Defining What to Report


For guidance on how to report the process for defining what to report, go to:
Communicating the Process for Defining What to Report

Companies can report on a vast range of sustainability topics (use of water, energy, and land; waste; greenhouse gas emissions, and so on). Even within the realm of water, numerous issues affect, and are affected by, companies to varying degrees, depending on the geographic location, industry sector, and other circumstances. To be effective in its reporting, a company must determine which water-related topics are most important to its stakeholders, which topics have (or may have) significant impacts on people and ecosystems, and which have the potential to generate risks or opportunities for the business.

Here we provide an overview on how a company can define which water-related topics and information it should disclose. A more thorough and detailed description of this process can be found in the print/PDF version of the Guidelines which can be viewed or downloaded at:

Relevance and Materiality: What Are They?

For more detailed guidance on defining report content for a sustainability report, see the GRI
Sustainability Reporting Guidelines (G4) (pages 31-40 of the G4 Implementation Manual).

In sustainability reporting, materiality is commonly thought of as a threshold at which certain sustainability topics become relevant enough for a company to report on. The Global Reporting Initiative (GRI) defines material topics as those that:

  • Reflect the company’s significant economic, environmental and social impacts or
  • Substantively influence the assessments and decisions of stakeholders (such as employees, investors, suppliers, local communities, governments, investors, or consumers)

Materiality and relevance are often used interchangeably. However, they are two distinct terms whose subtle differences are critical to companies seeking to define which content to report:

  • Relevant topics are those that may reasonably be considered important for reflecting the company’s economic, environmental and social impacts, or influencing the decisions of stakeholders. They therefore potentially, but not necessarily, merit disclosure.
  • Material topics are the subset of relevant topics that are ultimately determined to be sufficiently significant to report on.

Assessing Relevance And Materiality For Water-Related Topics

The process of determining a company’s material water-related topics, and thereby defining which water-related information should be reported, has four key steps, each underpinned by ongoing stakeholder engagement:

1.1 Determining reporting boundaries for water

As a first step, a company determines the range of entities to be included in the relevance and materiality assessment.
There are several methodologies available for defining the boundary of a topic for reporting purposes, notably
those suggested by the
GHG Protocol and the GRI G4 Guidelines.

1.2 Assessing whether water is a relevant sustainability topic

Next, companies assess whether water is generally a relevant sustainability topic. Companies typically consider the general exposure of their industry sector to water-related risks and the likelihood that they will create negative water-related impacts. Then they assess the risk exposure and likelihood of creating negative impacts in the specific basins in which they operate (link to Context page). The table below, though likely not comprehensive, offers an overview of industry sectors typically exposed to significant water-related business risks due to the nature of their water use.

Industry Sectors with High and Medium Exposure to Water-Related Risks


Source: Ceres. The Ceres Aqua Gauge: A Framework for 21st Century Water Risk Management, 2011.

1.3 Identifying specific water-related topics to report

A list of Potential global, regional, and basin-level water-related topics that might be considered
part of the identification step can be found:

Detailed Disclosure – Context

Reporting companies then seek to determine which specific water-related topics are of particular relevance by assessing the company’s water-related risks, opportunities, and impacts on people and ecosystems. At this level of assessment, a company considers at least the following broad considerations:

  • Its impacts on water resources and access to WASH services
  • Business risks stemming from basin conditions (e.g., water scarcity, pollution,
    regulatory uncertainty, etc.)
  • Opportunities to contribute to sustainable water management
  • Opportunities to adapt to ensuing changes in basin conditions (e.g., climate change or land use) and planned changes in policies and regulatory frameworks

In Step 2, a company prioritizes the water-related topics identified in Step 1 to develop a list of material topics to be reported. Fundamental to this step is assessing the significance of the risks, opportunities, and impacts associated with the topics identified in Step 1 by asking the following questions:

  • What is the likelihood and severity of the impacts?
  • Does this topic compromise the company’s license to operate in a specific location?
  • Might this trend or condition eventually disrupt the company’s operations or its value chain?
  • Is there an opportunity to gain competitive advantage through action in this area?
  • Might action in this area further assure investors and markets that business operations
    will continue to be profitable?
  • Does this topic compromise the company’s ability to uphold its own values and ethics?

Next, the company must determine the influence that the topics identified in Step 1 have on stakeholder assessments and decisions. When doing so, the company proactively engages with stakeholders so that they can articulate their interests and values, their perceptions of the company’s impact on that stakeholder group, or their expectations regarding the company’s response to that topic.

The matrix in the figure below may be useful to visually represent the significance of each topic. In order to determine which specific water-related topics are material, a company defines the thresholds and underlying criteria (depicted by the red line) that render a topic material. Topics that exceed the significance threshold set by the company are material.

Visual Example of Prioritization of Topics


In the third step, the company ensures that the final selection of material water-related topics
provides a reasonable and balanced representation of the company’s significant water-related risks,
opportunities, and impacts by assessing:

  • Scope – Are all significant water-related risks, opportunities, and impacts covered?
  • Boundary – Has the company considered significant risks, opportunities, and impacts
    in entities both within the company and throughout its value chain?
  • Time – Does the selected information cover the entire reporting period?

As the company is preparing for its next reporting and management cycle, it reviews its materiality assessment in order to capture ongoing changes in global water challenges, specific basin conditions, stakeholder expectations and priorities, and how and where the company operates.

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