Navigating the Materiality Maze: A Survey of the Full Spectrum of Materiality Definitions and Approaches

1. Navigating the Materiality Maze: A Survey of the Full Spectrum of Materiality
Definitions and Approaches
Bill Baue, Sustainability Context Group @bbaue
Cornis van der Lugt, Stellenbosch University & BSD Consulting
Louis Coppola, Governance & Accountability Institute @gainstitute
Jackie Cook, Fund Votes
Rachel Guthrie, TD Bank Group
Ralph Thurm, A Leader’s Guide to ThriveAbility @aheadahead1

2. MAPPING MATERIAL CLIMATE RISK
in SEC Disclosures

3. SEC and Climate Disclosure
Materiality standard
(“reasonable investor”) 1980s
Environmental Risk Disclosure
SEC Filings 1970s
GAO Review SEC / enviro. risks and
liabilities 2004
EPA Findings under Clean Air Act
2009
Guidance on Disclosure Related
to Climate Change - 2010
• Legislation & Regulation
• International Accords
• Physical Consequences
• Business Trends
NAIC mandatory disclosure of financial risks from
climate change 2009

4. http://www.ceres.org/ceres-search

5. “…Severe weather events over the last several
years have… created uncertainty regarding
insurers' exposures to financial loss...”
Travelers, 2015

6. “Future compliance with carbon dioxide (CO2)
emission requirements may include substantial
costs...restriction of production and higher
[input] prices…”
United States Steel 2015

7. “The electric utility industry is facing
requirements to upgrade aging infrastructure,
deploy smart grid technology and comply with
new state and federal environmental regulations
and renewable portfolio standards....”
Black Hills Corp, 2015

8. “New sources of hydrocarbons may be more
difficult to reach, extract and process... extraction
…more energy-intensive, [increasing] operating
costs and greenhouse gas emissions...”
BP PLC, 2015

9. “…[government regulation may] reduce demand
for hydrocarbons, shift hydrocarbon demand
toward relatively lower-carbon sources [and]
…increase our compliance costs.”
Exxon, 2015

10. “Many aspects of our operations are subject to
increasingly stringent environmental
regulations and concerns about climate
change and greenhouse gas (GHG) emissions.”
American Airlines, 2015

11. “…greenhouse gas emission standards effectively
are fuel economy standards.”
Ford Motor Co, 2015

13. Type of Disclosure
Differing Patterns of disclosure across sectors
Oil & Gas Insurance Electricity & Gas
Utilities

14. Amount of Disclosure
Large variations across sectors and companies
Food & Agriculture
Insurance Services
Oil & Gas
Electrical & Gas Utilities

15. MAPPING MATERIAL CLIMATE RISK
in SEC Disclosures