An Explanatory Model of Materiality in Sustainability Accounting: Integrating Accountability and Stakeholder Heterogeneity

Abstract

This study aims to advance the conceptualisation of materiality in sustainability accounting by tackling theoretical deficiencies that remain unresolved in the current understanding of materiality. In doing so, we integrate accountability and stakeholder heterogeneity into a new conceptual model of materiality that is used to explain how an organisation sets priorities in reporting and in managing different sustainability issues in a heterogeneous stakeholder environment. The model is illustrated with reference to events involving the multinational organisation Exxon. The empirical accounts of the Exxon case presented herein fortify our knowledge claims for this model and, moreover, confirm its explanatory potential with respect to the materiality phenomenon, including how unaccountable behaviour is dealt with in materiality practices.

Corporate purpose and early disaster response: Providing evidence of dynamic materiality?

“…Sustainable materiality is closely related to stakeholder management as it involves identifying and prioritizing the issues that matter most to stakeholders. Materiality analysis helps organizations determine which issues are significant to stakeholders and should be included in their reporting and decision‐making processes (Torelli et al, 2020; Velte, 2022; Zhou et al, 2023). By engaging with stakeholders and understanding their concerns, organizations can ensure that their reporting and actions align with stakeholders' expectations and interests (Puroila & Mäkelä, 2019; Saenz, 2019).…”

“…Materiality implicates distinguishing what is significant from what is trivial, guiding action and resource allocation towards issues that matter (Zhou et al, 2023). Materiality applies to both financial and sustainability contexts (Jebe, 2019).…”