Archer Daniels Midland Company (ADM) announced in its sustainability report last week that it has reached its goal in palm oil traceability, achieving 98% traceability for palm oil and more than 95% for palm kernel oil, reduced water usage by 24% since 2008, and reduced energy intensity and emissions by 25% and 11% respectively – but the company also shared step-by- step details on how it pulled together the wide-ranging details for the report.
Step #1. Engage adviser to assess the stakeholders that would rely on information from the report.
First, ADM says, the company engaged Deloitte Advisory to undertake a formal materiality assessment to apply its knowledge of the Global Reporting Initiative (GRI) methodology and the industry as a whole to select stakeholders whom the report would affect.
To assess those who would be most affected by the report, Deloitte looked at four variables:
–Responsibility: those stakeholders linked to the organization through legal, financial, operational regulations, contracts and/or policies.
–Influence: stakeholders who have the ability to influence whether or not the organization can reach its intended goals, including those with formal decision-making power, internally or externally.
–Proximity: Stakeholders on whom the organization depends for daily operations and those living close to operation sites.
–Dependency: Stakeholders who are most dependent on the organization’s operations, such as customers/clients reliant on the organization’s products and services, and suppliers for which the organization is a large client.
Step #2. Narrow the field of topics to cover and check with stakeholders.
Then Deloitte narrowed the field of potential topics to a specific set that could be rated and ranked by stakeholders. The process did not limit materiality to a select number of topics; rather, all topics that scored a certain rating were marked as material. ADM next worked with Deloitte to survey a variety of internal and external stakeholders about the chosen topics.
Step 3. Conduct secondary research on those topics to determine areas of focus.
The companies reviewed a variety of documents published by various parties, from internal reports from ADM leadership and employees, to trade associations and regulators, to customers and NGOs, to further explore the chosen topics. ADM says the process – both interviews with stakeholders and documents – revealed that several key topics were consistent across all stakeholder groups, with deforestation, human rights, and environmental criteria among the primary concerns raised.
Step 4. Define materiality.
In order to cover the correct topics to the correct depth, ADM prioritized topics based on several criteria:
–current management programs;
–potential risks;
–economic, environmental and social impacts.
Step 5. Continue with engagement.
ADM seeks continued information from stakeholders, including customer feedback, NGO inquiries, and the results of efforts of its investor relations team. To ensure proper long-term focus, the materiality assessment will be updated at regular intervals in the future, ADM says.
ADM Shares Most Requested/Important Topics
ADM said the most important sustainability initiatives that address topics that are significant to stakeholders – and which are therefore included in the report – were: community relations, energy management, food safety/customer safety, GHG emissions, human rights and labor conditions, land rights and diversity, supply chain management, technology and innovation, and water management.