Day 2: Tech sector gets material

The Global e-Sustainability Initiative (GeSI) is an industry association of 20+ members - mainly European telecomms but some other global players in the ICT sector are also among the membership. They are working together to address the common sustainability issues their sector faces. One of their projects is on the topic of accountability. To improve their accountability for impacts caused by their products and services, GeSI decided it was time to first agree - on a general level - on what issues were most "material" for the industry. They hired BSR to conduct some research on the subject and today I was invited to attend a stakeholder dialogue to review and discuss the results of this research.

I read the 40 page paper before hand and was generally impressed at its depth and breadth, but there was certainly room for some stakeholder dialogue on how to expand, focus, and improve it!

Firstly, their definition of materiality was important to note. They decided to rank issues according to its importance to the companies and the importantance to "influencial stakeholder groups". The old addage "if a tree falls in the forest and nobody hears it" came to mind. What if the sector was having a huge sustainability impact in a certain area but there just didnt happen to be an influencial stakeholder group that was fighting for it? Does this mean the companies are off the hook?

Secondly, lets look at their issues identification. They clustered their issues into ten categories:
1. Climate change
2. Waste and materials use
3. Access to ICT
4. Freedom of expression
5. Privacy and security
6. Employee relationships
7. Customer relationships
8. Supply chain
9. Product use issues
10. Economic development

Stakeholders in the room suggested that it may be more helpful for the industry to re-organize these issues differently so they could be better understood: impacts on environment, impacts on suppliers, impacts on employees, impacts on customers, etc. Others thought that some key issues were left out or were not prominent enough - such as labor issues, human rights, and water.

One of the most interesting ideas I have heard in a long while came out at this meeting. We always do life cycle assessments for our products and services which focus on the environmental impacts. What about a social or societal LCA?

BSR and GeSI will take our feedback and conduct two further dialogues in Europe and Asia. An updated list of material issues will surface and will help companies in the sector focus on the right things, and work collaboratively to tackle some of the most challenging issues.

Materiality: The Porter approach

Those of you engaged heavily in the reporting world will know the term 'materiality' and the continuous global discussion underway to define it vis-a-vis sutainability reporting. When applied in the sustainability context, it differs from the traditional financial reporting definition - that much we can agree on - but what is the right definition, and should we be 'importing' this concept at all? Check the G3 Guidelines for GRI's conclusion:
http://www.globalreporting.org/ReportingFramework/G3Online/DefiningReportContent/

But there are others. I was reading Michael Porter and Mark Kramer's article in December's edition of the Harvard Business Review and although the authors do not consciously attempt to define materiality, they do present a framework for prioritizing sustainability issues that I thought was quite simple and practical.

They identify three categories, and present the case of HIV/AIDS and carbon emissions as illustrative examples:

1. Generic issue/impacts: Those that have been recognized as important to society but do not affect, or are affected directly, by a company's operations.
-HIV/AIDS could be considered a generic issue by a company like Home Depot
-Carbon emissions could be considered a generic issue by a company like Bank of America

2. Value chain issue/impacts: Those that are significantly affected by the company's operations in the ordinary course of business.
-HIV/AIDS could be considered a value chain impact for a company like GlaxoSmithKline
-Carbon emissions could be considered a value chain impact for a company like UPS

3. Competitive context issue/impacts: Those that significantly affect the underlying drivers of competitiveness in the places the company operates.
-HIV/AIDS could be considered a competitive context issue by a company like Anglo American as it affects the direct health of their workforce in mine sites
-Carbon emissions could be considered a competitive context issue by a company like Toyota due to the long term impacts of their products.

Do companies get bogged down in long lists of issues, or are they getting better at understanding the different types of issues they need to manage and report on? Your thoughts?