How AT&T used AI to deliver a data-driven, defensible materiality assessment
Why is a data-driven materiality assessment business-critical?
A materiality assessment has been defined as “the process of identifying, refining, and assessing numerous potential environmental, social and governance issues that could affect your business, and/or your stakeholders, and condensing them into a short-list of topics that inform company strategy, targets, and reporting”. So how are global enterprises leveraging big data and technology to create a robust, defensible materiality assessment in a world of such fast-shifting business risks? The days of static surveys and manual research for materiality assessments are over.
This article will talk you through how Datamaran client AT&T tackled this pressing issue, as presented during one of our digital workshops, where Datamaran users share why and how they adopted a data-driven process.
As a globally recognized brand and the largest telecommunications company in the world, AT&T needed a way to continuously monitor pressing and emerging ESG issues in order to engage with stakeholders and prioritize reporting and strategy decisions accordingly.
Check out the highlights of the session in this customer story video, or continue reading to discover why it’s so important for AT&T to conduct a materiality assessment in the first place.
Traditional vs Data-Driven Materiality Assessment
A materiality assessment is the method by which a business determines the range of issues that are material - or strategic - to the organization and its stakeholders, both now and in the future.
Traditional methods of conducting materiality assessments are to engage with stakeholders through static surveys. But as AT&T discovered, traditional surveys can be a limiting medium:
“If you're doing a traditional survey and you're asking folks to prioritize from among a list of topics, you might give them the opportunity to add a qualitative response”, Kruse said. “Traditionally, a very small percentage of respondents do that. So it's difficult to get the background rationale for why a respondent might have prioritized topics in one way or the other.”
At its core, a materiality assessment is about understanding all the factors, across a variety of mediums, and from a range of stakeholders, that will help your business set a strategy that delivers value in the future. Context is key.
AT&T valued how the Datamaran software made the entire process so much more efficient, credible and robust. Automation of manual and time-consuming elements of the process, such as pulling discussions from mainstream media, social media, regulatory and peer reports, enabled significant expansion of the reach of their assessment - and ultimately, to ground decision-making in facts.
What we liked about the Datamaran solution was the reach of the technology, so the ability to bring in inputs from mainstream media, social media, regulatory activity, and peer reporting. All of those things are super valuable, and in a traditional methodology, require hours and hours of desktop research... And so we liked the ability to cast this very wide net in a very efficient way."
Ben Kruse - Director of Global ESG Reporting & Insights, AT&T
By using Datamaran, AT&T were able to build custom surveys for several different stakeholder groups for B2B customers, B2C customers, CSR or community programmatic partners, and investors, among others. They were able to survey 26,000 stakeholders and integrate the data from these back into the system to inform the materiality assessment.
The materiality assessment process at AT&T
AT&T typically begins planning for its reporting cycle in early November, meaning they’re ready to reach out to the relevant business units and stakeholders by mid-January in order to collect the data they need. The goal is to publish their ESG reporting no later than the end of May.
That means June until November is the main window of opportunity for AT&T to conduct a materiality analysis. But the level of manual research required to deliver a robust materiality assessment on that scale takes a tremendous amount of time.
Thankfully, Datamaran has the ability to automate that research and complete it in real-time.
“That was really, really valuable”, Kruse said. “It allowed us to shorten that research window, certainly for that initial step of identifying that core list of material topics, and then you can very quickly get into that next stage of assessments where you’re actually doing those measurements with stakeholders. That was very helpful for us.”
How a materiality matrix can help achieve buy-in
What is a materiality matrix?
A materiality matrix is the visual representation of the results of a materiality assessment. The materiality matrix showcases a business’s sustainability issues by plotting against two dimensions: the importance of the issue to the organization in terms of business success; and the importance of the issue to stakeholders, which has a resultant influence on business success.
Not everyone who reads a materiality assessment will read it in depth, and even those who do may not understand the implications of every datapoint. For people who aren’t subject matter experts, or simply prefer to digest data visually, the materiality matrix is an important asset.
Even as Director of Global ESG Reporting & Insights at AT&T, Kruse fully admits he’s a visual person, and so having Datamaran transform the results of AT&T’s materiality assessment into a digestible, visual format is a huge benefit.
“It's great to have that statistical support [in a materiality assessment]. But as you are trying to digest the data and you are having conversations with other departments and business units, being able to visualize the relative importance of those topics is super helpful”.
Having understood the financial value of monitoring external risks, AT&T post the results of their materiality assessment on their website, making the materiality matrix a crucial tool for sharing their findings with their vast array of stakeholder audiences. As Kruse said, “To easily be able to communicate the results of this to all stakeholders.”
The value of stakeholder engagement backed by technology
Stakeholder engagement is key to a successful materiality assessment, but it can be challenging for an organization with the size, scope, and complexity of AT&T. Simply put, they have a lot of different stakeholders, and need to make sure they include as many as possible in a quest for reliable feedback.
AT&T has been reporting in the ESG space since 2007, has been aligned to GRI (the Global Reporting Initiative) since 2008, and their last materiality assessment, completed in fall 2019, was their fifth. They are used to interacting with stakeholders at scale.
However, AT&T recently merged with Time Warner to form the WarnerMedia Group, resulting in a whole host of new stakeholders in the media, entertainment, and advertising businesses that they had never engaged with before.
The Datamaran platform enabled them to build customized surveys targeting various stakeholder groups across the organization, and send them out to 26,000 stakeholders, automating the process of consolidating all the data into the materiality assessment.
"It was great to be able to have the system receive that back and integrate that into the calculations" says Kruse.
We were able to take those qualitative discussions, convert them into some sort of quantitative analysis, in terms of prioritizing the material topics, and load that into the platform. And it was great because it allowed us to have all of these different methodologies right there within the platform and it made the process very, very efficient."
Ben Kruse - Director of Global ESG Reporting & Insights, AT&T
In addition to strengthening the survey process for AT&T, Datamaran was also used by our partner, Environmental Resources Management (ERM), to prepare stakeholders interviews and target relevant topics of discussions. An example is the identification of the "biodiversity" topic for stakeholders in Latin America thanks to Datamaran's raw data, showing trends that were confirmed during interviews led by ERM. This enabled them to accelerate and strengthen the pre-interviews research work needed to engage with stakeholders.
Why it’s crucial to monitor risks
When AT&T last surveyed their stakeholders as part of their most recent materiality assessment process, some of the issues most important to them were pretty unique to a Telecom company, what Kruse refers to as “table stakes”.
Topics like customer privacy, network and data security, and the reliability of the network were all near the top of the list. Also front of mind for AT&T stakeholders where issues like the technological revolution or technological innovation.
What some might consider the most obvious risks are often the most important to the long term success of an organization. Controlling external risks allows your business to perform its core functions well, and provides the platform for you to achieve more beyond that.
“Obviously [technology is] super important to a company like AT&T when we're on the cusp of 5G and all the evolutions that are coming as a result of that,” Kruse said. “[Stakeholders] viewed that as almost Paramount. Because if a company like AT&T can't get the technology innovation piece right, that's foundational to everything else that we do, and really, it’s what gives us the capital to invest in all the other ESG work that we do.”
The ‘other’ ESG work undertaken by AT&T includes using Datamaran’s AI-powered materiality analysis technology to spot emerging external risks, like COVID-19.
How to identify emerging risks in the external landscape
Materiality is not really a state of being, but more a process of becoming, and being able to track out the evidence of materiality that builds over time is a crucial tenet of materiality analysis. Still, there are certainly a number of best practice guidelines to help you identify and prioritize emerging risks.
AT&T certainly found that the emerging risks landscape was a dynamic one. As you might well expect, in the last 6 months, the importance of some issues have shifted in the eyes of AT&T stakeholders. For example, there has been an emergence in the importance of social issues from topics like geopolitical risk (which includes global pandemics), employee health, safety and wellbeing, intellectual property (Working from Home) and diversity and inclusion, over environmental issues such as e-waste and energy efficiency.
Given what’s going on in the world right now, that’s understandable. Those changes don’t signify that the world is thinking differently about being more environmentally friendly - more that the world has more pressing things to think about at this moment in time.
What’s important is being able to track those changes, understand why they’re happening, and use that information to create a strategy for the future, something that Datamaran empowers AT&T to do:
“I think it definitely plays into our strategic analysis of emerging issues, and just trying to be a step ahead if it's possible”, Kruse says. “In terms of the next evolution of programmatic development or ways you might want to enhance or tweak existing programmes, it just gives you a really valuable window into that. And companies do this sort of research in all sorts of ways, but [Datamaran] is just a great tool to assist with that.”
See how Datamaran can help you
Datamaran is the only software analytics platform in the world that identifies and monitors external risks, including ESG. Trusted by blue-chip companies and top tier partners, it brings a data-driven business process for external risk and materiality analysis. In house - at any time.
Datamaran’s patented and award-winning technology offers real-time analytics on strategic, regulatory and reputational risks, specific to your business and value chain.
Fill the form on the right to get your complimentary demo of Datamaran.