Materiality in the context of Sustainability

Abstract

Aim: This research aims to study the idea of materiality by examining how Swedish companies assess and report materiality in their sustainability reports. The research, therefore, sheds light on how materiality is being interpreted by companies in their sustainability reports and its potential to increase stakeholder accountability. Methodology: To answer the research questions of this study a qualitative content analysis was performed. Qualitative analysis in a descriptive way in an interpretative method was used for a subjective interpretation of data, with the use of a classification process whereby the data is coded according to identified parameters from previous literature and core aspects of materiality as defined by different sustainability frameworks. For the analysis thirteen companies from three different sectors have been examined to understand how they interpret materiality in their sustainability reports in an interpretive way. Findings and Conclusion: Companies report on materiality in different ways depending on the sector. Hence, a more sector specific guideline is required to improve the quality of reporting. Identification of material issues, materiality assessment methods and stakeholder involvement in deciding what is material are the three most effective areas as reported by the companies. However, there is less information on the frequency of engagements yearly and a clear description of stakeholder involvement. Overall, in terms of reporting materiality and other sustainability issues most companies have reflected high level of commitment in sustainability engagements and have stated plans for future development. Contribution: There are few studies on materiality assessment and how firms report on materiality issues in their sustainability reports. The finding from this study contributes to the field of accounting sustainability, through its finding it could be concluded that companies report and assess materiality in different ways based on its operation even though they follow similar standards and guidelines. This study analysed different sectors and their core aspects of materiality assessment, which is helpful for companies in these sectors that are interested in improving their sustainability approach. The banking sector and country specific findings are part of the contribution from this study to the field and previous literature. Companies are recommended to be part of the monitoring sustainability index frameworks as the banking sector have shown it is essential in sustainability reporting. As sustainability activities can be monitored to ensure and improve on reporting concisely, relevant and clearly.