to stakeholders. This step is simple: you just need to explain the purpose of the questionnaire to the respondent, incorporate options for identifying stakeholder type and options for suggestions and, of course, assign a value scale to each issue.
Send out the questionnaire and collect the data
Once you have identified the recipients and created the questionnaire, you simply send it to them. Do not hesitate to explain the purpose of this process again and give your stakeholders the opportunity to ask questions. As and when you receive completed questionnaires, collect the answers and store them in a file.
Analyse the data
You will need to have a timeline for the process. Start by defining a deadline for closing the questionnaire and starting to analyse the responses. Your database of collected answers will help you to understand the issues that appear to be most pressing to your stakeholders. If the option is included in your questionnaire, you will also be able to make a link between levels of importance and stakeholder category.
The aim is to compare stakeholders’ views with those of the company itself, comparing external and internal. This analysis will help you understand your stakeholders’ views and see the issues from a new perspective.
Integrate the guidelines into your sustainable strategy
By gaining an understanding of your stakeholders’ expectations, you can prioritise and integrate them effectively into your CSR strategy. It is always useful to create objectives related to the issues highlighted. In this way, you can clearly outline all actions needed to achieve these objectives.
Communicate the results
Transparency is a key element of any sustainable approach. Once your company has obtained the results of the matrix and applied them to its strategy, it is important to communicate them. You can send the results to each of the stakeholders contacted. The results can also be integrated into your sustainability report. You can also link the results and issues identified to the United Nation’s SDGs. This makes it easier to communicate the guidelines.
Conclusion
A materiality matrix is a tool that helps you visualise and establish your CSR strategy guidelines while integrating your stakeholders’ requirements. This is one of the first steps towards building a sustainable development strategy. We are sure you can see how useful this tool is on so many levels. If you want to create a materiality matrix for your company, we can help! Contact us here.