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GRI Content: G4-37

As an industry leader, we are committed to upholding the highest standards and to operating a sustainable business. An important part of this is ensuring that SGS focuses its management attention and reporting on issues of critical importance to both our stakeholders and the business.

By conducting a periodic materiality assessment, we can prioritize issues through our strategies and programs and report on them in our Annual Report and our Sustainability Report. This ensures that we stay in touch with and respond to the information needs and expectations of our stakeholders, while also addressing the issues of most importance to our business.

Our approach to materiality has evolved in line with the G4 reporting guidelines from the Global Reporting Initiative (GRI). SGS first referenced the G4 guidelines as part of a detailed materiality process in 2013.

In 2016, we reached a significant milestone in our journey towards integrated reporting by merging the outputs of our latest materiality assessment and our business risk assessment processes. We conducted an extensive materiality assessment process involving consultation with around 850 stakeholders in 52 countries and the direct engagement of our senior management team to identify and map the most important issues for SGS to manage. Our online sustainability report describes the processes we used to identify our most important issues in detail, and it explains how we manage each of these important issues through our sustainability pillars and the management systems underpinning them, as well as through the programs we have developed to drive progress toward our 2020 Sustainability Ambitions.

Having conducted this robust exercise to assess our material and business issues, we are reassured to find that our business objectives and our 2020 Sustainability Ambitions remain focused on the most important issues for our stakeholders and for the business.

We plan to conduct a high-level materiality review every year, and to repeat a comprehensive assessment of our materiality and business risks every three years.

Materiality Process Diagram

Materiality_Process

Phase 1: Identification of Relevant Sustainability Topics
In June, using frameworks such as the Global Reporting Initiative, the International Integrated Reporting Council (IIRC) Framework, the Dow Jones Sustainability Indices (DJSI) and the CDP criteria, we created a list of around 100 topics. We also reviewed questionnaires from socially responsible investors and analysts, customer tenders and our internal risk assessment process. The list was mapped against our operations to identify the most relevant topics for our business and our industry. This resulted in a shortlist of 40 topics.

Phase 2: Global Stakeholder Survey and Benchmark Review
The online survey was conducted during July 2016 and around 850 stakeholders (representing customers, senior managers, employees, suppliers, NGOs, ratings agencies, sustainability professionals and academics) in 52 countries provided feedback. Alongside the survey, we conducted a detailed benchmark review of globally relevant and sector- specific sustainability issues and trends.

Phase 3: Data Analysis and Synchronization
We conducted a weighted analysis of the outputs of our materiality assessment by stakeholder type and integrated the business risks identified in our annual board risk review to provide a more complete picture of the most salient issues for SGS. This resulted in a consolidated list of environmental, social and governance topics.

Phase 4: Senior-Level Impact Assessment
We conducted an impact assessment, which involved over 80% of Operations Council members participating in an online survey, to rank each topic according to its relative impact on the business (covering business continuity, economic performance, reputation and legal compliance) as well as their assessments of the controls in place to manage the impacts.

Phase 5: Prioritization of Topics
We calculated the median score for each topic based on its importance to stakeholders and its assessed impact on our business. Once plotted, we can identify a threshold of priority topics for SGS to manage and report on. Topics outside the threshold are considered not to be material and are shown in a different color. We recognize that these topics could become material over time. Therefore, we will continue to manage them and observe our performance, but we may not necessarily report on them as part of our sustainability report.

The final Business Materiality Matrix was presented to the Sustainability Steering Committee in October 2016 for approval.

 

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