The Flawed Foundation of Materiality Assessments

In today's corporate world, sustainability materiality assessments have achieved an almost untouchable reverence, akin to a sacred ritual whose importance is rarely, if ever, questioned. However, it’s time we scrutinize this concept and its prevalent methodology.

Doctor Appointment as Materiality Assessment

Consider this analogy: Imagine visiting your doctor and she takes a "materiality" approach. Instead of focusing on your specific symptoms, the doctor compiles an exhaustive list of potential ailments based on various general factors—your age, gender, physical health, occupation, diet, genetics, and even the opinions of people who resemble you. Your own views are incorporated into the mix. This extensive, convoluted process sees doctor and patient spend weeks pouring over possible illnesses– slowly eliminating the immaterial. Ultimately the list narrows down to a few conditions you should monitor. Absurd, right? A competent doctor would instead prioritize understanding your unique medical history, aspirations, and immediate concerns, performing targeted tests and asking a simple but crucial question: "What brings you in today?"

A skilled doctor, through direct engagement and precise diagnostics, could quickly identify your ailment based on your symptoms, bypassing the need for a protracted, scattershot approach. The same logic should apply to sustainability materiality assessments, yet it doesn’t.

In the realm of sustainability, we begin with an overwhelming array of potentially relevant—but often irrelevant—issues, mirroring the hypothetical doctor's exhaustive list. The SDGs, the ESRS's, the scoring methodologies of MSCI and S&P Global, industry benchmarks, and any pet issue a board member or investor wants you chasing after. In short, this overwhelms and frustrates. Most business people are (still) new to sustainability and this exhaustive (and exhausting) approach is an unpleasant introduction. No, that's not strong enough...it's a huge turnoff!

But the approach keeps consultants busy, sustains the activity of corporate sustainability departments, and creates an illusion of progress. However, a truly adept sustainability expert could, much like an astute doctor, swiftly discern the core issues based on the client's specific symptoms, needs, and interests.

Cut Through the Noise

Why, then, do we not adopt this more direct and effective approach? Perhaps the answer lies in our fear of blunt, candid analysis. It could also be that there is a scarcity of truly skilled sustainability experts who can cut through the noise. Or maybe some sustainability professionals are more engrossed by the broader issues of sustainability than in addressing the precise needs of their clients—akin to a doctor more fascinated by the field of medicine than by the well-being of their patients.

It is high time we re-evaluate how we conduct materiality assessments in sustainability. We must shift from a bloated, one-size-fits-all methodology to a more focused, client-centric approach. Only then can we genuinely serve the needs of businesses and the environment with the proficiency and precision they deserve.

Remembering the Destination

"What are we really trying to accomplish?"

When lost in the minutiae, asking this basic question can help ground a team again in its purpose. The healthcare system is focused on preventing people from getting sick and returning them to health. Materiality is about helping companies identify environmental and social issues that most impact their performance, and in turn that they are best positioned to help address. It's that simple.

I've been doing sustainability work for nearly 30 years and I can usually identify a company's material issues in under an hour, sometimes in 15 minutes. That's not bragging. There are many skilled sustainability professionals with a similar ability. That's not special just as it is not special for doctors to be able to, after some analysis, to pass judgement on the state of one's health. After decades, if one couldn't do this, they should find another profession. I make the point to even the scales. We've created an increasingly complex materiality assessment industry around something really quite simple. And here's the point: identifying the issues and opportunities is not the hard or important part. If a doctor informs you about your high blood pressure or thyroid condition, that's the easy part. Now the work begins.

But instead of investing time in the hard, important work of sustainability actions and investments, we have people tied up in paperwork. It's an expensive, time-consuming distraction that likely turns more people away from sustainability than toward it.

Think about it. If a doctor treated you that--taking too long and costing too much to answer a simple question--how long would you continue to see them?