Social and Environmental Accountability Journal

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/reaj20

Matter of opinion: exploring the socio-political

nature of materiality disclosures in sustainability
reporting
by J. Puroila and H. Mäkelä, Accounting, Auditing & Accountability Journal,
2019, 32(4), pp. 1043–1072

Putu Agus Ardiana

To cite this article: Putu Agus Ardiana (2021): Matter of opinion: exploring the socio-political
nature of materiality disclosures in sustainability reporting, Social and Environmental Accountability
Journal

To link to this article: https://doi.org/10.1080/0969160X.2020.1870315

Published online: 13 Jan 2021.

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SOCIAL AND ENVIRONMENTAL ACCOUNTABILITY JOURNAL

ARTICLE REVIEW

Matter of opinion: exploring the socio-political nature of materiality disclosures

in sustainability reporting, by J. Puroila and H. Mäkelä, Accounting, Auditing &
Accountability Journal, 2019, 32(4), pp. 1043–1072

Puroila and Mäkelä seek to unfold the seemingly institutionalised practice of materiality assess-
ment in sustainability reporting in a deliberative democratic setting, in which companies tend
to focus on technicalities in preparing a materiality matrix. The materiality assessment in that
setting is viewed as a corporate discursive arena where the company and its stakeholders
discuss material topics in an assumed ‘ideal speech situation’, leading to acceptance of con-
sensus by all stakeholders. Diverse and even conflicting views on corporate sustainability
among stakeholders seem to have been narrowed down in current practice through compro-
mising and reaching consensus. Pluralism is unified to reach consensus in order to achieve sus-
tainability reports that are focussed on what really matters by cutting down the amount of
unnecessary sustainability information. When the socio-political aspects of stakeholder
engagement are ignored in that way, it is likely that information which is actually material
for stakeholders is not included in the sustainability report. In this regard, management discre-
tion tends to dominate the process of capturing sustainability issues in the development of the
materiality matrix. Consequently, the interest of stakeholders might not be reflected in the
report because they lack the power to urge the company to report their perceived material
issues.
This paper contributes to the contextualisation of agonistic democratic principles (as
opposed to deliberative ones) in materiality assessment, asserting that pluralism and contesta-
tion of ideas should not be replaced by apparent unity, despite the inevitable compromises
necessary to reach consensus. Such compromises in the agonistic democratic setting should
be viewed as political acts that appreciate and acknowledge differences of opinion in reaching
consensus on sustainability topics and such differences must be disclosed in the sustainability
report. Agonism is rooted in a political theory which recognises that dissent and conflict are
inevitable, even permanent, but it seeks to accept such conditions in positive ways (see
Mouffe 1999).
Contextualising agonism in materiality assessment potentially offers greater inclusiveness,
transparency and accountability. That is because a wide range of stakeholders take part in a
critical dialogic engagement by which the sustainability report discloses dissent arising from
the process of reaching consensus in defining the report’s content. Critical dialogic engage-
ment, in the context of sustainability reporting, is an engagement with various stakeholders
whereby individuals are able to express their sustainability views in undistorted conditions
and agree ‘not to abuse their powers to achieve predetermined outcomes’ (see Bebbington
et al. 2007, 373). The divergent sustainability views among stakeholders are still preserved
with mutual respect, even when the consensus has been achieved. However, such a critical
dialogic approach receives relatively less attention in practice than its technical-rational
counterpart. Inspired by this research, future research could be undertaken by triangulation
of (longitudinal) document analysis and interviews in exploring economic, political, sociocul-
tural and legal barriers to adopting a critical dialogic approach in materiality assessment. On
top of that, future research could also explore ‘managerial capture’ arising from the unification
2 ARTICLE REVIEW

of pluralism which is likely to be present in the overly technical approach of materiality matrix
development.

References
Bebbington, J., J. Brown, B. Frame, and I. Thomson. 2007. “Theorizing Engagement: The Potential of a Critical
Dialogic Approach.” Accounting, Auditing & Accountability Journal 20 (3): 356–381.
Mouffe, C. 1999. “Deliberative Democracy or Agonistic Pluralism?” Social Research 66 (3): 745–758.

Putu Agus Ardiana

Durham University Business School, Durham, UK
putu.a.ardiana@durham.ac.uk
© 2021 Putu Agus Ardiana
https://doi.org/10.1080/0969160X.2020.1870315
 The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0951-3574.htm

Exploring the
Matter of opinion socio-political
Exploring the socio-political nature nature
of materiality disclosures in
sustainability reporting 1043
Jenni Puroila
Mistra Center for Sustainable Markets (Misum), Stockholm School of Economics, Received 27 November 2016
Revised 30 June 2018
Stockholm, Sweden, and 17 October 2018
Accepted 29 October 2018
Hannele Mäkelä
Faculty of Management and Business, Tampere University, Tampere, Finland

Abstract
Purpose – The purpose of this paper is to contribute to the socio-political role of materiality assessment in
sustainability reporting literature and discuss the potential of materiality assessment to advance more
inclusive accounting and reporting practices, in particular critical dialogic accounting.
Design/methodology/approach – Drawing on literature on the concept of materiality together with
insights from stakeholder engagement, commensuration and critical dialogic accounting the paper analyses
disclosure on materiality in sustainability reports. Empirically, qualitative content analysis is used to analyse
44 sustainability reports from the leading companies.
Findings – The authors argue that, first, the technic-rational approach to materiality portrays the
assessment as a neutral and value-free measurement, and second, the materiality matrix presents the
multiple stakeholders as having a unified understanding of what is considered important in corporate
sustainability. Thus, the technic-rational approach to the materiality assessment, reinforced with the use of
the matrix is a value-laden judgement of what matters in corporate sustainability and narrows down rather
than opens up the complexity of the assessment of material sustainability issues, stakeholder engagement
and the societal pursuit of sustainable development.
Originality/value – The understandings and implications of the concept of materiality are ambiguous and
wide-reaching, as, through constituting the legitimised set of claims and information on corporate sustainable
performance, it impacts our understanding of sustainable development at large, and affects the corporate and
policy-level transition towards sustainability. Exploring insights from critical dialogic accounting help us to
elaborate on the conceptions and practical implications of materiality assessment that enhance stakeholder
engagement in a democratic, rather than managerial, spirit.
Keywords Sustainability reporting, Sustainable development, Stakeholder engagement, Materiality,
Critical dialogic accounting
Paper type Research paper

Introduction
Sustainable development is a deeply contested and value-laden concept replete with
questions of, “what is to be sustained, for whom, how and who decides” (Brown and Dillard,
2014, p. 1124). Understanding of the consequences of business operations on sustainability
has evolved to cover a wide array of social, environmental and governance issues ranging
from child labour to climate change, poverty, tax avoidance and so on. To recognise and to
report on their unique sustainability impact, each company holds a responsibility to conduct
a comprehensive materiality assessment, incorporating stakeholder engagement into the
process. The concept of materiality is intended to increase transparency and accountability
by making the reports more focussed on “what matters” and reducing the amount of
Accounting, Auditing &
unnecessary sustainability information (GRI, 2016; IIRC, 2013b; Accountability, 2013). Accountability Journal
In practice, the concept of materiality is widely implemented in sustainability disclosure, Vol. 32 No. 4, 2019
pp. 1043-1072
as today a majority (78 per cent) of multinational organisations refer to materiality as a © Emerald Publishing Limited
0951-3574
guiding principle in sustainability reporting (KPMG, 2013). However, the implementation of DOI 10.1108/AAAJ-11-2016-2788
AAAJ the concept varies widely between organisations (Moroney and Trotman, 2016), and
32,4 identifying and prioritising material issues has been noted as challenging (Hsu et al., 2013;
Calabrese et al., 2016). Well-rooted in financial accounting, the concept of materiality is
traditionally focussed on presenting a true and fair view of a company’s financial
information to support financial decision-making that serves the interests of investors as the
primary stakeholder group (IASB, 2010). Accounting has increasingly become involved and
1044 embedded in ethically, ecologically and politically contested areas, such as sustainable
development, the understanding of corporate impacts on society and the diverse, reciprocal
accountability relationships between a company and the surrounding society (Cooper and
Morgan, 2013; Brown and Dillard, 2015). Introducing the concept of materiality into the
arena of sustainability reporting means expanding the concept through consideration of a
broader set of stakeholders with multiple informational needs (GRI, 2013a). This requires
that stakeholder interests are accounted for with the utmost scrutiny in the process of
defining what is material in complex corporate settings. Materiality is a social construct
(Eccles and Krzus, 2015), and instead of a unified understanding of what information on
corporate performance is material, there are, in fact varying, perhaps conflicting, views that
ultimately lead to different constructions of corporate sustainability (Brown, 2009; Brown
and Dillard, 2013; Brown and Tregidga, 2017).
By informing society at large of the various implications of corporate performance,
accounting discourse can shape our views of what is important and what organisations
should be held responsible for (Burchell et al., 1985; Hines, 1989; Cooper and Morgan, 2013).
Thereby, the process of identifying and prioritising material information on corporate
sustainability performance is of great importance. The concept of materiality, with its
central role in defining and legitimising the reporting contents, is here argued to be of
critical importance in the analysis of sustainability reporting. By providing “legitimate
closure” to the reporting content, and to the variety of understandings of corporate
sustainability, the concept of materiality also has a broader societal impact.
While there are indications that materiality is more of a socio-economic and political
phenomenon than a technical one (Carpenter et al., 1994; Eccles and Krzus, 2015; Lai et al.,
2017), much of the previous research on materiality focusses on developing “means of
arriving at a consensus regarding the criteria which influence the judgment of what is
material and what is not” (Bernstein, 1970, p. 131). Standing at the intersection of different
streams of literature on materiality, stakeholder engagement and critical dialogic
accounting, we contribute to the understanding of the less explored socio-political nature
of the assessment of materiality. Empirically, this study sheds light on the concept of
materiality and its implications by exploring disclosures of materiality assessment
processes in the sustainability reports of the global top 44 companies.
This paper proceeds by introducing the concept of materiality and its implementation in
the sustainability arena. After this, we review the sustainability reporting standards and the
definitions of the concept of materiality within. We then discuss the broader understandings
of the concept by surveying literature on stakeholder theory, critical dialogic accounting
and commensuration processes. This will assist us in problematizing the current practice of
materiality disclosure in sustainability reporting in the next section. Finally, the empirical
findings are discussed in the wider context of corporate sustainability.

The concept of materiality in sustainability reporting

The traditional understanding of accounting materiality focusses on presenting a true and fair
view of the financial information, and not including significant errors or omissions that could
affect shareholders’ decision making (IASB, 2010; IFAC, 2017; Hicks, 1964; see, e.g. Lai et al.,
2017; Edgley, 2014; Brennan and Gray, 2005; Messier et al., 2005, for a detailed review of
literature on accounting materiality). Materiality, as understood in sustainability reporting,
broadens and challenges this traditional definition by including the significant environmental Exploring the
and social impacts of corporate performance in materiality considerations, and, instead of socio-political
focussing merely on financial considerations as the interest of shareholders, it considers a nature
larger scope of information users (Accountability, 2008; GRI, 2013c). A thorough consideration
of the reporting timescale is also required, as the more straightforward operational and
financial considerations often have a significantly different timescale than corporations’
complex social and environmental issues (Zadek and Merme, 2003). Much of these concerns 1045
are similar to considerations of the materiality of non-financial issues with a greater amount of
discretion (see, e.g. Lai et al., 2017; Eccles et al., 2012; Guthrie and Parker, 1990), but materiality
assessment in sustainability reporting goes beyond these with its explicit commitment to
stakeholder engagement. Although the introduction of the concept of materiality as a part of
the reporting standards is relatively new, the judgements about materiality have always been
implicitly present in the disclosure of sustainability information and in evaluations of what
counts, to whom, what is to be reported and to what extent. As most of the reporting
standards do not predefine the report content, companies need to take responsibility for
conducting a comprehensive analysis of their sustainability impacts with an explicit emphasis
on stakeholder engagement to be able to report on them.
Even in the context of the seemingly objective nature of accounting information, the
principle of providing a true and fair view is not explicitly defined, and, thus, always allows a
degree of flexibility and uncertainty (Holmes, 1972; Carpenter et al., 1994; Brennan and Gray,
2005). In a similar manner, prior accounting literature shows that the concept of materiality
brings along a certain extent of flexibility; in other words, it cannot be explicitly defined to suit
each circumstance (Carpenter et al., 1994; Brennan and Gray, 2005). Hence, materiality is seen
as more of an opinion rather than a mechanical process (Gray and Manson, 2008, as cited in
Edgley, 2014). Materiality assessment is a process that requires making judgements on what
information to include and what to exclude from reporting, and the implementation of the
concept affects both the quantity and quality of corporate disclosure (Rose et al., 1970; Edgley,
2014; Jones et al., 2016; Eccles and Youmans, 2016). Broadening both the scope of issues
considered and the users and sources of information considered in materiality assessment,
sustainability reporting further challenges the process, enabling explicit discussion and
dialogue on what is considered relevant sustainability information in which context.
Research suggests that materiality is a socio-economic and political phenomenon rather
than a technical one (Carpenter et al., 1994; Lai et al., 2017). Furthermore, it links materiality
to the bigger picture of the role of corporate communication, particularly in constituting the
broader societal understandings on sustainable development: what is to be sustained, for
whom, how and who decides what is sustainable (Brown and Dillard, 2014, pp. 1123–1124).
As stated by Tregidga and Milne (2006, p. 220), “organizational communication may be
viewed as part of the discursive struggle in which organisations attempt to shape, manage
and make sense of their identities, concepts [and] themselves”. Accounting is acknowledged
to possess significant social power in its ability to shape a particular conception of, for
instance, sustainable development (Burchell et al., 1985; Tregidga and Milne, 2006; Livesey,
2002). Prior research shows that companies tend to picture their operations and impact on
society in a manner that prioritises particular interests of investors and presents sustainable
development as a business opportunity or as a risk to be managed so that business may
continue as usual (Larrinaga-Gonzalez and Bebbington, 2001; Tregidga and Milne, 2006;
Spence, 2007). Furthermore, corporate talk is claimed to promote a unitarist perspective
based on assumptions of shared purpose between all stakeholders and a denial of any
conflict between different parties in society (Brown, 2009; Eccles and Youmans, 2016;
Mäkelä, 2013; Cho et al., 2015; Boiral, 2013; Milne and Gray, 2013; Spence, 2007).
Yet, the socio-political nature of the materiality assessment is not often recognised in the
literature on materiality in the sustainability reporting context, and the motives of the
AAAJ information producers are not often questioned. Instead, they are treated as “compliant, yet
32,4 disinterested producers and providers of information, capable of revealing themselves fully
and, able to describe organisational reality in a comprehensive, balanced, and unequivocal
manner” (Christensen and Cheney, 2015, p. 74). Much of the research on materiality is
focussed on elaborating the “means of arriving at a consensus regarding the criteria which
influence the judgment of what is material and what is not” (Bernstein, 1970, p. 131). Recent
1046 research on the assessment of materiality in sustainability reporting acknowledges the
urgent need for, and difficulty of, defining what is material from varying stakeholder
perspectives ( Jones et al., 2016; Maniora, 2018; Steenkamp, 2018; Formisano et al., 2017;
Lai et al., 2017), but mostly remains technical-rational in its consensus-oriented approach to
developing structural materiality analysis and quantitative methods for prioritising
sustainability issues (Calabrese et al., 2015, 2016; Hsu et al., 2013; Krajnc and Glavič, 2005).
The complex nature of sustainability information requires a broader approach regarding
the timescales and stakeholder interests as part of the assessment (Accountability, 2006,
p. 8). Also, there is a possibility that the materiality process is utilised to narrow the scope of
the report, leading to a risk that companies end up omitting issues that are not seen to be in
line with the business strategy, but might be considered important from a particular
stakeholder’s point of view (Unerman and Zappettini, 2014, p. 173). Indeed, recent research
by Lai et al. (2017) shows that investors are prioritised in the materiality assessment process
and material issues are identified from the corporate strategy perspective.
The literature is still limited and there have been calls for more attention on materiality in
corporate sustainability reporting (Maniora, 2018; de Villiers et al., 2014; Unerman and
Zappettini, 2014). Specifically, there is a lack of consideration of the engagement of varying
stakeholder groups with conflicting interests in materiality assessment (Calabrese et al.,
2016; Eccles and Youmans, 2016). In defining what the material issues are in a specific
context and what is to be reported, “difficult trade-offs must often be made” between the
interests of different stakeholders, such as providers of different kinds of financial capital
and the advocates of different sustainability targets (Eccles and Youmans, 2016, p. 43).
Furthermore, compromises must also be made on what to report about this trade-off process
as such. In line with Higgins et al. (2014, p. 1112), who call for critical studies on the language
used in corporate reports, we focus on analysing the meanings, implications and
possibilities associated with materiality in sustainability reports. We particularly focus on
exploring possibilities for broadening the understanding of the concept of materiality and
on the consideration of stakeholder engagement in sustainability reporting.

Materiality as defined in reporting standards

The concept of materiality has become a central element in distinguishing the most
important sustainability information from the less significant immaterial information in
corporate reporting (Unerman and Zappettini, 2014; Edgley et al., 2014; Moroney and
Trotman, 2016), and the latest versions of various sustainability reporting standards
consider materiality as a guiding principle in defining the contents of the disclosure.
However, the standards differ in their materiality definitions, and, to illustrate this, we
briefly review the definitions of materiality in the most used and well-known sustainability
reporting standards (GRI, 2013c; SASB, 2014; IIRC, 2013a, b; Accountability, 2008) in
comparison with materiality in financial statements as defined by IASB (2010).
The definitions are analysed through three perspectives: the definition of materiality; the
purpose of conducting a materiality assessment; and the guidance given about the criteria
and thresholds for prioritising those issues (see Table I).
The most critical differences among the standards are found in considerations of whose
point of view should be emphasised in selecting the most material issues. While GRI
emphasises the broad and inclusive stakeholder perspective, IIRC and SASB clearly focus on
 IASB
DefinitionInformation is material if omitting it
or misstating it could influence
decisions that users make on the
basis of financial information about
a specific reporting entity. In other
words, materiality is an entity-
specific aspect of relevance based on
the nature or magnitude, or both, of
the items to which the information
relates in the context of an
individual entity’s financial report
Purpose The need for materiality
judgements is pervasive in the
preparation of financial
statements. IFRS Standards
require companies to make
materiality judgements in
decisions about recognition,
measurement, presentation and
disclosure
Criteria/ An entity might conclude that an
Threshold item of information is material for
various reasons. Those reasons
include the item’s nature or size, or
a combination of both, judged in
relation to the particular
circumstances of the entity.
Therefore, making materiality
judgements involves both
quantitative and qualitative
considerations
Approaches to
Table I.
to reporting standards
materiality according
GRI
Material aspects reflect the
organisation’s significant
economic, environmental and
social impacts; or substantively
influence the assessments and
decisions of stakeholders
The purpose of materiality
assessment is to determine the
sustainability report content
Materiality matrix: “Influence on Materiality matrix: “Internal” and Materiality matrix: “Likelihood of The Materiality Map relies heavily
stakeholder assessments and
decisions” and “Significance of the choose internal and external criteria effect”. The magnitude of the
organisation’s economic,
environmental and social
impacts”. The thresholds and
underlying criteria based on these which are most important to the
dimensions should be clearly
defined, documented and
communicated by the
organisation. This determination sophisticated, indicating a scale of medium and long term
should involve discussion,
qualitative analysis and
quantitative assessment to
understand how significant
an aspect is
Accountability IIRC SASB
A material issue is an issue that will A matter is material if it is of such Material information is
influence the decisions, actions and relevance and importance that it sustainability information that is
performance of an organisation or could substantively influence the important to investors in making
its stakeholders. Materiality assessments of providers of investment decisions. Materiality
determines the relevance and financial capital with regard to the is defined on an industry-by-
significance of an issue to an organisation’s ability to create industry basis
organisation and its stakeholders value over the short, medium and
long term
Materiality guides business Materiality defines information to
Materiality plays a crucial role in
strategy and performance, determining the matters to be be included in S-K filings,
stakeholder engagement, disclosure requirements by US
included in an integrated report and
and reporting regulation, which sets the specific
ensuring conciseness of the report
disclosure requirements for
companies to describe known
trends, demands, and
uncertainties that have a material
impact on financial results
“external”. Companies should occurrence and magnitude of the on two types of evidence: “evidence
of investor interest” (financial risks,
to identify those issues relevant to effect on the organisation’s ability legal drivers, industry norms,
drivers of business strategy and to create value is determined by stakeholder concerns, innovation
performances, and those issues, assessing the magnitude of the opportunity) and “evidence of
matter’s effect on the financial impact” (revenues and
stakeholders. This may be a simple organisation’s strategy, its costs, assets and liabilities, risk
division into material/not material business model and the different profile: cost of capital). A forward-
categories or it could be more forms of capital, in the short, looking adjustment (probability
and magnitude, externalities)
levels of materiality acknowledges emerging issues,
which are not yet reflected in the
evidence-based tests
1047
nature
Exploring the
socio-political
AAAJ the shareholders’ point of view, employing the materiality perspective of financial reporting
32,4 standards (IASB). Accountability combines both perspectives. Regarding the purpose of
materiality assessment, GRI emphasises that it is to guide the selection of the topics to be
reported, while accountability’s approach is designed mainly for strategy development.
The IIRC framework uses materiality to make the integrated report “as concise as possible”,
and SASB states that it is designed to fulfil the disclosure requirements of US regulations.
1048 GRI and Accountability have similar approaches to the criteria and thresholds for
prioritising and selecting material issues. Both emphasise that the company has the
responsibility to report its internal criteria for evaluation. However, and importantly, the
dimensions of what should be considered as material are different. GRI takes a broad and
inclusive view by defining materiality through dimensions of “social, environmental and
economic impacts of corporate performance” and “stakeholder views”. Accountability’s
approach refers to differentiating and analysing internal and external viewpoints on
sustainability. The IIRC guidance directs attention towards the likelihood and magnitude of
the impact on value creation for different forms of capital, mainly for the use of
the “providers of financial capital”. SASB’s approach provides a predefined list of
industry-specific material issues that have financial implications, and the criteria are based
on financial considerations. IASB advises companies to define materiality depending on the
magnitude or nature of the item.
To sum up, the standards differ in terms of their definitions of materiality. Not
surprisingly, GRI and Accountability appear the most democratic and, GRI in particular is
in line with sustainable development in stressing the importance of a broader group of
stakeholders and the business’s impact on society, and not the other way around. IIRC and
SASB are explicitly investor-focussed and closer to financial materiality as defined by the
IASB. They consider sustainability as a risk or opportunity to business operations, and
accordingly, reporting is about how the companies manage these issues. Importantly, while
these different standards have diverse and partially conflicting perspectives on materiality,
they all share the technical-rational perspective suggesting that through a rigorous process
it is possible to measure and quite objectively deem that certain information is more material
than others (Boiral and Henri, 2017).

Stakeholder engagement in sustainability reporting

Any issues related to sustainable development are highly complex and thus require a
thorough exploration and understanding of the related multiple, varied and often conflicting
viewpoints and values. Corporate sustainability reporting is no exception to this, and
obliges consideration of the multiple corporate impacts on a wide variety of stakeholders,
and of the multifaceted, interactive relationship between the company and its human and
non-human stakeholders (GRI, 2013a; IIRC, 2013a; UN Global Compact, 2015). Definitions of
materiality in sustainability reporting emphasise the role of a broader set of stakeholders,
such as investors, regulators, civil society, employees, suppliers and customers as
informants in the materiality assessment, vital to determining which information and data
should be included in the report (Gray et al., 2014). For instance, the GRI’s G4 guidelines
states that “taking stakeholders” views into account is central to developing a robust
understanding of a company’s economic, environmental, and social impacts’ (GRI, 2013c).
The traditional means of (financial) accounting, often focussed on monetary valuations of
resources, impacts and values, face the criticism of not being capable of tackling the
challenge of sustainable development (Gray, 2002; Spence, 2007). Novel, explorative means
of accounting are recommended to account for the corporate impact on society (Brown,
2009). These novel means should be attentive to a diverse range of goals and values related
to the economic relationships involved, and thus be more suitable than the traditional means
to account for these multiple aspects of corporate sustainability. With an explicit
commitment to stakeholder engagement, the concept of materiality has the potential to Exploring the
enable more novel, inclusive means of accounting and reporting. Such approaches may also socio-political
hold practical value in elaborating on the premises of practical methods for the engagement nature
of the various, often conflicting groups of stakeholders (Calabrese et al., 2016; Boesso and
Kumar, 2009). Stakeholder theory offers normative grounding for the inclusion of
stakeholders (Crane and Ruebottom, 2011, p. 77) and discusses “a broader societal
embeddedness of organisations and its interdependencies with the societal environment” 1049
(Hörisch et al., 2014, p. 331).
However, stakeholder engagement does not inherently equate with corporate
accountability or sustainability (Brown and Dillard, 2015), rather, it can merely serve as
an instrumental tool of stakeholder management to further the financial interests of the
organisation (Mitchell et al., 1997). The current practices of corporate sustainability face the
critique of being based on narrow, technical-rational means and favouring the hegemonic
understanding of sustainability that re-enforces the status quo and puts emphasis on
financial interest (Cho et al., 2015; Boiral, 2013; Milne and Gray, 2013; Mäkelä and Laine,
2011; Spence, 2007). Even the approaches that rely on stakeholder engagement often fall
short of their pluralistic and democratic intentions, remain very superficial and dilute the
broader stakeholder concerns, “by translating them into traditional business language and
criteria” (Brown and Dillard, 2013, p. 250).
Much of the existing accounting research on stakeholder engagement takes the
definition of stakeholder as a given and oversimplifies the diversity of social identities and
interactions (Brown and Dillard, 2015; Crane and Ruebottom, 2011). Stakeholders are often
defined solely by their economic function, as employees, consumers, investors and so forth
(Crane and Ruebottom, 2011, p. 77; Perrault, 2017; Brown and Dillard, 2015). However, the
recent elaborations of stakeholder theory (Freeman, 1984) highlight the multiplicity of
stakeholder identities and emphasise that such categories are naïve, meaningless and fail to
account for multifaceted stakeholder interaction (Perrault, 2017, p. 25). Miles (2017)
emphasises that the solution for dealing with the multiple understandings of stakeholder
identities lies not in setting up a universal definition, but in constantly debating the
boundaries. A stakeholder is a “unique societal constituency that affects and is affected by
the firm across a range of […] relationships. Therefore, for firms to effectively understand
societal values and expectations, predict relevant social issues, manage stakeholder
relationships, and assess impacts on their constituencies, they need to understand
the identifications that drive constituency membership in more sophisticated ways”
(Crane and Ruebottom, 2011, pp. 77-78).
Overall, stakeholder identities are not temporally exclusive but varied and overlapping
in terms of the divergent interests of individuals and based on “the plurality of ties that
any given stakeholder may have and the interaction between stakeholder groups”
(Crane and Ruebottom, 2011, p. 80). Not all stakeholders within the typical groups, such as
employees for instance, are similar in their social identities, but vary in terms of age, gender,
nationality, sexual orientation, ethnicity, ability, political commitments and so forth
(Crane and Ruebottom, 2011). Stakeholders also span several categories and migrate from
one category to another (Perrault, 2017, p. 26). Individual stakeholders may have several,
and perhaps conflicting, interests, such as an employee as a shareholder, or an
environmental conservationist as a local community representative. Furthermore,
stakeholders also differ in how they interact with other stakeholders; sometimes the
groups compete against and sometimes complement each other. They also differ in how
they coalesce and mobilise in pressing their interests. Sometimes different groups of
stakeholders form strategic alliances to complement each other and cooperate to increase
their power. Then again, stakeholders may try to lobby and even manipulate not only the
company, but other stakeholders, too (Perrault, 2017; Neville and Menguc, 2006).
AAAJ No matter what definition of stakeholders we choose to follow, the identification of
32,4 context-specific corporate stakeholders is a key issue for stakeholder engagement in
materiality assessment. While the status or identity of a stakeholder may not affect the
issues-based approach to materiality assessment as such, it is crucial in the first phase of
stakeholder identification. If a particular interest group is not seen as a stakeholder at all,
then their interests are perhaps not identified as relevant sustainability issues. Additionally,
1050 the manner in which the stakeholder engagement is carried out in the materiality process,
which stakeholder views are privileged, which inputs are filtered through, what is
highlighted, and which questions are asked, depends on how the definition of materiality is
framed, perceived and understood (Leach et al., 2010, p. 105). The expectations and interests
vary between different stakeholder groups and depending on how an organisation
prioritises its stakeholders and their interests, the influence of stakeholder engagement may
lead to different outcomes (Brown, 2009). Prior research says that corporations tend to
engage more with stakeholders who have higher status or who contribute favourably to the
corporate strategy (Perrault, 2017).
In practical terms, there is a difference between whether stakeholder views are used as an
input to identify and recognise the most significant sustainability impacts and risks to the
company, or whether stakeholder views are identified to answer the broader societal needs
for sustainability information provided through corporate disclosure. For instance,
regardless of whether the prevention of child labour, for instance, is material from corporate
perspective, there are likely certain groups who want to see such information disclosed.
However, there are always likely to be impacts that the stakeholders are not aware of, since
they don’t have access to all the information. Furthermore, relatively few stakeholders have
the knowledge, understanding and impetus to raise sustainability as an issue. It cannot be
assumed that the concept of sustainability and the elements of sustainability are familiar to
most stakeholders (Gray et al., 2014, p. 56).
To sum up, corporate accounts may appear very different depending on how they are
framed, resulting in very different constructions of corporate sustainability. These further
affect the very practical questions of producing corporate disclosure, such as how and what
to account, and who is involved in the process. The concept of materiality and the recent
emphasis on the materiality assessment process in corporate sustainability reporting have
potential to enable and highlight explicit discussions and evaluations on what is required,
important, and material in corporate sustainability, and from whose perspective. Materiality
assessment itself is valuable as an inclusive practice. Reporting of the issues prioritised, the
broader implications of such a process, the management of sustainability within
organisations, broader stakeholder accountability and the pluralistic accounts of
sustainable development are crucial if we wish to develop a societal-level transition
towards sustainability.

Empirical material and qualitative analysis

This study now moves on to reporting the findings of the empirical analysis. We focus on
analysing the meanings, implications and possibilities associated with materiality in
sustainability reports and contributing to the understandings of the less explored
socio-political nature of the materiality assessment. This study does not aim to evaluate
whether the material topics identified are indeed material, but to explore the current
materiality disclosure practices in sustainability reporting of the leading companies.

Empirical material
The empirical data consists of materiality disclosures collected from 44 sustainability
reports from 2013 to 2014, which follow the GRI G4 Sustainability Reporting Guidelines.
The selected reporting organisations are listed in the 2015 Global 100 Index, which lists
the companies that are ranked as the most sustainable companies in the world Exploring the
(see Table AI for company characteristics). Even though the reliability of sustainability socio-political
indices is questioned (Boiral and Henri, 2017), companies commonly use sustainability nature
indices to benchmark their performance (Sustainability, 2012, p. 7). The empirical material
was collected from companies using the GRI, as it is by far the most commonly used
standard for sustainability reporting (KPMG, 2017). In addition, several countries have a
formal reference to GRI in their governmental corporate responsibility guidance 1051
documents or policies. At the time of conducting the empirical analysis, G4 was the most
recent version of the GRI Guidelines, and it highlights materiality as a central element in
defining report content (GRI, 2013b). Another reason to limit the sample to GRI reports
alone is that the GRI guidelines include a specific requirement (G4-18) to disclose the
materiality assessment process. The requirement to report on materiality, and the process
behind the materiality analysis, is common for all the reporting organisations, regardless
of the size or the sector in which they operate. The presumption is that companies using
the G4 guidelines are likely to describe their approach in identifying the material aspects.
Many of the sample companies also reference other standards in their reports. The
references to IIRC, Accountability and SASB are shown in Table AI.

Method of analysis
The method of analysis resembles that of qualitative content analysis, or close reading,
where the materiality disclosures are scrutinised through several rounds of readings,
looking at the individual elements of materiality and drawing conclusions on the current
practices (Hsieh and Shannon, 2005). The first phase of the analysis originally focussed on
comparing the individual reports by identifying and quantifying explicit expressions. Later,
this approach was refined due to the inconsistencies found within the individual reports,
which would had led to overlooking and neglecting controversial expressions while trying
to constrain the report to fit into only one category. Thus, rather than comparing individual
reports, our analysis focusses on looking for similarities and patterns across the whole data
set that allow us to analyse the phenomenon more extensively (Langley and Abdallah, 2011;
Gioia et al., 2013). Yet, the characteristics found in individual reports contribute to the larger
patterns found across the data set, which together are used for the development of the
constructs. This method of analysing the data embraces a variety of the expressions that
allow the creation of a richer and more comprehensive picture of the phenomenon.
The analysis began by collecting the particular sections from reports that discuss
materiality. The texts and the visuals, such as tables and graphs, were analysed through
close-reading in order to compare materiality disclosures in different reports. The analysis
also focussed on the absence of information and what type of information remained
obscured. During the first rounds of reading, memos were written based on emerging
questions about the similarities and dissimilarities found in materiality disclosures. These
early memos particularly focussed on the absence of information in individual reports,
which triggered a search for certain types of information in others. The data were compared
with the previous literature and notes were taken about the links between the early findings
and the theory. This helped to structure the framework for analysis. From the close-reading,
the expressions and visuals used to describe what materiality is, how something is
determined as material and why, and what type of outcome it represents were found to be
worthy of analysis.
The first rounds of readings were followed by several rounds of examining the data,
memos and theory. Through this, the first order concepts emerged, which were then drawn
to larger second and third order constructs. These constructs describe different approaches,
choices and assumptions affecting the capacity for materiality assessment and its
potential in advancing dialogic accounting practices in corporate sustainability reporting.
AAAJ These constructs subsequently form the aggregative dimension, which represents the key
32,4 findings of the research, proposing that materiality is a value-laden positional judgement.
The data collection and the analysis were conducted by the lead author and the results
were revisited by the second author to reduce intrinsic subjectivity. The original data within
the reports were used to confirm the conclusions at various stages of the process to ensure
internal consistency.
1052
Findings
We now move on to report the findings from the empirical analysis of materiality in
contemporary sustainability reports, after which we discuss the findings in the light of the
theoretical framework and propose an elaborated framework for materiality assessment and
reporting from a critical dialogic perspective. The findings are summarised in Table II[1].
The findings of the empirical analysis illustrate that the current practice of disclosing the
materiality assessment process provides a spectrum of approaches, choices and
assumptions that provide answers to some critical questions regarding materiality:
What is materiality assessment for? Who decides what is material information? How are
material issues determined? What is the outcome of all this?
First, we briefly introduce the common practices of reporting on materiality in
sustainability disclosure. Our empirical analysis shows differences in defining what exactly
is material and what the basis for this analysis is. Overall, a materiality matrix is commonly
used to present the results of the materiality analysis. The matrices present the identified
material issues as ranked against each other based on certain criteria and definitions of
materiality (that form the two axes of the matrix). The different materiality criteria used in
the reports are categorised into three different dimensions: stakeholder perceptions;
strategic (financial) impact; and sustainability impacts created by the business. The most
frequent dimension is the stakeholder perspective, and the most common approach is to
connect stakeholder views with the business considerations. The business considerations
either represent the strategic relevance of the issue or highlight the understanding of
material issues as what causes the most (financial) harm or benefit for business operations.
The dimension that evaluates the company’s social, environmental and economic impacts
on society is the least used approach, appearing only in three of the sample reports. In other
words, in the most commonly used definition, material sustainability issues are such that
they have the most impact on the financial returns, either in the short or long term, and are
considered important by (some of ) the corporate stakeholders.

Underlying objectives
As reflected in the multiple definitions and criteria for materiality, the concept can be
understood and used in varying ways. The previous literature also notes fundamental
differences in the underlying objectives and values of the different approaches to
sustainability (Brown and Fraser, 2006), which affect the criteria for materiality assessment,
that is, for instance, whether the definition of materiality reflects strategic and financial
profit-oriented reasoning, or more stakeholder and responsibility-oriented reasoning.
These rather opposite objectives are, however, often combined or used interchangeability,
while strongly emphasising the dominant business discourse.
In the corporate-centred approach, the understanding of what is material is defined as
what causes the most (financial) harm or benefit for business operations, and the company’s
broader social and environmental impacts on the stakeholders and society at large seem
to be neglected:
Materiality: Focusing on issues that impact long-term business growth and are of utmost
importance to stakeholders (R2, 2014, 13).
1st order 2nd order 3rd order

What is materiality assessment for? Aggregative dimension: Materiality

as a value-laden, political and
positional judgement
Materiality assessments help in identifying the sustainability impacts that Society-centred approach Underlying
need to be managed objectives
Materiality assessments help to identify stakeholder relationships and
informational needs, increasing accountability
Materiality assessments help to identify financial and business risks and Corporate-centred
opportunities that need to be managed instrumental approach
Materiality assessments help to identify stakeholder information needs to
manage their expectations
Who decides what is material information?
Internal assessment Corporate-centric internal closed Authorities of
assessment information
Engagement with membership and industry associations, and the use of Reliance on predefined
different sustainability guidelines and standards, industry frameworks and norms and standards
sustainability indices
Participatory methods developed for the materiality assessment or regular Multiplicity of divergent stakeholder
dialogue with stakeholders is employed to define material topics perspectives and opinions
Regular dialogue with stakeholders, stakeholder workshops, panels,
questionnaires
Desktop research: media analysis, utilising available research, market analysis
and scanning trends
How are material issues determined?
Two-dimensional all-encompassing criteria visualised in a form of Unifying, technic-rational criteria (In)comparability
materiality matrix of the sustainability
Sustainability information is commensurable and comparable information
Materiality is judged based on topic-specific evaluations Contextual topic-specific criteria
What is the outcome of all this?
The outcome is a temporal compromise, varies depending on the context, Contingent, situational and temporal Transferability of
stakeholder identities and relationships, it is an on-going process version of materiality the outcome
Materiality varies in different locations, material topics per stakeholder group
The outcome can be applied to different contexts and the outcome remains Closure, “a true and a
relatively unchangeable throughout time fair view”
Guide to a long-term strategy
1053
nature
Exploring the

Identified approaches,
socio-political

choices and
assumptions in the
Table II.

materiality assessment
AAAJ The material issues that we focus on help us to improve our processes for managing short and
32,4 long-term risk in our business from a financial, operational and reputational perspective.
Where possible, we aim to turn the risks we identify into opportunities that create value for our
customers and for our business (R32, 2014, 6).
We focused on deepening our understanding of the issues that are crucial to sustaining our long-
term business success. Through a materiality assessment we identified eight non-financial material
themes that directly contribute to our strategy and potential to innovate and excel (R43, 2013, 6).
1054
When materiality assessment is conducted for the sake of understanding the broader
societal impacts of the organisation the reporting process aims at identifying, reporting
and managing these broader sustainability issues. This is in line with the original aim
of sustainability reporting (Gray, 2002). There are some examples of such an approach in
the reports:
In planning for the longer term, we have completed our second Citizenship & Sustainability materiality
assessment considering the ways we impact the world socially, environmentally and economically, or
that can be linked to our activities and results of relationships with others (R10, 2013, 3).
The report describes our material impacts on the environment, people and society, what we did
during the year to manage these impacts and what progress we made (R12, 2013, 55).
We use this information to assist the Group to ensure an equitable and balanced approach is
taken to engaging with our stakeholders and representing their views e.g. ensuring that those with
a strong interest but a quieter voice are included equitably in the engagement process
(R21, Stakeholder Engagement Framework 2014, 2).

Authorities of information
Overall, the findings of the empirical analysis suggest that, drawing from different sources
of information and engaging with stakeholders, it is possible to objectively identify and rank
the list of material sustainability issues. There are, however, differences in what the
companies rely on as a basis for the assessment, and who is seen as an authority of
information, which may affect the way materiality is further processed. Through our
analysis, we identified three distinctive approaches proposing where the underlying
assumptions derive from; existing corporate strategy, norm-based institutional standards or
multiple stakeholder perspectives.
The existing corporate strategy influences the materiality assessment. Organisations
scrutinise and evaluate sustainability topics as they do any other similar reporting activity,
and the corporate strategy is used to set the criteria for materiality assessment. The
corporate strategy and values become especially prominent in guiding the assessment
process when materiality is determined internally, often through a purely a management-
level evaluation. This implies a more closed and exclusive setting, involving the assumption
that information on the company’s materiality issues can be obtained by relying on internal
expertise, drawing on existing corporate strategy and other internal documents. The
corporate, business-as-usual discourse dominates the results:
This most recent version of Plan A [sustainability strategy] is launched in this report and was used
to determine the materiality of the issues that it covers. Plan A commitments were further assessed
for materiality by [company] management, who ranked them in terms of their “importance to
stakeholders” and “importance to [the company]” on a 3 x 3 matrix (R9, 2014, 34).
Our corporate responsibility team developed a survey listing more than 40 items for consideration
and reviewed it with members of our executive committee, regional presidents and heads of
departments to determine which issues in the survey had a significant, moderate or minimal impact
to our business (R44, 2013, 7).
Some companies take a more norms-based approach and rely on different sustainability Exploring the
guidelines and standards. Relying on external norms means, at least to certain extent, socio-political
accepting the standard-setters as experts and authorities in defining and guiding the nature
sustainability agenda:
We conducted our Materiality Assessment through a rigorous methodology that included the
review of key guidelines set forth by respected external organizations. In all, we explored 37 topics.
To populate the list of topics to include in our analysis, we referenced the Sustainability Accounting 1055
Standards Board (SASB) Biotechnology Sustainability Accounting Standard, which has its own
rigorous materiality process; United Nations Global Compact’s Ten Principles; The Ceres Roadmap
for Sustainability; and the Dow Jones Sustainability Indexes (R1, 2014, 91).
We carry out indirect engagement through the application of externally developed standards and
frameworks that reflect COI expectations. These include those developed by the following
organizations: Global Reporting Initiative, International Council on Mining and Metals,
International Finance Corporation, Mining Association of Canada Towards Sustainable Mining,
Organization for Economic Co-operation and Development (OECD), UN Global Compact, World
Economic Forum (R16, 2014, 31).

The level of detail in reporting these normative tools varies. Some reports include an
extensive list by naming different standards and engagement activities with different
organisations, including memberships in different associations, whereas others exclude
any detailed information and refer to international standards with general expressions
such as “review of external standards” and “participation in industry working groups”.
The use of these type of tools does not seem to require further explanation, and the
empirics suggest that companies simultaneously refer to several different principles and
standards. However, as presented in a previous chapter, the reporting guidelines vary in
their approaches and carry different normative assumptions on sustainability. Often,
adopting the standards can reduce the ethical burden and the complexity of the issue for
the organisation by outsourcing the responsibility to external parties. Merely referring to
a standard of climate change disclosures, for instance, can lead to the false image that the
concern is taken care of, without paying attention to whether the objective is to protect the
business from the risks of climate change or vice versa. Previous research notes that
companies also refer to standard-setters for reasons of legitimacy and impression
management (Mueller et al., 2009). What is often not discussed, are the conflicts between
the underlying assumptions of the standards. Adopting as many standards as possible
does not necessarily lead to an optimal outcome, but to the opposite.
The analysis also shows that many companies seek to engage stakeholders through
participatory methods and to include the multiplicity of stakeholder values and perspectives.
Based on our analysis, all the companies’ reports identify their key stakeholders. However,
there is dispersion between the companies as to how much effort is given to stakeholder
engagement and as to what kind of engagement methods are used. Some companies only
mention that their assessment is based on stakeholder views without reporting the details of
how stakeholder views were gathered to inform the analysis. However, many companies
report on stakeholder engagement activities designed specifically for materiality purposes.
These engagement activities include interviews, surveys, stakeholder panels or materiality
workshops. In addition to stakeholder engagement designed specifically for
materiality purposes, on-going stakeholder engagement and inclusion practices include, for
instance, regular dialogue with stakeholders, participation in sustainability events and
conferences, stakeholder feedback and inquiries, as well as media analysis:
In March 2015, we invited a group of external COIs to provide feedback on our materiality
assessment process applied in the preparation of this report, as well as the results of this
assessment. Participants included those from Indigenous Peoples, academia, government,
AAAJ investment analysts, industry and non-governmental organizations (NGOs). We presented the
32,4 results of our materiality assessment to participants and asked for feedback in terms of the
selection of issues and their prioritization (R16, 2014, 24).
In the consultation phase, a questionnaire was presented to stakeholders in order to understand
which sustainability issues were considered priorities, as well as their expectations and their
perceptions with regard to our performance in these subjects. From a total of 1,520 participating
stakeholders, we obtained 615 responses, giving us a representative overview of our stakeholders
1056 in the various business segments and regions where we do business (R17, 2014, 41).
Stakeholders engaged by companies in the materiality assessment process bring along a
wide range of world-views, ideologies, assumptions and values as part of their individual
and collective stakeholder identities. Furthermore, stakeholders have different levels of
knowledge and expertise which can be used to address sustainability as an issue. This
example shows that there might be issues which the stakeholders are unaware of:
We have evolved how we view materiality by distinguishing priorities by stakeholder group and
those that we see as shared priorities. This approach has given us clearer guidance not just on what
our stakeholders deem relevant, but also the identification of ways that we can engage our
stakeholders on topics that might be outside of their realm of consideration (R20, 2013, 10).

(In)comparability of sustainability information

Materiality assessment is used to limit the wide variety of information to be disclosed on
corporate sustainability, and is usually conducted with the use of the materiality matrix.
However, the multiplicity of sustainability issues challenges the assessment process
regarding the means of considering, valuating and measuring the different aspects of
non-financial information, in particular. The matrix can be seen to represent universal
criteria encompassing all varieties of sustainability issues, whereas, the rarer contextual
criteria considers the materiality of the topic based on a case by case evaluation.
The universal approach sets all-encompassing criteria that cover all topics, regardless of
the differences in their quality, and assesses all the topics through the same filter.
Materiality matrices are graphical tools that show the dimensions used in the assessment,
depicting each issue’s importance level, and their relative importance under the same
criteria. The matrices attempt to compare and rank sustainability information according to
predefined measures. They come in the form of two-dimensional graphs with an X and
Y-axis (labelled importance, concern, impact, significance or influence). The position of a
sustainability topic in a particular segment signifies its importance regarding its past,
current and/or future performance, as well as its relation to other topics. Those placed
further to the right or to the top are seen to have more materiality, whilst those placed
towards the left or bottom have less. This suggests that a high ranking guarantees more
weight in terms of affecting the sustainability programs or strategies (Figure 1).
The question, however, remains, how are the different sustainability issues ranked
against each other, and what is excluded and why? The matrices do not typically show the
thresholds that would reveal what is included in the report, and what is ranked as
immaterial and, therefore, excluded. Regardless of whether these criteria are set around
“quantitative” or more “qualitative” elements, the result is likely to be negotiable. However,
despite the seemingly rigorous, objective and technical exercise of identifying and ranking
the material sustainability issues, companies do not usually disclose background
information on how exactly the matrix was constructed.
Furthermore, the matrices merge the divergent stakeholder voices into one unified voice.
The matrix may well serve the stakeholder engagement process, but in the end, what the matrix
shows is a compromise of different perceptions on what sustainability information is material.
 Importance to
stakeholders
Transparency Customer satisfaction Exploring the
Responsible lending
socio-political
Business ethics and anti-corruption
Financial stability nature
Remuneration and bonuses
Responsible conduct

Responsible investment

Supporting economic growth IT security and fraud

1057
Financial literacy Financial inclusion
Responsible tax payment
Equal opportunities and anti-discrimination Human and labour rights
Infrastructure and accessibility
Product complexity
Regulation
Competency development/employability
Sustainable business solutions Figure 1.
Active ownership
Materiality matrix
Importance to (R6 2014, 28)
business

The stakeholder views are presented unequivocally, thus implying an illusory consensus
among different stakeholder groups, or simply presenting the majority’s point of view. This
means that the selection of material topics often reflects the values of some particular
stakeholders. This has the potential to promote one view while excluding the others, while
presenting this as a universal understanding:
The level of concern for stakeholders has been assessed as a whole, which is why the weightings of
the various areas by individual stakeholders are not reflected in the matrix (R3, 2013, 18).
By defining materiality in a narrow technical manner unifying all stakeholder concerns into
a compromise, the divergent perspectives of other stakeholders fall, by definition, out of this
narrow consensus-driven presentation of the assessment of materiality. Furthermore, the
limited information on the stakeholder engagement process does not allow for consideration
of the less prominent stakeholders and their concerns, and possible contradictions and
conflicts of interests are omitted. The matrix and the universal criteria for materiality
assessment may be critiqued from (at least) two perspectives: first, the technical-rational
nature of the matrix portrays the assessment as a neutral and value-free measurement for
ranking issues against each other and does not take into consideration the problems in
commensuration of the different aspects, nor does it present the criteria for prioritisation of
different issues. Second, the matrix presents the multiple stakeholders as having a unified
understanding of what is considered important in corporate sustainability, and the
differences and contradictions between different stakeholders are omitted.
The attempt to use context-specific criteria to evaluate materiality on a topic-by-topic
basis is rare. Context-specific criteria ideally take into account the complex nature of the
sustainability information. Sustainability topics are not easily commensurable, measurable
or comparable against each other. The range of sustainability topics varies, and the impacts
and importance of different topics cannot be evaluated with similar means and measures.
Instead, the evaluation should follow a unique assessment process considering the nature
of the topic itself, which means that materiality is analysed by a tailored combination of
topic-by-topic evaluations:
As a result of the analysis, 33 aspects were identified that are material with respect to impact. They
are discussed in this report. The related impacts by aspect are described in the disclosures on the
management approach (R3, 2013, 120).
The illusion of the measurability and commensurability of the various complex
sustainability issues leads to the risk of excluding the issues that are difficult to
measure. In addition, this raises questions of whether and how the impacts of divergent
AAAJ sustainability topics can be compared against each other and what kind of criteria would
32,4 allow a comparison of the impact of different sustainability topics. The thresholds that make
the impact of a particular topic material are likely to vary substantially, and setting those
thresholds is a value-laden judgement call.

Transferability of the outcome

1058 As the corporate reports are acknowledged to have broader societal importance (Livesey, 2002;
Tregidga and Milne, 2006), it is worth pondering the outcome and further implications of the
materiality assessment process and the nature of sustainability information.
The technical-rational nature of the contemporary reporting practices seems to aim at
creating a “true and fair view” of corporate sustainability, with an understanding of
corporate sustainability as something clearly defined, measurable and manageable. Relying
on this sort of rhetoric and authority, and on the matrix as a tool, the materiality assessment
process creates an illusion of closure, an allegedly neutral and “true” view of what is
material. This is likely to have concrete and material future consequences in the form of the
development of education, policies and legislation, for instance. On a practical level, a
specified definition of materiality and the outcome of the assessment process can be applied
to different contexts, remaining relatively unchanged through time and place. This is
reflected, for instance, in the descriptions of how the outcome of the assessment guides
sustainability work in the long-term:
The analysis will impact [the company’s] sustainability strategy, priorities and consumption of
resources for years to come (R11, 2014, 38).
Our Sustainability Agenda is based on our materiality assessment, which was conducted in 2011,
upon which we have defined long-term goals (R7, 2014, 15).
However, already on a practical level, there are several contextual and temporal factors
that affect the process and results of materiality assessment, making it a contingent
practice. Certain contextual factors, such as the prevalent political climate, policies,
laws and regulations also contain temporally changing aspects, not to mention the
physical resources, structures, tools and methods that also have a direct impact on the
assessment process:
Material issues change over time, as does knowledge about them, and new issues may arise.
This chart offers a snapshot of the most important corporate responsibility issues identified in 2014
(R6, 2014, 28).
Another important consideration is the physical location of operations and how local
differences should be considered in the assessment of materiality. Now, the single, global
matrix is not able to capture these, either. From the local perspective, the ranking of material
topics might look different:
Putting “Think globally, act locally” to the test. While materiality at a global level is strategically
important for the Group, different markets will naturally focus on additional priorities. We are
therefore working on a dedicated toolkit to support our affiliates as they put [the company’s] global
CSR priorities into action locally. This toolkit is designed as a point of reference for [the company’s]
CSR correspondents as they carry out materiality analyses and devise action plans. It ensures that
materiality is assessed in a consistent way across the Group, regardless of the size or shape of each
country’s CSR organization. This can go from identifying internal and external stakeholders to
designing new strategies and action plans (R42, 2014,18).
As discussed above already, social factors, such as the selection of stakeholders and their
knowledge, expertise and ideological backgrounds, and the power-dynamics and
relationships between stakeholders play a role in the assessment and influence the type of
view created by the outcome of the assessment. The materiality assessment process holds Exploring the
potential as a tool to embrace divergent stakeholder opinions with more open criteria. socio-political
Our results show examples in which there is an attempt to report on possible conflicts and nature
divergent stakeholder views. Disclosing the results from the perspective of each
stakeholder group reveals possible conflicts and overlapping views among stakeholders
(Figure 2):
The stakeholders do not completely agree on what they associate with the term corporate social 1059
responsibility. Certain topics are considered to be important by all of the groups, such as
operational stability, ethics and anti-corruption. As for the other topics, it seems that a topic which
is very important for one stakeholder group can be less important for the others (R24, 2014, 6).
Another company has solved the challenge of the diverse information needs of stakeholders
by adopting a technological solution that enables each user of the data to select their own
material topics and create a customised report based on the topics the user wishes to read
about (R3). Even if rarely presented in our empirical data, it is quite obvious that companies
that engage with various stakeholders with different ideologies, beliefs and values face
various, even conflicting, points of view:
The results of the assessments identified some interesting comparisons. Completing the
assessment internally, and also seeking external stakeholder input, enabled a comparison of what
internal staff thought stakeholders cared about with what the select group of stakeholders used
to complete the assessment told us they care about most. Of the top 14 most important issues, 12
appeared as high on both assessments. However, there were some notable differences. For
example, external stakeholder groups identified transparency higher than the internal assessors
did (R10, 2013, 14).

Stakeholder group Types of engagement activities Issues of interest

Media • Briefings/interviews • Ethics and business conduct
• Press releases • Products and services
• NAB news website • Responsible finance (lending and investment)
• National Press Club sponsorship • Innovation
• Diversity and inclusion
• Community investment
• Customer service and satisfaction
• Industry regulation
Government affairs • Regular meetings and briefings • Microfinance
• Participation in consultation process • Indigenous employment and housing
• Impact investment
• Natural capital and environmental regulatory
change/policy
Regulators • Regular meetings and briefings • Customer hardship
• Focus groups • Financial literacy
• Participation in consultation process • Responsible lending
• Environmental performance
Suppliers • Supplier forums • Diversity and inclusion
• Regular meetings and briefings • Resource efficiency
• Ongoing relationship management • Off-shoring and outsourcing
• Industry forums • Managing our exposure to ESG risks
• Sustainable sourcing
Not-for-profit (NFP) • Surveys • Employment opportunities for those
organisation • Interviews marginalised in society
• NFP customer support • Financial hardship
• Meetings • Financial education and literacy
• Financial inclusion Figure 2.
• Increased donor competition Issues of interest by
• Mental health support stakeholder group
• Products and services (R38 2014, 5)
• Regulatory insecurity
AAAJ Discussion
32,4 We now move on to discuss the findings of the study and the broader understandings and
implications of the assessment of materiality, with its approaches, choices and underlying
assumptions. By incorporating literature on stakeholder theory, critical dialogic accounting
and critiques of commensuration, we problematise the current practices of materiality
disclosure in sustainability reporting. The present study argues that the understandings
1060 and implications of the concept of materiality are more ambiguous and wide-reaching than
they often appear, as, through constituting the legitimised set of claims and information on
corporate sustainable performance, it impacts our understanding of sustainable
development at large, and affects the corporate and policy-level transition towards
sustainability (Cooper and Morgan, 2013; Tregidga and Milne, 2006).
Acknowledging the complexity of sustainable development, we incorporate a pluralistic
and critical dialogic perspective to the materiality assessment, arguing that, instead of a
unified understanding of what information is material for corporate sustainability, there are,
in fact, varying, perhaps conflicting views that lead to ultimately different constructions of
corporate sustainability (Brown, 2009; Brown and Dillard, 2013; Brown and Tregidga, 2017;
Calabrese et al., 2016; Eccles and Youmans, 2016; Maniora, 2018; de Villiers et al., 2014).
Furthermore, we discuss the use of the materiality matrix and the taken-for-granted
technical-rational understanding of sustainability as something objectively measurable, and
the varying sustainability issues as commensurable (Boiral and Henri, 2017; Stirling, 2008;
Cooper and Morgan, 2013; Brown and Dillard, 2013; Formisano et al., 2017).

Materiality matrix – comparing the incomparable

In corporate reports, the materiality assessment is treated as a seemingly neutral technical
exercise giving the impression that by drawing from different sources of information and
participatory methods of engagement with stakeholders, it is possible to measure, compare
and rank different sustainability topics against each other. However, this raises questions of
whether, and how exactly, the impacts and importance of divergent sustainability topics can
be measured and compared against each other? What kind of criteria would allow a
comparison of impacts of very different nature, for instance, social problems such as a
comparison of forced labour with environmental challenges such as greenhouse gas
emissions? Whether the valuation criteria are set to monetarisation or something else, the
thresholds that make the impacts of a particular topic material to a particular stakeholder
are likely to vary substantially.
The materiality matrix is a wide-spread commensuration tool in the materiality
assessment process (Eccles and Krzus, 2015). The matrix was first introduced by
Accountability and the pioneering companies in this area, such as BP, which first included
the materiality matrix in their 2004 sustainability reporting. The matrix was later integrated
into the GRI guidelines in 2006, and, as a consequence, the use of the materiality matrix
became common practice (Etzion and Ferraro, 2010, p. 1103). Today, plotting sustainability
topics on a two-dimensional matrix as a way to prioritise sustainability topics is shared by
different standards, but the dimensions of the matrix recommended by sustainability
standards vary (see Table I threshold/criteria).
As the reports were selected based on their adoption of the GRI framework, it is
noteworthy (if not surprising, as reported in Eccles and Krzus, 2015, p. 148) that they have
not, however, followed the GRI’s definition of materiality. This definition combines
stakeholder concerns ( y-axis) with the most relevant environmental, social and economic
impacts caused by the organisation to society (x-axis) and explicitly mentions that the
“materiality focus of sustainability reports is broader than the traditional measures of
financial materiality. […] Materiality in sustainability reporting is not limited to those
sustainability topics that have a significant financial impact” (GRI, 2013c). Instead, the
explicit criteria used in the matrices tend to promote the corporate-centred objectives while Exploring the
excluding the wider societal impacts. There is a risk of fulfilling the accountability socio-political
requirements of only the most powerful stakeholders, mainly investors and shareholders, nature
whose right for information is more formally regulated and unquestioned. Within such
profit-oriented reasoning, materiality appears to have instrumental value in serving
corporate objectives, and sustainability actions are rationalised as creating financial value
and competitive potential (e.g. Porter and Kramer, 2006; McWilliams and Siegel, 2000). In the 1061
sustainability reporting context, this leads to presenting sustainable development without
any conflict with profit-maximisation goals (Tregidga and Milne, 2006). This is in line with
previous research raising concern over multinational corporations’ lack of real commitment
to sustainability (Boiral, 2013; Milne and Gray, 2013; Rodrigue, 2014).
Furthermore, we argue that the process is more complex than that. The materiality
matrix is a technical-rational approach to materiality intended to solve a specific problem in
a rational manner. The materiality matrix suggests that common criteria can be defined and
applied to evaluate the materiality of different topics. Instead of seeing materiality as binary,
material or immaterial, the matrix suggests two-dimensional scales to measure the degree of
materiality. The complex nature of the sustainability topics is reduced into two-dimensions.
Along these dimensions, the sustainability topics can be compared and ranked against each
other. Literature on commensuration tackles these types of comparisons and rankings,
when seemingly different qualities are transformed into common metrics (Espeland
and Stevens, 1998). Evaluations of different topics with common criteria helps in
decision-making by rationalising, offering structure, order and coherence by enabling
comparisons that otherwise would not be possible. The matrices are seen to have universal
appeal, as they are associated with rational management and control ( Jordan et al., 2018;
Pollock and D’Adderio, 2012).
However, these commensuration practices are often treated in a way that the political
nature of those practices and the underlying assumptions are left unquestioned, and the
supposedly neutral and objective techniques used in the reporting process, such as the
materiality matrix, often entail value-laden choices made in the development phase that are
afterwards obscured (Bebbington et al., 2007). Two-to-two matrices as ranking devices not
only just assist the prioritisation assessment, but they have agency to actively intervene and
“shape the reality they attempt to monitor”, and influence the whole understanding and
meaning of the phenomenon, with socio-material consequences. It is not only about “people
moving dots”, but the use of tools such as the materiality matrix allows assessment by
directing attention to specific features while at the same time limiting or omitting
consideration of others (Pollock and D’Adderio, 2012, p. 566; Espeland and Sauder, 2007).
This raises questions such as what dimensions are used in the assessment, how the topics
are identified to be included in the assessment, how they are measured, plotted and how
they are moved within the matrix and why. Instead of users attempting to modify the
ranking tools, the tools modify the objective of the ranking to fit the assessment (Pollock and
D’Adderio, 2012).
When evaluating the importance of a sustainability topic, the rules or the criteria of the
process are not necessarily shared among the participants, since materiality can mean
different things to different groups and individuals (Eccles and Krzus, 2015). The dominant
business framing of materiality privileges the views of certain stakeholder groups
(Goodpaster, 1991; Brown and Dillard, 2015). The pressure to reach consensus among the
stakeholders in situations with inequalities of power may lead to biased results on what
exactly is material, potentially marginalising minority views (Brown and Dillard, 2014).
Brown (2009) points out the consequences of this sort of monologic accounting by stating
that “any single perspective involves the non-reporting of others” and to remain silent about
the contestability of viewpoints can be considered violence against those who are impacted
AAAJ by the prevalent power dynamics. The practices which are developed to seek consensus and
32,4 convergence by relying on similarities tend to treat diverging views as “bias, errors, outliers,
or noise” (Van de Ven, 2007).
Contrary to the common technical-rational understanding on sustainability performance
as something that can be reliably measured, the recent research shows the impossibility of
such rigorous measurement, mainly because of the complex, chaotic and discursive nature
1062 of the sustainability data (Boiral and Henri, 2017; Stirling, 2008; Cooper and Morgan, 2013;
Brown and Dillard, 2013). Evaluating corporate impact or performance in isolation can lead
to consequences such as the oversimplification of corporate actions caused by focussing
only on the measurable aspects (Sturdy, 2004). In a sustainability context, the illusion of
measurability and commensurability of the various complex sustainability issues leads to a
risk of excluding issues that are difficult to measure or monetarise (Boiral and Henri, 2017;
Stirling, 2008; Cooper and Morgan, 2013; Brown and Dillard, 2013; Formisano et al., 2017;
Sturdy, 2004), which further hinders the corporate and societal transitions towards
sustainability. Furthermore, one of the key assumptions embedded in commensuration
practices is that “all value is relative and that the value of something can be expressed only
in terms of its relation to something else”. Other types of valuations, such as seeing topics as
having intrinsic value, are not recognised. (Espeland and Stevens, 1998, p. 324)
However, defining something as incommensurable arguably reflects morally, culturally
and emotionally embedded views (Espeland and Stevens, 1998). Many topics categorised
under the umbrella of sustainable development are examples of this. For instance, putting a
price on indigenous communities’ land rights while calculating relocation costs, or
biodiversity in natural areas, or children and their rights can be seen as examples of
incommensurable categories. Incommensurability provides meaningfulness, expresses core
values and increases the need to defend these issues (Espeland and Stevens, 1998).
Therefore, it is argued in this paper that these evaluations become fundamentally ethical
questions and should be treated as such. Moreover, due to the complex nature of the
sustainability information, these considerations go way beyond simple comparisons, rather,
the whole exercise touches upon the philosophical questions which ask, what is corporate
sustainability and how do we know?

Opening up materiality assessment through critical dialogic accounting

To sum up the discussion, the following Table III describes the proposed critical dialogic
approach, as compared to the traditional technical-rational approach to the assessment of
materiality. Inspired by the recent work on critical dialogic accounting (Brown and Dillard,
2013, 2015), the suggested approach enables moving the research focus from technic-
rational discussion around materiality towards understanding the socio-political nature of
the assessment of materiality and experimenting with more inclusive materiality
assessment practices. The proposal suggests a shift in mindset and assumptions
regarding the role of the reporting organisation, stakeholder identity and interaction, the
nature of sustainability information, the analytical approach, the criteria for assessment and
the nature of the outcome. While we realise that the critical dialogic approach in its
normative take may appear to be a somewhat idealistic alternative, we maintain that it has
several practical aspects that can be implemented in stakeholder engagement in the short
term, too. The findings of our empirical study highlight how the crucial approaches, choices
and assumptions can either advance or hinder the potential of dialogic accounting. While
the current practices of materiality assessment prioritise a technic-rational understanding of
materiality and unify the stakeholder concerns while silencing possible contradictions, we
also detected possibilities for more democratic approaches to materiality assessment. For
instance, the report can contain a fairly advanced participatory approach, bringing in a
multiplicity of divergent stakeholder values and perspectives, which has great potential to
Approach Technical-rational approach Critical dialogic approach
Exploring the
Materiality as a technical-rational approach Materiality as a socio-political phenomenon socio-political
Reporting Organisation as a capable, neutral, and Organisation as a political actor with nature
organisation objective actor, capable of presenting the particular interests, motives and goals
information in a reliable and objective manner that effect the disclosure
Stakeholder Simple (economic) identity Multiple and changing identities
identification
Stakeholder Compromise-driven, differences between Political, agonistic, inequality of power- 1063
interaction stakeholders and their interests can be relations, divergent and often conflicting
balanced to satisfy their informational needs values, different informational needs
The nature of Objective, comparable, available, Highly complex, involving multiplicity of
sustainability commensurable and measurable disciplines and time frames, a socio-
information political construct and interconnected
Analytical Rigorous, technical, often result-oriented Judgements are value-based decisions
approach exercise aiming for consensus or compromise influenced by ideological perspectives
Criteria of Predefined, closed criteria Context-specific criteria, dependent on its
materiality framing, open to contestation Table III.
Outcome of the “A legitimate closure”, a true and fair view of “A temporal compromise”, contingent, and Opening up
materiality corporate sustainability performance, claimed uncertain, an explicitly political and materiality assessment
assessment transparency context-specific version of corporate through critical
sustainability dialogic accounting

advance the practice of dialogic accounting by listening to divergent, and potentially

conflicting, stakeholder interests. Yet, how these stakeholder views are assessed, filtered
and presented can lean towards the technic-rational approach and narrow down and
oversimplify these points of view, creating an illusory consensus or false compromise in the
form of a materiality matrix.
There have been calls for more attention on the engagement of varying stakeholder
groups with, perhaps, contradicting interests in corporate sustainability (Calabrese et al.,
2016; Eccles and Youmans, 2016; Maniora, 2018; de Villiers et al., 2014). The findings of our
empirical analysis of materiality disclosure support the previous research claiming that
stakeholder engagement practices are usually profoundly oversimplified versions of the
ideal (Brown and Dillard, 2013). Instead of considering a broader set of information users,
there is a wealth of evidence arguing that organisations engage in sustainability reporting
to secure their own private interests (Cho et al., 2015; Boiral, 2013; Milne and Gray, 2013;
Mäkelä and Laine, 2011; Spence, 2007). Thus, corporate reporting may be claimed to
serve ideological and legitimising purposes. There is, however, a growing interest in
counter-accounts of corporate sustainability (Tregidga, 2017; Vinnari and Laine, 2017) that
serve to provide additional information and contradict the corporate agenda outside the
corporate realm, with more freedom for expressing conflicts and controversies.
To open up the process we argue that rather than relying on the technic-rational
approach, a “true” stakeholder engagement in materiality assessment for sustainability
reporting must explicitly consider a wide variety of questions, such as: what are the
understandings and dimensions of materiality assessment and who gets to decide them?
Do we first define the stakeholders and then the materiality dimensions, or vice versa?
Who is identified as a stakeholder? Is there a difference between what the company sees as
a (relevant) stakeholder and who consider themselves legitimate stakeholders? How are
the stakeholder voices heard and accounted for throughout the process? How do the
stakeholders interact with one other? How do we ensure that stakeholders are enabled to
engage, in terms resourcefulness (of time, knowledge, power, etc.)? Is there a possibility for
negative stakeholder interaction, such as manipulation or extensive lobbying? What are
the means of engagement? Are they based on rational argumentation or linguistic
AAAJ communication only, or do they perhaps explore other, more narrative and affective
32,4 means of interaction (Brown and Dillard, 2013; Heikkurinen, 2017)? How do we deal with
compromises and conflicts? How are the stakeholders prioritised? On what interval is the
engagement process conducted, or is it more of an on-going process? What happens to
the stakeholder voices and sustainability issues that are not considered material? What is
the time frame considered for the materiality analysis? Who organises and manages the
1064 process and how? The list could go on. We argue that these sorts of questions are of
crucial importance, as they all potentially impact the stakeholder relationships regarding
the specific company, the sustainability issues to be reported, the management of
corporate sustainability and, importantly, the broader societal understanding of, and
transition towards, sustainable development.
Pluralistic studies, and critical dialogic accounting in particular (Brown, 2009; Brown
and Dillard, 2013, 2015), aim to develop “civil society-oriented accounts that foster critical
reflection and debate on organisational practices” (Brown and Dillard, 2013, p. 247). Critical
dialogic accounting relies on agonistic politics (Mouffe, 2005) and acknowledges different
ideological positions and claims that, instead of one “true” account of corporate
sustainability, understandings and interpretations of sustainability are varied and
inevitably ideological and political (Brown and Dillard, 2013, p. 250). Critical dialogic
accounting is based on a broader, more inclusive understanding of corporate accountability
which “more fully expresses the plural nature of contemporary democracies; enables
accounting to engage with more (conflicting and consensual) perspectives on economic,
social, environmental and cultural matters; recognises the value-laden and political nature of
all perspectives; is more sensitive to complex power dynamics in social relations; and offers
promising avenues for pursuing transformative social change”. (Brown, 2009, p. 319)
Such dialogic accounts resist closure and highlight debate, dialogue, and pluralism in values
and goals related to corporate sustainability. Varying points of interests are expressed
and respected, and conflict can foster, instead of unifying stakeholder views with a
(false) compromise.
We maintain that viewing materiality from the critical dialogic accounting perspective
helps us elaborate on the conceptions and practical implications of materiality assessment
and reporting that enhance stakeholder engagement in a democratic, rather than
managerial, spirit. In corporate disclosure, the rich processes of materiality assessment,
relying on a diversity of means and methods, including a wide variety of stakeholders and
with possible conflicts and compromises, can be highlighted. Such a process would not
focus on predefined rules and procedural norms but would embrace the full richness of the
experimental learning process. Regarding decisions on what sustainability issues to report,
for instance, compromises are obviously needed, but “these should be seen for the political
acts they are, and in ways that respect, recognise and preserve opportunities for ongoing
dissent, rather than appealing to a false ‘consensus’ ” (Brown, 2009, p. 323).

Concluding remarks
This study adds to the growing literature problematizing the current sustainability
reporting practices and their ability to fulfil the informational needs of corporate
sustainability (Cho et al., 2015; Boiral, 2013; Milne et al., 2009). To conclude, we argue that
despite the seemingly rigorous, objective and technical exercise of defining a set of material
corporate sustainability issues, the assessment of materiality and the resulting presentation
of corporate sustainability is a value-laden, political judgement of what matters in corporate
sustainability, favouring the corporate financial interests and falling short of addressing the
complexity of sustainable development. Building on critical dialogic accounting research
with insights from stakeholder pluralism, acknowledging the complex nature of the
sustainability information and being attentive to the wide variety of organisational and
societal goals and values, we add to the existing literature on materiality in sustainability Exploring the
context by contributing to the understanding of the less explored socio-political nature of socio-political
the assessment of materiality. nature
Our findings show that the technic-rational approach to the materiality assessment,
reinforced with the use of the materiality matrix is commonly accepted as a means for
materiality assessment and reporting. Based on our empirical analysis and our theoretical
framework, we provide a critique of the technic-rational approach from two main 1065
perspectives: first, the technic-rational approach portrays the assessment as a neutral and
value-free measurement which ranks issues against each other and does not take into
consideration the problems in the commensuration of the different aspects, second, the
matrix presents the multiple stakeholders as having a unified understanding of what is
considered important in corporate sustainability; the differences and contradictions between
different stakeholders are omitted. Moreover, by presenting a “true and a fair view” of
corporate performance, the materiality disclosure constructs the “legitimate closure” of the
reporting content and the variety of understandings of corporate sustainability, failing to
address the temporality and situatedness of the outcome (Boiral and Henri, 2017; Stirling,
2008; Cooper and Morgan, 2013; Brown and Dillard, 2013). Thus, the technic-rational
approach to the materiality assessment, reinforced with the use of the matrix narrows down
rather than opens up the complexity of the assessment of material sustainability issues,
stakeholder engagement and the societal pursuit of sustainable development, all mentioned
as the overarching objectives of sustainability reporting.
Instead, we believe that insights from critical dialogic accounting (Brown, 2009) help us
to elaborate on the conceptions and practical implications of materiality assessment and
reporting that enhance stakeholder engagement in a democratic, rather than managerial,
spirit. Such agonistic accounts resist closure and highlight debate and dialogue as well as
pluralism and contradictions in the values and goals related to corporate sustainability.
From this perspective, we propose that materiality should be understood as a temporal,
context-specific and political method for sustainability assessment. Adopting the critical
dialogic accounting perspective would allow for the multiple, and often conflicting, views to
be heard without the need for reaching a consensus. Pluralistic notions of the differences,
conflicts and diverse perspectives not only apply to the various stakeholders’ informational
needs, but also to the various sustainability topics. Due to the complexity of sustainability
topics, their materiality varies in terms of time, context and perspective. The question is not
about comparing the sustainability topics in relation to each other and ranking such data,
but more about evaluations of whether the information is material in a specific context, time
and perspective. Where a temporary consensus should be reached, the dialogic perspective
would ensure it is as informed and inclusive as possible, and remain transparent regarding
its underlying politics.
This study focussed on analysing the different approaches, choices and assumptions
affecting the capacity for materiality assessment and its potential in advancing critical
dialogic accounting practices in corporate sustainability reporting. The materiality
assessment process involves numerous critical questions to consider. While we argue that
corporate disclosure in its all forms is powerful with its wider societal implications on the
constructions of corporate responsibility, we understand the limitations of this study as
focussed on a limited set of disclosure data only. Investigation of the processes of drafting
the disclosure is needed. Furthermore, we look forward to future studies on the development
of integrated reporting and non-financial disclosure, and how these perhaps affect the
connection between the sustainability report and the financial report and materiality
analysis within. Similarly, the new GRI Standards launched in 2016 have clarified the term
“impact” by emphasising the “effect an organization has on the economy, the environment,
and/or society, which in turn can indicate its contribution (positive or negative) to
AAAJ sustainable development” and being explicit that it “does not refer to an effect upon an
32,4 organization” (GRI, 2016). Whether this clarification has affected the disclosure is yet to see.
Most urgently, we encourage future empirical research to experiment with the possibilities
of critical dialogic accounting and more inclusive understandings and processes of
materiality assessment. In particular, this necessitates studies on stakeholder engagement
and counter accountings that are able to address the alternative understandings of
1066 materiality assessment.

Acknowledgements
The authors are thankful for the comments provided by the two anonymous reviewers and
the participants of the 28th International CSEAR Conference on Social and Environmental
Accounting Research; the 33rd Summer Seminar of Finnish Economists; School of
Accounting and Finance Seminar, University of Vaasa (2017); and the MISUM seminar
(Stockholm, 2017) with discussants Sanne Frandsen and Andreas Rasche. The authors also
gratefully acknowledge the comments provided by Eija Vinnari, Mette Morsing and Emilia
Cederberg. The work was financially supported by the Stockholm School of Economics,
Gunvor Plantings Stiftelse, The Dr H.C. Marcus Wallenberg Foundation for Promoting
Research in Business Administration and the Finnish Foundation for Economic Education.

Note
1. More evidence from the data is available on request.

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Appendix Exploring the
socio-political
nature
Rank
Report Company name Country GICS Industry Year Framework 2015

R1 Biogen Idec USA Biotechnology 2014 GRI, SASB 1

R2 Keppel Land Singapore Real estate management and 2014 GRI 4
1071
development
R3 Kesko Finland Food and staples retailing 2013 GRI, AA1000 5
R4 Reckitt Benckiser Group UK Household products 2014 GRI, AA1000 7
R5 Schneider Electric France Electrical equipment 2014 GRI, AA1000 9
R6 Danske Bank Denmark Banks 2014 GRI 10
R7 Outotec Finland Construction and engineering 2014 GRI 12
R8 L’Oreal France Personal products 2014 GRI 14
R9 Marks & Spencer Group UK Multiline retail 2014 GRI, IIRC 16
R10 Johnson & Johnson USA Pharmaceuticals 2013 GRI, SASB 18
R11 Storebrand Norway Insurance 2014 GRI 20
R12 StarHub Singapore Wireless telecommunication 2013 GRI 24
services
R13 Koninklijke Philips The Industrial conglomerates 2014 GRI, IIRC 25
Electronics Netherlands
R14 Coca-Cola Enterprises USA Beverages 2014 GRI 26
R15 Statoil Norway Oil, gas and consumable fuels 2014 GRI 27
R16 Teck Resources Canada Metals and mining 2014 GRI, IIRC, 29
AA1000
R17 Galp Energia Portugal Oil, gas and consumable fuels 2014 GRI, AA1000 30
R18 Nokia Finland Technology hardware, storage 2014 GRI 33
and peripherals
R19 POSCO South Korea Metals and mining 2014 GRI 36
R20 Sigma-Aldrich USA Chemicals 2014 GRI 38
R21 Westpac Banking Australia Banks 2014 GRI, AA1000 41
R22 Natura Cosmeticos Brazil Personal products 2014 GRI, IIRC 44
R23 Samsung Electronics South Korea Semiconductors and 2014 GRI, AA1000 45
semiconductor equipment
R24 DNB Norway Banks 2014 GRI 46
R25 Ecolab USA Chemicals 2014 GRI, AA1000 47
R26 LG Electronics South Korea Household durables 2014 GRI, AA1000, 51
SASB
R27 Wolters Kluwer The Media 2014 GRI 52
Netherlands
R28 Agilent Technologies USA Life sciences tools and services 2014 GRI 53
R29 Intel USA Semiconductors and 2014 GRI, AA1000, 56
semiconductor equipment IIRC
R30 Bombardier Canada Aerospace and defense 2014 GRI, IIRC 57
R31 Skandinaviska Enskilda Sweden Banks 2014 GRI 58
Banken
R32 British Sky Broadcasting UK Media 2014 GRI 59
Group
R33 Daimler Germany Automobiles 2014 GRI 60
R34 Shinhan Financial Group South Korea Banks 2013 GRI 70
R35 Johnson Controls USA Auto components 2014 GRI 71
R36 H&M Hennes & Mauritz Sweden Specialty retail 2013 GRI 75
R37 Australia & New Zealand Australia Banks 2014 GRI 78
Banking Group
R38 National Australia Bank Australia Banks 2014 GRI, IIRC 79
R39 Renault France Automobiles 2014 GRI 81
R40 CapitaLand Singapore Real estate management and 2014 GRI 84
development Table AI.
The characteristics of
(continued ) the sample companies
AAAJ Rank
32,4 Report Company name Country GICS Industry Year Framework 2015

R41 Celestica Canada Electronic equip., instruments 2014 GRI 85

R42 Sanofi France Pharmaceuticals 2014 GRI, IIRC 92
R43 ASML Holding The Semiconductors and 2013 GRI 95
Netherlands semiconductor equipment
R44 Prologis USA Real estate investment trusts 2013 GRI 97
1072
Notes: AA1000 standard is mentioned in the report. If AA1000 is mentioned only in the assurance providers
Table AI. statement, it is not included here

Corresponding author
Hannele Mäkelä can be contacted at: hannele.makela@uta.fi

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