Firms’ materiality scores poorly

29th September 2016

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  • Auditing ,
  • Corporate governance ,
  • Reporting



Identifying materiality for sustainability reporting is increasingly important to businesses but most firms are some way from perfecting their approach, according to this year's Dow Jones Sustainability Index.

The 2016 survey covers 3,400 global firms and included materiality as a standalone criterion for the first time.

Christopher Greenwald, head of research at Dow Jones, told the environmentalist that the move was in response to the Global Reporting Initiative’s increased emphasis on the issue.

Companies were scored on how well they had identified their significant economic, environmental and social impacts, the strategies they had in place to address them, and how progress was measured.

Typically, firms scored highest on criteria for the systems they had implemented internally, such as corporate governance, environmental policy and management systems, including establishing commitments and targets.

They performed less well on implementation. Greenwald expected firms to improve performance over time. ‘We want criteria to be reasonable for businesses, but we want it to be challenging. We use new criteria to encourage firms to develop best practice,’ he said.

He noted a trend among top performers for measuring the external impacts of their products and services on the environment and communities, rather than just the impact of internal operations.

This year, Cisco Systems, Royal Dutch Shell and Adobe Systems were added to the global index. Intel Corp and British American Tobacco have been removed, although they remain in regional indices. Samsung Electronics has been removed completely. Dow Jones refused to discuss reasons for companies being added or deleted.


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