Materiality
In line with the new Global Reporting Initiative (GRI G3) requirements, this year we have developed a new, more formal materiality process to identify what we should report on.
As a seasoned GRI reporter we periodically re-visit our report preparation processes. Our latest review has begun to evolve our approach to materiality (or relevance). Applying the principle of materiality helps to determine those topics which are sufficiently important to be included in our report. Not all topics are reported, but if they are omitted it doesn't mean that they are not managed by the company. Materiality assessments for future reports will evaluate if an issue that is currently omitted has become sufficiently important to report on again. This approach will streamline the report, enhance its readability and improve transparency.
The approach taken with our 2006 Materiality Assessment involved the following steps:
1. Collate key sustainability issues and concerns raised by external stakeholders
2. List issues derived from internal risk assessment work and employee surveys
3. Collate outputs of benchmark studies of peer reporters
4. Compile key compliance issues from legal and regulatory sources and voluntary agreements
5. Include topics raised by other expert research
6. Assign a score to each issue to create a list of high, medium and low priority issues.
The scores are awarded according to the degree to which Rio Tinto's action on the issue is of significance to stakeholders or society. For example, if the source, such as an investor report, referred to a given issue as highly important to investors with potential impacts on investment performance, then it may achieve a 'high' score; but if the source observed the existence of the issue without referring to it as critical, then a 'medium' score may be applied, and so on. By expressing the score numerically the materiality assessment helps us to direct what is included in the printed Sustainable development review, what is provided only in the web version of our report, and what is omitted from our reporting altogether.
Our risk assessment process, including the Committee on Social and Environmental Accountability(CSEA), traditionally makes a judgement on crucial issues for management by the company. Additionally there is a significant amount of opinion survey work carried out at the local business level on what is crucial for local and regional management. Results of many of our local surveys are published in the local area concerned. More and more, we are integrating our stakeholder engagement with our materiality work in order to account for broader sets of evidence. Our materiality approach is being developed using recognised models such as the Accountability five-part test
Applying a judgement on the relevance of an issue raised by external and internal stakeholders is crucial to managing our accountability and performance. We believe that assessing materiality helps us identify the core, significant risks that affect our ability to deliver our commercial strategies. Further formalising our approach to materiality in our reporting also strengthens and develops our stakeholder engagement, so reinforcing our application of the 'inclusivity', or stakeholder engagement, principle in reporting as well.