The Value of a Materiality Assessment

Speakers

• Mary Capozzi, Senior Director, Corporate Responsibility , Best Buy Co., Inc.
• Hamlin Metzger, Senior Manager, Corporate Responsibility, Best Buy Co., Inc.
• Eric Olson, Senior Vice President, Advisory Services, BSR (Moderator)

Highlights

• A materiality assessment is a powerful tool to understand where business interests overlap with the sustainability priorities of a company’s stakeholders.
• Engaging corporate leaders on sustainability is key to the successful implementation of sustainability initiatives.
• Creating a story about your sustainability program helps engage external stakeholders and align internal players.

Memorable Quotes

“The process of doing your materiality assessment is often as important as or more important than the answer you get.” —Eric Olson, BSR

“The materiality assessment made it easier for us to get senior leadership on board because the focus areas highlighted in the assessment more closely aligned with who we are as a company.” —Mary Capozzi, Best Buy Co., Inc.

“I tend to think that materiality is a never ending process. We should always be looking at where we are, where we were, and where we’re going.” —Hamlin Metzger, Best Buy Co., Inc.

Overview

Olson kicked off the session by giving a brief overview of what a materiality analysis is. First, Olson was clear to say that materiality is a tool, rather than an end in and of itself. Second, he outlined the ways in which a materiality assessment permits companies to determine which sustainability issues are most material to both their overall business operations and their stakeholders.

Next, Capozzi spoke about her company’s experience with the tool. She revealed that Best Buy was increasingly faced with the reality that customers were making choices about where to shop based on a company’s corporate responsibility work. Additionally, while Best Buy had a number of responsibility programs, there was little internal alignment. Recognizing the need to align their business strategy with their corporate responsibility strategy, Best Buy embarked on a robust materiality assessment, interviewing 40 to 50 executives as well as external stakeholders.

After conducting in-depth interviews and stakeholder roundtables, BSR input all of the raw data into a spreadsheet and produced a map of where each issue fell in terms of priorities for stakeholders and for business. When an issue ranked as a high priority for both, Best Buy knew it would be an issue they would have to focus on. Once BSR completed the mapping, Best Buy worked with BSR to categorize high-priority issues into four key focus areas. These included:

• Product stewardship, which focuses Best Buy’s efforts to solve sustainability challenges across the lifecycle of its products.
• Sustainable solutions, which prioritizes the need to ensure technology solutions to sustainability challenges (e.g. energy use).
• Access through connection, which recognizes Best Buy’s unique advantage to help connect people throughout the world to technologies that will link them to the global community.
• Inspired workplace, which emphasizes the powerful role that employees play in promoting a connected world.

Now that these key focus areas are outlined, Best Buy is working to develop goals related to each area and determine the appropriate communications strategy.

Further developing the ideas Capozzi presented, Metzger outlined the ways they integrated the materiality assessment into their reporting. For the company’s sixth CSR report, they decided to build their reporting around the four focus areas. As such, they were better able to be coherent and concise in speaking about their efforts, rather than just providing a laundry list of activities.

After Best Buy’s presentation, Olson followed up to understand whether the process had helped the sustainability team engage with senior leadership around CSR. Capozzi responded that the new framework helped bring senior leadership on board because it provided a clear rationale for why it was not only important for sustainability, but also for the company. In addition, including top executives throughout the process allowed them to feel a sense of ownership over their company’s sustainability agenda, which lent itself to deeper executive engagement.

Next, Diana Lyon from IBM questioned the value of the materiality tool and wondered whether it should become more ambitious given the larger stakeholder pool and increased pressure from nontraditional players. In response, Metzger mentioned that in their assessment they not only looked at the micro-level issues, but also some of the macrotrends and the material issues facing the electronics industry. Olson followed up by saying that the materiality assessment might not be the appropriate tool to understand key underlying frustrations with the private sector as it looks specifically at the issues that are uniquely important to a given company. However, given the current political climate, there is a need for deeper and less-traditional engagement with stakeholders.

Finally, Todd Nash from the Home Depot asked how Best Buy planned to keep their assessment relevant. In response, Metzger stated the importance of maintaining an ongoing conversation with stakeholders while also choosing focus areas wisely to ensure that they were likely to be on the sustainability agenda for years to come.

In conclusion, participants broke into two teams to discuss the challenges around stakeholder engagement and internal alignment. Reporting back to the group, they each highlighted key challenges and opportunities.

Participants who focused on stakeholder engagement highlighted the importance of knowing your audience and framing your sustainability story appropriately. In addition, they promoted the view that companies should be frank about their challenges, rather than gloss over shortcomings. Next, participants who focused on internal alignment highlighted the importance of getting high-level buy-in by incorporating top executives into the sustainability agenda. They also mentioned the value of educating company leadership about sustainability issues before requesting time or money. Finally, they focused on the power of mobilizing store associates through entertaining and dynamic outreach.