AA1000 Series

AA1000 Assurance Standard

Guidance Note - Materiality

Consultation Document

February 2004

AA1000 Assurance Standard Guidance Note - Materiality

Consultation Document

The AA1000 Assurance Standard was launched in 2003 as the worlds first
assurance standard developed to ensure the credibility and quality of
corporate public reporting across the range of sustainability performance.
It is the result of an extensive, two-year, worldwide consultation involving
hundreds of organisations from the professions, the investment community,
non-governmental organisations (NGOs), labour and business. AA1000
Assurance Standard Guidance Notes are intended to provide detailed
guidance in the implementation and use of the AA1000 Assurance Standard.
Guidance Notes, which are an integral part of the AA1000 Series of
documents, address particular technical aspects of the standard, and also
provide guidance related to different user groups. There are expected to be a
growing number of Guidance Notes, which will reflect ongoing practitioner
experience and other developments (e.g. regulatory).
The first series of Guidance Notes are planned to address technical issues
aimed primarily at assurance providers, as follows:
GN.1.
GN.2.
GN.3.
GN.4.
GN.5.
GN.6.
GN.7.

Materiality (Principle 1).

Completeness (P2).
Responsiveness (P3).
Evidence.
Assurance Statement.
Statement of Assuror Independence.
Statement of Assuror Competencies.

In addition to the above, this first series is planned to include user-oriented

notes, as follows:
GN.8. Global Reporting Initiative (GRI) Reporters.
GN.9. Investors.

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AA1000 Assurance Standard Guidance Note - Materiality

Consultation Process

Consultation Document

Each AA1000 Assurance Standard Guidance Note will be released as a

consultation document. Subsequently, each Guidance Note will undertake an
international consultation process that will involve multiple user groups over
a several month period. Following this process each Guidance Note will take
into account stakeholder feedback, be revised, reviewed by AccountAbilitys
international, multi-stakeholder governance process, and formally released.
The evolving nature of learning in the standards field means that the process
of providing guidance is an ongoing one. By continually engaging with
AA1000 Assurance Standard users and stakeholders AccountAbility will be
best placed to reflect that learning in the form of concrete tools and guidance
for practitioners of all kinds.
AccountAbility invites you to share your AA1000 Assurance Standard
experiences with us through the consultation process so that we can provide
more guidance in the future on the how to of using it.

Related Publications

AccountAbilitys work in developing and promoting the AA1000 Assurance

Standard also includes the following elements:
Practitioner Notes, which reflect thinking by a particular set of
stakeholders at a particular time, but which are not formally part of the
standard.
State of Sustainability Assurance -- an annual report on developments in
sustainability assurance.
Future of Sustainability Assurance, a forward looking view on
contemporary approaches to sustainability assurance with a set of
scenarios about where the field is going.
AccountAbility is an international membership organisation committed to
enhancing the performance of organisations and to developing the
competencies of individuals in social and ethical accountability and
sustainable development. For more information, view www.accountability.org.uk.
For more information on the AA1000 Assurance Standard and related
Guidance Notes, contact AccountAbility at AA1000S@accountability.org.uk.

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AA1000 Assurance Standard Guidance Note - Materiality

Scope

Consultation Document

The AA1000 Assurance Standard is a generally applicable standard for

assessing, attesting to, and strengthening the credibility and quality of
organisations sustainability Reporting, and their underlying processes,
systems and competencies. It provides guidance on key elements of the
Assurance process.
This Guidance Note provides guidance on the issue of materiality in the
course of using the AA1000 Assurance Standard for:
A Reporting Organisation in relation to:
a) its determination of what constitutes materiality;
b) the process to be adopted in its consideration of what constitutes
materiality.
An Assurance Provider in ascertaining the degree to which a Reporting
Organisation has accounted for:
a) its material activities and impacts;
b) issues and impacts that are material to its stakeholders; so that its
reporting provides a balanced and relevant representation of the
Reporting Organisation and its performance.

Definition

The Materiality Principle requires that the Assurance Provider states whether
the Reporting Organisation has included in the report the information about
its sustainability performance required by its stakeholders for them to be able
to make informed judgements, decisions and actions.

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Consultation Document

Guidance Note
Responsibilities of the Reporting Organisation
GN 1-1

The content of a public report on social, ethical and environmental

performance should reflect significant activities and impacts. It should
include what the Reporting Organisation and its stakeholders consider as
material information. Information is material if its omission or
misrepresentation in the report could influence the decisions and actions of
the Reporting Organisation's stakeholders, either directly, or indirectly.
Information that is material may be quantitative or qualitative; and may relate
to facts or probabilities, and to past, present or future events and decisions.

GN 1-2

In determining what it should include in its report, the Reporting

Organisation should build on the following, which take into account both
longer-term and short-term impacts, as well as opportunities and risks.
Direct short-term financial impacts. Those social, economic, ethical and
environmental aspects where there are short-term financial impacts.
Policy-related performance. Those aspects of performance linked to the
agreed policy positions of the Reporting Organisation, irrespective of
financial consequences. The publishing of an agreed policy position
suggests that the Reporting Organisation considers the issue to be material
and accordingly it is likely that this should be reported upon.
Business Peer-based norms. Those aspects of performance, which are
deemed material by peers and competitors, irrespective of whether the
Reporting Organisation has a related policy should be considered.
Stakeholder-based perspectives. The stakeholder perspective should take
into account those concerns of stakeholders where there is reasonable
evidence that related information disclosures by the Reporting
Organisation would impact on stakeholders decisions and behaviour.
Conflicting views by stakeholders as to what concerns are material and
their priority should be taken into consideration. Such aspects of
performance are likely to be lead indicators. Consideration should also be
given to aspects of performance demonstrably relevant to stakeholders
even when actual or likely stakeholder responsiveness is not currently
known.
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Consultation Document

Societal norms. Those aspects of performance where society may have

already regulated, or there is evidence that it is likely to regulate or
produce persuasive guidance in non-regulatory form in the future.
Regional priorities and local interests should also be taken into account
in this context.

GN 1-3

In its consideration of materiality the Reporting Organisation should consider

establishing, within its corporate governance framework, a transparent and
explicit decision-making process that involves:
An assessment of the skills, competencies and experience of the
individuals primarily involved in the Reporting Organisations
consideration of materiality.
A review of the sources, quality and reliability of information that could
potentially be included in its report and the degree that they are used for
decision making within the Reporting Organisation to ensure the inclusion
of any information that if omitted or misrepresented would be likely to
influence the decisions and actions of stakeholders.
A review of the output from its stakeholder engagement processes and the
extent to which matters arising from these have been determined to be
material to the Reporting Organisation.
Procedures for ensuring that consistent materiality judgments are made on
the information to be reported upon, both within the report and between
reports.

GN 1-4

A report must cover all matters that are deemed material. In particular,
Reporting Organisations are encouraged to distinguish between their primary
material issues and content included for supplementary purposes. This
additional content is often useful and adds value, however, it should not
detract from the most significant issues, either in volume or positioning.

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Responsibilities of the Assurance Provider

GN 1-5

In forming its opinion on the extent that the Reporting Organisation has taken
account of the materiality principle in preparing its report, the Assurance
Provider should evaluate the degree to which the Reporting Organisation has:
demonstrated how it has determined materiality when deciding the
content of its sustainability report;
ensured that its processes for determining materiality were complete and
responsive;
taken into account the output of its stakeholder engagement processes;
included all information that if omitted or misrepresented would be likely
to influence the decisions and actions of stakeholders;
resolved any perceived conflict between the Materiality and Completeness
principles;
ensured that the information in the reporting is:
timely (i.e. not out of date or mistimed for decision making
purposes);
comparable over time, with other organisations and against
relevant standards.

GN 1-6

In its Assurance Statement the Assurance Provider should consider the

responsibilities of the Reporting Organisation and, to the extent not already
covered by the Reporting Organisation in its report, comment in its statement
on any issues where it considers the Materiality principle has not been
adhered to, based on evidence it has derived from its work.

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AA1000 Assurance Standard Guidance Note - Materiality

Consultation Document

AccountAbility's mission is to promote accountability for sustainable

development. As a leading international professional institute, AccountAbility
provides effective assurance and accountability management tools and
standards through its AA1000 Series, offers professional development and
certification, and undertakes leading-edge research and related public policy
advocacy. AccountAbility has embraced an innovative, multi-stakeholder
governance model, enabling the direct participation of its organisational and
individual members who span business, civil society organisations, and the
public sector from different countries across the world.

The AA1000 Assurance Standard was launched in 2003 as the world's first
assurance standard developed to ensure the credibility and quality of corporate
public reporting across the range of sustainability performance. It is the result
of an extensive, two-year, worldwide consultation involving hundreds of
organisations from the professions, the investment community, nongovernmental organisations (NGOs), labour and business. AA1000 Assurance
Standard Guidance Notes are intended to provide detailed guidance in the
implementation and use of the AA1000 Assurance Standard.

AccountAbility invites you to share feedback concerning this document as part

of the formal consultation process, which will help build a stronger AA1000
Assurance Standard Guidance Note. For more information contact:

AccountAbility
Unit A, 137 Shepherdess Walk, London N1 7RQ, UK
Tel:
+44 (0)20 7549 0400
Fax:
+44 (0)20 7253 7440
Email: AA1000S@accountability.org.uk
Web: www.accountability.org.uk

AccountAbility 2003
ISBN 1 901693 19 8

8 AA1000 ASSURANCE STANDARD GUIDANCE NOTE