Long term value creation through the medium of an Impact Evidence based Materiality Assessment (IEMA)

Abstract

This research focused on the subject of the Materiality Assessment (MA) conducted by companies, Dutch Multinationals in particular. The purpose of the MA is to identify, select and prioritize relevant sustainability issues that needs to be tackled by a company. During the analysis of the current practice it is identified that the MA is mainly stakeholder oriented and fails in taking location specific needs into account. This research proposed a new MA method that is data-driven and tackled the shortcomings of the current practice. The new method is called: The Impact Evidence Based Materiality Assessment (IEMA). This method takes into account the impact data of 27 sustainability indicators related to planet, people and prosperity for all the countries in which a company produces. The indicators are selected based on a comprehensive literature review and research on community practices and covers all aspects of sustainability. The IEMA includes a sustainability risk assessment of a company, on a country level taking into account the activities in the (international) supply chain. The IEMA shows the evidence of the severity of sustainability threats of the operations of a company that needs attention. The output of the IEMA is the prioritization of sustainability topics based on impact data. Each material theme can be referred to with a level of accuracy, corresponding to its level of importance (materiality). In addition, based on the retrieved results existing of the material topics, the IEMA enables to rank the importance of the SDGs based on evidence based impact data, instead of a subjective selection. The application of IEMA is demonstrated successfully by implementing it for a Dutch multinational company.