The Stakeholder Engagement Manual Volume 2 - AccountAbility

P3: IDENTIFYING ISSUES
A
B
C
D
E
STAGE 1
BACKGROUND
Many issues you should consider engaging on will already be clear from the
strategic engagement objectives discussed above. However, there are issues
that may not be immediately strategically relevant, but nonetheless need to
be identifi ed and addressed, as they also have the potential to impede business
performance. In general, issues can be specifi c or general aspects of a companies
activities or decisions where:
– Th e organisation is perceived to have a positive or negative impact on
stakeholders.
AND
– Th ere is a gap between what the company is doing or perceived to be doing,
and what stakeholders expect the company to be doing in terms of
management of impacts, behaviour or outcomes.
Th is range of relevant issues goes beyond the limited defi nition of materiality
used in fi nancial accounting standards, which are often interpreted conservatively
to mean only those issues that are likely to have a measurable short-term
impact on the fi nancial health of an organisation. Th is defi nition of materiality
does not consider broader economic, social, environmental issues and leaves
the organisation open to unanticipated risks and unable to identify new
opportunities. On the other hand without some way of assessing the importance
of diff erent issues to corporate performance, stakeholder engagement risks getting
caught up by the short-term dynamics and moods of public opinion.
A key challenge then is to identify those issues which are material to the business’s
long-term sucess. Accountability's approach to assesing materiality is described
below.
5-Part Materiality Test
AccountAbility has developed a fi ve-part materiality test as a framework for
considering the materiality of issues. 5 Issues are considered material if they can
be identifi ed by one or more of the following tests:
Issues that have direct short-term fi nancial impacts
Issues where the company has agreed policy statements of a strategic nature – these are
often in the form of commitments to key stakeholders.
Issues that comparable organisations consider within their sphere of materiality; i.e. peerbased
norms.
Issues that your stakeholders consider important enough to act on (now or in the future).
Issues which are considered social norms (as indicated by regulations, likely future
regulation or institutionalised norms and standards).
5 For further explanation, please see AccountAbility & The UK Social Investment Forum: “Redefi ning Materiality”, London, 2003
THE PRACTITIONER'S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 35