Materiality analysis

In 2013, CNH Industrial carried out its first materiality analysis aiming at identifying and prioritizing economic, environmental and social measures consistent with its business strategy, as well as at setting out the 2013 Sustainability Report according to GRI-G4 guidelines.materiality analysis

In terms of sustainability reporting, CNH Industrial defined material aspects as those that significantly impact business performance and that are perceived as most relevant by stakeholders. The evaluation was carried out by the Sustainability Unit, in accordance with both AA1000 criteria and GRI-G4 guidelines, with the support of a specialized consulting firm.

The analysis was performed within the organization, on the same scope as that consolidated in the Annual Report, which encompasses every CNH Industrial segment worldwide (see also pages 208-209). The scope outside the organization was identified case by case and included in the table on pages 36-37.

 The materiality analysis was subdivided in five phases:

  • definition of all potential aspects relating to CNH Industrial
  • assessment of potential aspects 
  • identification of material aspects
  • revision by top management 
  • assurance and reporting.

MATERIAL ISSUE IDENTIFICATION PROCESS

material issue identification process

The first definition phase focused on identifying potential material aspects through the analysis of different sources, the main ones being: corporate documents (such as the Code of Conduct, Policies and Guidelines, Fiat Industrial’s 2012 Sustainability Report and related KPIs, and the Enterprise Risk Management Model), initiatives focusing on stakeholders’ perceptions (such as employee and customer satisfaction surveys), sustainability issues assessed by rating agencies, sector studies, GRI-G4 guidelines, international standards, competitor benchmarking, and media search. It should be noted that, in the scope of the analysis, aspects related to corporate governance, regulatory compliance, and economic value creation were considered as prerequisites, and therefore were not examined individually within the process. A total of approx. 200 issues were identified during the first phase.

During the evaluation phase, each issue was verified, analyzed, rationalized, and assigned priority by the organization’s representatives for sustainability (about thirty people). These individuals were asked to serve as spokespeople for the global vision of CNH Industrial’s processes and activities, evaluating each topic from both the corporate and stakeholders’ perspective. In the scope of this first materiality analysis, in fact, they were called upon to represent the viewpoints of the various stakeholders, owing to their daily involvement with them.

Every aspect was evaluated on a scale from 1 to 5, for both sides (corporate and stakeholders), according to different criteria: the alignment with business strategy, the economic and environmental impact, reputational risk, consistency with internal policies, and the Code of Conduct. In this first materiality analysis, all stakeholders were considered as equally important.

All aspects were also considered from a third angle: their individual significance to the supply chain; an issue, in fact, is material to the supply chain if it falls within the scope of the annual supplier-monitoring process. These aspects are highlighted in the matrix with a thicker outline.

At the end of this phase, the potential issues decreased from 200 to approx. 140.

The actual material issues were identified in the third phase. In fact, as a result of the Sustainability Unit’s analysis of interview results and assessment of the priorities assigned to each issue by the sustainability representatives, 30 aspects were identified as most relevant and positioned in a first matrix draft.

The matrix was reviewed and approved by the members of the Group Executive Council, who further reduced the selection to 25 material issues. The final matrix was approved by the Chief Executive Officer.

The final phase involved the assurance of compliance by third parties; the development process of the matrix was in fact audited by the SGS and verified by the GRI. The material aspects identified represent the groundwork of the 2013 Sustainability Report. To highlight the link between matrix and Report contents, a materiality matrix reference was included at the beginning of every chapter, indicating the specific material aspect discussed in the chapter itself.

global reporting initiative

This process is not a static one, but rather in constant evolution; on the one hand, matrix outcomes will serve as a useful tool to corporate functions in identifying areas of intervention for the next Sustainability Plan; on the other, the analysis will continue, extending to other corporate functions and directly involving relevant stakeholders. The materiality analysis will be updated in 2014.

The matrix can be read in four different ways:

  • the horizontal axis illustrates the degree of significance for CNH Industrial, in ascending order 
  • the vertical axis illustrates the importance to stakeholders, in ascending order
  • the thickness of the outline indicates significance to the supply chain 
  • the graphics differentiate social aspects (in gray) from environmental aspects (in black). The economic aspect was not illustrated since all issues have economic implications.

The matrix also allows verifying the level of alignment between external expectations and the relevance of issues within the organization. 

The in-depth analysis of the matrix suggests that greater importance is attached to business-related aspects and particularly to the ability to innovate in terms of safe use and environmental impact of products, product quality, and customer and dealer engagement. It also suggests that safeguarding health and safety in the workplace is an essential aspect of CNH Industrial’s operations, and that environmental protection, although already an integral part of corporate management, is important in terms of continuous commitment to maintaining set targets and because of the marked interest it creates among stakeholders. CNH Industrial also considers a number of emerging social issues as material aspects, such as responsible supply chain management, relationships with local communities, respect for human rights, and professional development.

materiality analysis

(1) Because all the issues have an economic impact, only the social and environmental dimension are represented.

CORRESPONDENCE BETWEEN MATERIAL ASPECTS AND GRI-G4 ASPECTS

Material aspectsBoundary
(inside and outside the organization)1
Link to GRI-G4 Aspects
Innovation related to product safetyReporting  organizationCustomers (worldwide)Product Responsibility - Customer Health & Safety
Product quality controlReporting  organizationCustomers (worldwide)(2)
Product innovation related to environmental protection -
Eco-friendly products
Reporting  organizationCustomers (worldwide)Environmental - Products & Services
Customer  engagement and supportReporting  organizationCustomers (worldwide)Product Responsibility - Marketing & Communications Product Responsibility - Product & Service Labeling
Occupational  health and safety managementReporting  organization Labor Practices and Decent Work - Occupational Health & Safety
Supplier assessment on environmental and human rights aspectsReporting  organizationTier 1 suppliers (worldwide)Environmental - Supplier Environmental Assessment Labor Practices and Decent Work - Supplier Assessment for Labor Practices
Human Rights - Supplier Human Rights Assessments Society - Supplier Assessment for Impacts on Society
Performance and Leadership ManagementReporting  organization Labor Practices and Decent Work - Training & Education
Spills - Soil and subsoil protectionReporting  organizationLocal communities (near the plants)Environmental - Effluents & Waste
Dealership managementReporting  organizationDealers and Customers (worldwide)(2)
Energy management, GHG and other air emissionsReporting  organization Environmental - Energy Environmental - Emissions
Waste managementReporting  organizationLocal communities (near the plants)Environmental - Effluents & Waste
Transparent supplier relationship and engagementReporting  organizationTier 1 suppliers (worldwide)Economic - Procurement practices
Environmental  impact of inbound and outbound logistics systemReporting  organizationLogistics providers (worldwide)Environmental - Transport
Customization for Emerging MarketsReporting organizationCustomers (APAC and
LATAM Regions)
(2)
Human and Labor RightsReporting organization Labor Practices and Decent Work - Labor/Management
Relations
Human Rights - Non-discrimination
Human Rights - Freedom of Association and Collective
Bargaining
Human Rights - Child Labor
Human Rights - Assessments
Sustainability governance, policy and managementReporting organization (2)
BiodiversityReporting organizationLocal communities
(near the plants)
Environmental - Biodiversity
Local community initiativesReporting organizationLocal communities
(near the plants)
Society - Local Communities
RemanufacturingReporting organizationDealers and
Customers
(worldwide)
Environmental - Products & Services
Internal culture development / communicationReporting organization (2)
Public policy and interest representationReporting organizationCustomers
(worldwide)
Society - Public Policy
Water managementReporting organizationLocal communities
(near the plants)
Environmental - Water
Environmental - Effluents & Waste
Diversity and equal opportunityReporting organization Labor Practices and Decent Work - Diversity and Equal
Opportunity
Wellbeing and work-life balanceReporting organization Labor Practices and Decent Work - Employment
LCA analysisReporting organizationCustomers
(worldwide)
Environmental - Products & Services

(1) For details regarding the scope of reporting, see also pages 210-211.

(2) As regards this topic (although not directly related to an aspect identified by GRI-G4 guidelines), the Sustainability Report specifies how CNH Industrial manages it (DMA) and its specific indicators.