What is material, matters...
When we evolved the firm’s Responsible Business strategy last year, one thing was very clear – the need to focus in and consider what issues were material to Irwin Mitchell and its stakeholders, what would help us grow our business in a sustainable, responsible, and inclusive way.
Kate Fergusson
Head of Responsible Business, Irwin Mitchell
For a firm with a proud heritage of supporting its communities and those most in need, there is an instinctive urge to try to do as much as we can, to address as many environmental and societal issues as possible. Whilst we knew we were not alone in that ambition; we also understood that we needed to be more strategic if we wanted to make a meaningful difference.
The decision to undertake a double materiality assessment was a logical next step in our aspiration to become a leading responsible business.
The decision to undertake a double materiality assessment (this looks at how our business impacts people and the planet, and how our financial wellbeing is affected by climate change and the drive to sustainability) was a logical next step in our aspiration to become a leading responsible business. It enabled us to pause and reflect upon our areas of focus – both in terms of the most material environmental, social and governance risks and opportunities we face as a business, but also which environmental and societal issues could be most positively impacted by our skills and resources.
After several months of working closely with a brilliant team of consultants at Corporate Citizenship, part of SLR Consulting, and engaging over 100 stakeholders, including our clients, colleagues, senior leadership, future recruits, and community partners in the consultation, we have a set of results which make us far better placed to address the challenges ahead.
If you are thinking of going down this route, here are some insights you might find useful:
Our stakeholder groups have different perspectives on what is most material to Irwin Mitchell. Breaking the results down in this way is enabling us to identify any potential tensions and address them through education and awareness. It also highlights where there is an overwhelming consensus. Given that we work in a sector which is very much focussed on people, it was unsurprising that our stakeholders identified talent attraction and retention and diversity and inclusion as two of our most material issues.
We couldn’t have done this alone. Working with consultants added a layer of objectivity and credibility but is also meant that they could challenge and encourage us to think more ambitiously about what being a leading responsible business means.
Some of the issues we felt were critical didn’t rank as highly as we thought they would: supply chain management and climate change were two of the surprises. We took some time to understand why that might be and concluded that these were likely to be emerging issues – ones to watch which would increase in materiality in the coming months and years. We also realised that visibility of the issues was vitally important: their lower placing in the matrix didn’t absolve us of the responsibility to address them.
At the start of the process, we worked with consultants to identify 16 key material issues which we would ask stakeholders to rank according to their importance to Irwin Mitchell. What became clear was that all 16 issues were hugely important. The process was then very much about prioritising and identifying where we could make the greatest impact – it was not about discounting any of the issues as being immaterial or irrelevant.
Environmental, social and governance issues don’t fit neatly into separate boxes. For example, the concept of a just transition evidences the important overlay between diversity, equity and inclusion, and climate change. There is intersectionality between the 16 material issues we identified and a need to consider the impact of each from a multi-stakeholder perspective.
This process has been invaluable for our business. Specifically, it has enabled us to engage our stakeholders in our responsible business journey, generating new ideas and opportunities for collaboration.
This is of course only the start: the hard work of refining our strategy to reflect the outcomes of the materiality assessment begins now and we are optimistic about where that will take us.
Mandatory ESG reporting
In line with the Corporate Sustainability Reporting Directive 2022 (CSRD), there’ll be a phased introduction of mandatory ESG reporting from 1 January 2024:
1 January 2024
In 2025, EU companies must report their emissions and ESG performance for the 2024 financial year if they:
- Have over 500 employees (including EU subsidiaries of a UK parent)
- Are currently subject to the Non-Financial Reporting Directive.
This report must be completed in line with the European Sustainability Reporting Standards.
1 January 2025
In 2026, EU companies (including EU subsidiaries of a UK parent) must report on their emissions and ESG performance for the 2025 financial year if they:
- Have more than 250 employees, and/or;
- €40 million in turnover, and/or;
- €20 million in total assets.
1 January 2026
SMEs listed on EU-regulated markets will become subject to CSRD in 2026 if they:
- Have more than 10 employees
- Have more than €700,000 in net turnover, or more than €350,000 in total assets.
For a transitional period of two years, relevant SMEs will have the option to opt out of the reporting requirements, subject to providing an explanation in the management report.
1 January 2028
Non-EU undertakings will become subject to CSRD from January 2028 (with reports due in 2029) if:
- Their net turnover generated in the EU exceeds €150 million (£132m)
- They have a subsidiary or branch in the EU.