Materiality

We periodically re-visit our report preparation processes and continue to evolve our approach for assessing the materiality of topics covered in our reports.

Materiality assessments are used to help us focus attention on those issues that are most important to our internal and external stakeholders.  We do not publicly report against all topics, but omission from our report does not mean that an issue is not managed by the company. Future materiality assessments will be used to evaluate if an issue that is currently omitted has become sufficiently important to report it on again. This approach will streamline our report, enhance its readability and improve transparency.

The approach taken with our 2007 Materiality Assessment involved the following steps:

1. Collate key sustainability issues and concerns raised by external stakeholders, including those raised by our External Reporting Panel, and issues covered in the various news media
2. List issues derived from internal risk assessments and employee surveys 
3. Benchmark issues included in our peers' sustainable development reports 
4. Compile key legal and regulatory compliance issues and requirements of voluntary agreements
5. Include issues raised by other expert research
6. Assign a score to each issue to create a list of high, medium and low priority issues.

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 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 printed reports, what is provided on-line, and what is omitted from our reporting altogether.

Judgement on critical issues for management by the company is determined through our standard risk assessment process. 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. 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 has been 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.