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The Importance of Materiality Risks and Assessments for a Sustainable Businesses

Blog: NASSCOM Official Blog

Our world has evolved tremendously in the last few decades. Thanks to urbanisation and technological development, it truly has become a global village. The information technology sector has had a massive role to play in this transformation. However, as we continue to advance further, responsible, sustainable businesses form the way to progress, especially in IT. In our last blog (link) we spoke about how enterprise leaders can create strong sustainability strategies. Now, we’re going to focus on one critical part of this strategy and its importance, i.e. materiality risk and assessments. 

What constitutes Materiality Assessments?

Materiality is the principle that defines the social and environmental topics that resonate most with the business and its stakeholders, and have a direct impact on the value of the business. Most of these topics fall under either of the E, S or G verticals, i.e. they are either related to the environment, social or governance front. 

Under environmental assessments, businesses commonly analyse their usage of energy, water, natural resource usage and consumption, biodiversity conservation, animal welfare and policies for waste management and pollution. For the social and governance related assessments, businesses typically analyse the health and safety of their employees, diversity at the workplace, equal opportunities at work and impact of business practices on local communities. They may also include the training and education initiatives at the organisation, supply chain assessments and value, and responsible business practices in line with CSR initiatives. 

Materiality risks and assessments form the backbone of reporting. When it comes to responsible business practices, reporting and documentation forms a crucial element of the overarching sustainability strategy.  Identifying issues, problems and solutions related to this may be time consuming, but is important to get right. 

Why should businesses undertake Materiality Assessments?

Out of the 250 largest companies around the globe, only 41% of companies use materiality assessments correctly right now (KPMG). Less than half explain stakeholder input to ESG goals. What is most “material” from a reporting standpoint may differ business to business, but they form a strategic business growth tool. Here’s a checklist of the basic steps for enterprise leaders to follow, in order to define materiality correctly:

With the right amount of time, effort and resources, a materiality assessment can become an invaluable tool for gathering insights to propel a business’s sustainability strategy and enable meaningful reporting. An expert, highly skilled team who understands these challenges can lead you in the right direction.  At Treeni, we follow a consultant led approach, along with our disruptive, state of the art resustain™ model, and we have been enabling a smart play of technology and sustainability for enterprises in almost all industries. One step at a time, we can tackle the sustainability challenge and ensure responsible businesses for all! 

Written by: Anand MA – Head of Products, Treeni Sustainability Solutions.

The post The Importance of Materiality Risks and Assessments for a Sustainable Businesses appeared first on NASSCOM Community |The Official Community of Indian IT Industry.

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