Table 2.

Companies’ definitions of materiality and explanations of the process for conducting materiality analysis

Bayer
2021 sustainability report
DefinitionExplanation of the process
The materiality analysis serves to meet external requirements in accordance with the CSR Directive Implementation Act (CSR-RUG), a the German Commercial Code (Sections 289b to e) and the GRI Standards. In accordance with the GRI Standards, the following two dimensions were among the factors applied for the identification and prioritization of key issues: impact of Bayer’s business operations on economic, social or environmental matters; impact on decisions by Bayer stakeholdersWe determine the expectations and requirements of the various stakeholders using a materiality analysis that surveys global representatives of important stakeholder groups and managerial staff from various areas of the company. The results thereof reveal relevant issues and the latest developments, along with sustainability-related opportunities and risks, and help us to assess these accordingly. The survey of external stakeholders also reflects how our sustainability performance is perceived, which enables us to identify weaknesses and areas for improvement. At the next stage, Bayer managers supplement the assessment of issues of relevance from an external perspective with an estimation of the impact the company has on the environment, employees and health in each respective topic area. Finally, the issues prioritized on this basis are approved by the board of management [– –]
The areas of activity in the current materiality analysis are accounted for in our sustainability strategy and determine the focal points of our sustainability management approach and our nonfinancial Group targets. [– –] In 2022, we will carry out a new materiality analysis
2022 Sustainability report
DefinitionExplanation of the process
The materiality analysis serves to meet external requirements in accordance with the CSR directive implementation act (CSR-RUG), the German commercial code (Sections 289b to e) and the GRI standards. In accordance with the GRI standards, the following two dimensions were among the factors applied for the identification and prioritization of key issues: impact of Bayer’s business operations on economic, social or environmental matters; impact on decisions by Bayer stakeholders [– –]
Due to changing legal requirements, for example, as a result of the adoption of the CSRD by the EU, we are working on a new materiality analysis, the purpose of which is to satisfy the requirements of the ESRS, which are currently undergoing the political development process and are designed to more specifically define the requirements of the CSRD		We determine the expectations and requirements of the various stakeholders using a materiality analysis that surveys managerial staff from various areas of the company worldwide and representatives of important stakeholder groups. The results thereof reveal relevant issues and the latest developments, along with sustainability-related opportunities and risks, and help us to assess these accordingly. The survey of external stakeholders also reflects how our sustainability performance is perceived, which enables us to identify weaknesses and areas for improvement. At the next stage, Bayer managers supplement the assessment of issues of relevance from an external perspective with an estimation of the impact the company has on the environment, employees and health in each respective topic area. Finally, the issues prioritized on this basis are approved by the board of management [– –]
The areas of activity in the current materiality analysis are accounted for in our sustainability strategy and determine the focal points of our sustainability management approach and our nonfinancial Group targets
Novo Nordisk
2021 annual reportb
DefinitionExplanation of the processe
Novo Nordisk relies on the international integrated reporting council’s definition of materiality [– –]
In 2021, we completed a thorough process aimed at addressing materiality and prioritizing our key ESG topics. We identified key ESG topics across two dimensions: how our activities impact society and planet and how society and planet impact our activities		Material issues are determined and reassessed on an annual basis by management to ensure we stay on top of issues that could substantively affect our strategy, business model, ability to access required resources or key stakeholders. For reporting purposes, this process is anchored with the disclosure committee, chaired by our chief financial officer
Materiality determination is informed by legal requirements, insights from stakeholder feedback such as analyst reports and investor queries, patient panels, independent assurance, reputation surveys, the AI tool, Datamaran and internal surveys among employees. Material issues are linked to the annual strategic planning process and reflected in the renumeration of the Executive Management and the long-term share-based incentive program
The materiality determination process is further validated by data-driven insights delivered by independent providers, which include assessments of sector specific issues, legal requirements, media coverage and social media conversations. The list total approximately 25 material issues across financial, environmental and social dimensions. The filter criteria for materiality determination are based on sector-specific guidance provided by the Sustainability Accounting Standards Board (SASB) and the Future Fit Business Benchmark [– –]
Key issues are identified through ongoing stakeholder engagement and trendspotting, informed by data-driven analysis and addressed by programs or action plans with clear and measurable targets
Material social and environmental issues are selected using a Disclosure Assessment Model we have developed. To assess identified issues, a scoring system is in place. This scoring system is made up of 12 dimensions of impact, within which each issue is given a score between 0 and 3. All 12 scores are totaled and those issues which score above 16 are included in our annual report
The high level of data quality of the disclosures is ensured by applying a framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The COSO Framework, supported by a top-down risk based approach as stated in Audit Standard no. 5, ensures an efficient and effective control environment
2022 annual report
DefinitionExplanation of the processe
Novo Nordisk relies on the international integrated reporting council’s definition of materiality [– –]
In 2022, we performed a double materiality assessment aimed at prioritizing our key ESG topics. Double materiality was identified by assessing how our activities impact society and the planed and how society and the planed affect our activities financially [– –]
Overall, we aim to be respected for adding value to society, progressing toward zero environmental impact, being recognized as a sustainable employer and building trust across the E, S and G dimensions		Same as in 2021
Sanofi
2021 corporate social responsibility reportd
DefinitionExplanation of the processe
Materiality refers to what can have a significant impact on a company, its activities and its ability to create financial and nonfinancial value for itself and its stakeholderseA materiality analysis helps rank the most important issues and is a key driver to design the CSR strategy. It is informed by the analysis of general, health care, social and environmental trends and expectations from the civil society and stakeholders. Our materiality assessments are performed through a formalized stakeholders’ engagement process. Starting in 2010, they are updated approximately every two years (2010, 2013, 2015, 2018, 2020, 2022)e
The Sanofi Board of Directors has a commitment to promote long-term value creation while taking account of the social and environmental impacts of our operations. An annual review of the CSR strategy and performance is performed by the Board: at least once a year. The Appointments, Governance and CSR Committee of the Board ensures that CSR issues are given due consideration in developing and implementing our corporate strategy. In particular, the Committee ensures that our commitments and policy orientations are consistent with what our stakeholders expect from us. A review of the CSR strategy and performance is performed by this Committee on a quarterly basis. In addition, a dashboard on KPIs linked to our CSR strategy is sent to the Executive Committee on a quarterly basis. Each Executive Committee member has individual CSR objectives tied to the CSR strategy. The compensation policy of our Chief Executive Officer is designed to motivate and reward performance, and to ensure that a significant portion of his compensation is contingent on the attainment of financial, operational and social criteria aligned with the corporate interest and creating shareholder value. Since 2020, a specific individual CSR performance criterion has represented 15% of his annual variable compensation package. [– –] The list of Sanofi’s extra-financial risks has been approved by the Sanofi Risk Committee every year since 2018e
Sanofi believes that the risk identification principles applied for SEFP [statement of extra-financial performance] purposes and those applied for duty of vigilance purposes do not wholly overlap. Consequently, we conducted two risk identification exercises in parallel, using the same basic methodological framework but applying criteria specific to each of the two pieces of legislation. Risk identification for SEFP purposes sought to take account of the impacts on Sanofi and its stakeholders, while for the duty of vigilance only the impacts on people and the environment were assessed [– –]
The principal SEFP risks and issues were identified by our CSR department, in collaboration with our Risk Management department, on the basis of Sanofi’s material risks and issues and material issues identified in the industry-specific standard (Biotechnology and Pharmaceuticals) issued by the Sustainability Accounting Standards Board (SASB) [– –]
For risks specific to the duty of vigilance, we apply a three-step methodology: identify major issues inherent to the sector in which we operate; classify and evaluate, at Business Unit and support function level, the criticality of the risks associated with each major issue; and evaluate the level of control over those risks, and prepare action plans to manage them [– –]
We drew largely upon feedback on our existing policies and internal processes, and in particular: the “Human Rights in Our Activities” guide, and our practice of identifying the highest-risk procurement categories and hence of suppliers [– –]. Based on this analysis, backed up by external data - sourced from industry initiatives such as Together for Sustainability (TfS) and Pharma Supply Chain Initiative (PSCI), international research studies and a peer benchmarking exercise - we were able to identify major vigilance issues relating to the protection of patients, our employees, the environment and local communities. These vigilance issues are related to Sanofi’s activities, whether we carry out those activities ourselves or through our direct commercial relationships [– –]
The Vigilance Plan covers the operations of Sanofi and of entities fully consolidated by Sanofi for financial reporting purposes, as well as the operations of our Tier 1 suppliers and subcontractors
2022 Corporate social responsibility report
DefinitionExplanation of the process
Materiality refers to what can have a significant impact on a company, its activities and its ability to create financial and nonfinancial value for itself and its stakeholderse
In 2022, we performed a double materiality assessment to gain insights into Sanofi’s impact on the external environment and its CSR risks and opportunities and to prepare for the upcoming CSRD regulation in the EUe
This covered the impacts of our activities on society (impact materiality) and impacts that societal changes might have on Sanofi’s performance (financial materiality). The results of this assessment will inform our preparations for the new European CSRD, but do not call into question the list of SEFP risks and issues already compiled		Same as in 2021, plus an explanation of the double materiality assessment process (below)
The following phases were performed:
Phase 1: Selection of relevant stakeholder groups and 16 material topics for consideration. For this step, the following documentation was consulted: Sanofi documentation including the previous materiality assessment (2020), the declaration of extra-financial performance and a previously performed CSR risk mapping; international standards identifying the most important sustainability issues given by the following sector-specific standards: SASB Sustainability standard Biotechnology and pharmaceuticals, GRI Pharmaceuticals, biotechnology and Life science, OECD Pharmaceutical Innovation and Access to Medicines, International Pharmaceutical Federation (FIP) Development goals; competitors and peers, taking into consideration the topics that Sanofi’s peers defined as “material”
Phase 2: Interviews with internal and external stakeholders. The 16 material topics were grouped into bundles, and each stakeholder was assigned to one bundle, associated with his/her area of expertise. Stakeholders were asked their views on impacts, risks and opportunities for Sanofi regarding the topics in their assigned bundle. The outputs of the interviews were aggregated across all interviews and summarized in factsheets, one for each topic. After the interview and consolidation of impacts, each stakeholder was asked to score the impacts related to the topics he/she was assigned to on several parameters: for impact materiality: likelihood, velocity, scale, scope, reversibility of impact; for financial materiality (risks and opportunities): likelihood, velocity, impact on profitability and impact on growth rate over a period of 3 years. The selection of these parameters was done based on the current version of the CSRD and in alignment with Sanofi’s risk department
Phase 3: Survey with selected members of Sanofi’s senior management to prioritize the 16 material topics. The factsheets were used as a pre-read, for management to have all relevant insights. The survey participants ranked the top five and bottom three topics with regards to: the impact of Sanofi on society from an economic, environmental and people perspective (i.e. impact materiality), and the impact of society on Sanofi’s business value (i.e. financial materiality)
UCB
2019 integrated annual report
DefinitionExplanation of the process
As a company, we are convinced that we have a role to play in providing solutions beyond our economic contribution. [– –] This year we consulted key stakeholders and our employees to identify how best to maximize our societal contribution while ensuring we continue to develop our business successfully. This materiality assessment fulfills the requirements of the GRIThis year, we refined our process by conducting a thorough analysis of published evidence on materiality topics relevant to our industry and by interviewing external stakeholders and employees. The literature analysis phase was followed by 45 qualitative interviews with UCB employees. This interview process allowed us to gather insight from our Executive Committee members, from leaders in the organization and from younger employees who are at early stages in their career. We also conducted interviews with 30 external stakeholders about the issues that most concerned them. The 30 interviewees included patients and representatives from patient organizations, advisors and investors, representatives from non-governmental organizations, foundations and members of academia, members of governments, administrators and multilateral organizations. As a final step, we qualitatively coded all interviews. Coding refers to identifying concepts, themes and ideas across data and finding relationships between them. The topics that emerged were also mapped against the list of top UCB risks identified through the Enterprise Risk Management Update process in 2019. To refine our assessment of external stakeholder concern, we analyzed three additional sources: SASB Disclosure Topics for Biotechnology and Pharmaceutical Industries, GRI Topics of Stakeholder Concern for Pharmaceuticals, Biotechnology and Life Science Industry and World Economic Forum’s Global Risks Report. As a result of the overall process, we developed the UCB materiality matrix 2019 that was endorsed by the UCB Executive Committee in July 2019 and by the UCB Board of Directors in October 2019
2021 integrated annual report
DefinitionExplanation of the process
A materiality assessment is a formal process to identify, refine and assess ESG topics, which matter most to a company’s internal and external stakeholders and which have an impact on business performanceIn 2021, rapid changes in society driven by the COVID-19 pandemic spurred us to update our materiality assessment, building mostly on an extensive literature review and the engagement of a group of emerging leaders, our External Sustainability Advisory Board and the UCB Sustainability Governance Committee. This update fulfils the requirements of the GRI. [– –] Ten topics were identified ranked and prioritized, based on their business impact and relevance to our stakeholders
2022 integrated annual report
DefinitionExplanation of the process
NDWe are committed to updating our materiality assessment in 2023. This process fulfills the requirements of the GRI

Notes:

[– –] is used to indicate that a part of text is not included in the table; ND: not defined;

aCSR-RUG (Sect. 289 b ff. German Commercial Code) implements the requirements set in the NFRD to German legislation;

bExtracts are from Annual reports, unless otherwise stated;

cExtracted from website: Materiality determination.

dExtracts are from Corporate social responsibility reports, unless otherwise stated;

eSanofi’s CSR materiality, strategy and governance

Source: Table by author
[ViewLarge]
This Feature Is Available To Subscribers Only

or Create an Account

Close Modal
Close Modal