Epitome: Issues of Sustainability

Thursday, May 21, 2009

Issues of Sustainability – In Business

Corporate responsibility (CR) is becoming an increasingly critical matter of concern for large companies across the globe, as the unscrupulous are lambasted in the Press media and sued into oblivion. Business ethics, environment, society and employment are considered now integral parts of the quadruple-bottom-line in operating successfully i.e. sustainably in the modern business world.

A key precept of establishing sound CR practices is how an organisation defines and provides for its Key Material Sustainability Issues (KMSI).

Firstly, let’s define “materiality.” At its most basic, it is “the state or quality of being material.”[1] Another more specific source says, “An issue or concern is material if it could influence the decisions, actions and behaviour of stakeholders or the organization.”[2] Materiality hence relates to tangibility. When issues have high materiality they’re meaningful to the sustainability of the organisation.

Furthermore, issues are ‘material’ to an organisation if they’re both appreciably relevant (what matters) and significant (how much it matters) as normally defined by account of all stakeholders and the business itself. Materiality is measured by the stakeholder’s: 1) impact on sustainability, and 2) influence on the industry.

Fundamentally, a business must know what its stakeholders care about i.e. know what is material for them, and put this together with the strategic impact of individual stakeholders on that business or business area i.e. their impact and influence.

This information (the KMSIs) provides a business with direction or rules with which to guide and govern judgments, decision making and action. Underpinning and further directing this detailed corporate knowledge are Sustainability or Business Principles. These are broad business values, for example, “We create and sustain a working environment where people are challenged to do their best.” This would be a fitting Business Principle supporting the ‘employment’ branch of the quadruple-bottom-line.

In sum, sustainability is achieved through stakeholder involvement and the embracing of the Principle of Inclusivity. Supporting this principle of inclusivity (i.e. breadth) are three others: Materiality (i.e. realness), Completeness (i.e. accuracy) and Responsiveness (performance based on reality).[3]

At the end of the day, business needs to endeavour to do whatever it can to protect its future interests; the only way a company can do its best to guarantee its future, or provide for its sustainability, is to heed all stakeholders’ input and weigh it with opportunities, and against the perceived threats, to its business. This is sustainability.

Post Script: I don’t normally tackle such issues as this, preferring to handle ‘softer’ issues such as those on relationships. In part two of this series I will focus on Issues of Sustainability – in Relationships.

ENDNOTES:
[1] The Free Dictionary, “Materiality,” Retrieved 20 May 2009. Source: http://www.thefreedictionary.com/materiality
[2] Det Norske Veritas, Defining Materiality and Material Sustainability Issues (presentation) at Report Comunicacao, Sao Paulo, 22 July, 2008. Source: AccountAbility. Available: www.reportcomunicacao.com.br/downloads/MaterialityPrezReport080723.pdf
[3] Where ‘inclusivity’ and ‘materiality’ provide an understanding of reality, almost like the breadth and length of prevailing knowledge. Referring to the AA1000 Assurance Standard.