{"id":3232,"date":"2022-03-31T16:17:42","date_gmt":"2022-03-31T14:17:42","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/?p=3232"},"modified":"2022-10-19T08:38:17","modified_gmt":"2022-10-19T06:38:17","slug":"an-open-letter-on-the-materiality-debate-in-sustainability-reporting","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2022\/03\/31\/an-open-letter-on-the-materiality-debate-in-sustainability-reporting\/","title":{"rendered":"An Open Letter on the Materiality Debate in Sustainability Reporting"},"content":{"rendered":"<p>Following the\u00a0<a href=\"https:\/\/www.bristol.ac.uk\/accounting-finance\/seminars-and-events\/workshops\/2022\/asg-roundtable\/\">Materiality Debate<\/a>, the organizing committee of the event from the\u00a0<em>University of Bristol Accountability Sustainability and Governance Research Group<\/em>\u00a0prepared an\u00a0<a href=\"https:\/\/www.bristol.ac.uk\/media-library\/sites\/accounting\/documents\/Open%20letter%20about%20the%20Materiality%20Debate%20(signed).pdf\">open letter<\/a>\u00a0addressed to the EFRAG and the IFRS Foundation, and their respective boards \u2013 the EFRAG Sustainability Reporting Board (SRB) and the International Sustainability Standard Board (ISSB). The open letter is endorsed by 109 signatories from across the globe. The open letter calls for (1) better acknowledgement of the interdependencies of financial sustainability with the sustainability of the planet and society, (2) collaboration between various standard-setting bodies, jurisdictions and voluntary reporting initiatives, and (3) greater use of leading-edge sustainability and social science research in sustainability reporting standard-setting.<\/p>\n<p>In preparing the letter, we received wide ranging responses, including endorsement messages, suggestions of amendments, references to related bodies of work, and questions about our position. Reflecting on these responses, it is clear that the Materiality Debate needs to continue. Although virtually everybody acknowledges its importance, materiality remains poorly defined and articulated, particularly in the context of sustainability reporting.<\/p>\n<p>Different notions of materiality are floating around \u2013 \u2018financial\u2019, \u2018impact\u2019, \u2018double\u2019 and \u2018dynamic\u2019 materiality \u2013 and they all seem to be attached to different definitions (e.g.\u00a0<a href=\"https:\/\/29kjwb3armds2g3gi4lq2sx1-wpengine.netdna-ssl.com\/wp-content\/uploads\/Reporting-on-enterprise-value_climate-prototype_Dec20.pdf\">\u2018Group of Five\u2019<\/a>,\u00a0<a href=\"https:\/\/www3.weforum.org\/docs\/WEF_Embracing_the_New_Age_of_Materiality_2020.pdf\">TruValue\/ WEF<\/a>,\u00a0<a href=\"https:\/\/www.efrag.org\/Assets\/Download?assetUrl=\/sites\/webpublishing\/SiteAssets\/Appendix%202.6%20-%20WP%20on%20draft%20ESRG%201.pdf\">EFRAG SRB<\/a>, etc.). These different notions of materiality create misunderstanding that leads to an unnecessary divide between those who are interested in more-or-less the same thing. In the open letter, we indicate that there needs to be a better articulation of materiality to bridge this divide and that is in alignment with the scientific evidence monitoring the environmental sustainability and social wellbeing of our planet and its inhabitants.<\/p>\n<p>Another important element of this debate is the implication of materiality on practice. Given the subjective nature of materiality judgments, there remains concern over the misappropriation of sustainability reporting (as shown extensively in the academic literature \u2013 see\u00a0<a href=\"https:\/\/eaa-online.org\/arc\/blog\/references-supporting-academic-research-stated-open-letter-ifrs-foundation\"><em>References supporting academic research stated in Open Letter to IFRS Foundation<\/em><\/a>). In this regard, we see value in the development of innovative approaches to materiality determination that is designed for sustainability reporting, including context-based materiality approach (for example, see McElroy, 2019,\u00a0<a href=\"https:\/\/www.unrisd.org\/mcelroy\"><em>Making Materiality Determinations: A Context-Based Approach<\/em><\/a>).<\/p>\n<p>The Materiality Debate reflects the complexity of sustainability reporting and the discord around the definition of materiality is just the tip of the iceberg. We call for greater research to provide a better understanding of this highly complex area.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Following the\u00a0Materiality Debate, the organizing committee of the event from the\u00a0University of Bristol Accountability Sustainability and Governance Research Group\u00a0prepared an\u00a0open letter\u00a0addressed to the EFRAG and the IFRS Foundation, and their respective boards \u2013 the EFRAG Sustainability Reporting Board (SRB) and the International Sustainability Standard Board (ISSB). The open letter is endorsed by 109 signatories from [&hellip;]<\/p>\n","protected":false},"author":28,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[128],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>An Open Letter on the Materiality Debate in Sustainability Reporting - ARC<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An Open Letter on the Materiality Debate in Sustainability Reporting - ARC\" \/>\n<meta property=\"og:description\" content=\"Following the\u00a0Materiality Debate, the organizing committee of the event from the\u00a0University of Bristol Accountability Sustainability and Governance Research Group\u00a0prepared an\u00a0open letter\u00a0addressed to the EFRAG and the IFRS Foundation, and their respective boards \u2013 the EFRAG Sustainability Reporting Board (SRB) and the International Sustainability Standard Board (ISSB). 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