What is the purpose of a materiality analysis?
Materiality analysis is an approach to identifying critical economic, environmental and social issues, which may either reflect a significant impact on the company’s business performance or substantively influence the assessments and decisions of its stakeholders.
Michelin’s objectives in undertaking regular materiality analyses are to:
- Identify and prioritize critical issues
- Inform the Michelin Performance and Responsibility (PRM) approach
- Engage Michelin’s stakeholders
- Inform Michelin’s approach to the disclosure of information on sustainability.
The Michelin approach to materiality: process and tools
Informed by the Global Reporting Initiative standards and Michelin’s corporate systems for risk identification and assessment, the analysis was conducted in the following four steps:
- Issue identification
Issue identification was based on a review of Michelin communications, performance rankings, peer sustainability approaches, the Michelin strategy and global sustainability trends. From 100 sustainability issues identified, 19 were consolidated for further analysis.
- Assessment of societal concerns
Stakeholder’s concerns regarding sustainability challenges were assessed through consideration of the perspectives of investors, experts and influencers, as well as the general public.
- Assessment of impact on Michelin
The potential impact on the business performance was assessed based on the Michelin Risk Analysis tools and by Michelin PRM experts.
- The results were presented on a materiality matrix
The Michelin materiality matrix
The matrix plots the material issues against the rising level of societal concern (vertical axis) and the rising importance on Michelin (horizontal axis). All issues represented on the matrix are considered material to Michelin.
|Business Integrity||Ethical principles in the business and workplace; curbing tax avoidance, corruption, bribery, money laundering, etc.||Michelin considers this as one of our most valuable assets to be preserved absolutely, thanks to our core values, ethical behavior and zero tolerance for misbehavior. The company has a dedicated ethics and compliance system in place, supported by training and a robust governance structure at both the corporate and local levels.|
|Competitiveness||The ability to remain a viable business through innovation, sales and cost competitiveness||The steady improvement in the management of our operations has lifted Michelin to a new level of performance. We created value for the fourth year in a row in 2013, delivering 11.9 percent return on capital employed. This trend must continue.|
|Emerging Market Strategy||Shifting demographics, resource constraints and the change in purchasing power of global consumers||The number of motor vehicles on the road could double in 20 years, with|
three-quarters of the growth coming from Asia, South America, the Middle East
and Russia. Michelin will continue to invest aggressively to capture growth in these markets.
|Core responsibility and competitive differentiating factor||Michelin’s growth has always been driven by a passion for innovation, which creates differentiation and builds loyalty by providing customers with clearly perceivable value. Each year, the Group dedicates more than 600 million euros in investment and nearly 6,000 employees to its innovation commitment.|
|Public Policy & Regulations||Advocacy for positive government policies and the effect of regulations that shape the way business is done||We advocate for the development of policies that are in line with our Michelin Performance and Responsibility approach. Also, Michelin believes that appropriate regulations can create opportunities for highly innovative companies such as ours. We have a specialized department that constantly analyzes potential regulations and creates action plans at the correct geographic level to deal with them.|
& Air Pollution
|Scope 1, 2 and 3 greenhouse gas (GHG) emissions, climate change adaptation and emissions of gas and particulates, which could have an impact on health and environment||We are leading the fuel efficient tire market and continue to aggressively pursue lower rolling resistance targets. As tires play a significant role in the transportation industry’s impact on air quality, through contribution to vehicle combustion of fuels, Michelin will continue to focus on aggressively lowering rolling resistance of its tires.|
|Water Use||Water usage in Michelin operations, and its effects on scarcity and pollution||Water use in Michelin’s operations is relatively low but we continue to exercise good stewardship and look for opportunities to reduce its usage.|
|Energy||Sourcing and sustainable use of energy in Michelin operations, as part of the production process||Michelin has strong policy of energy efficiency, with an ambition to reduce its|
use by 25 percent by 2020.
|Tires no longer able to be used on vehicles and waste recycled as a result of operations or sent to landfills||Michelin has acted responsibly to develop an end-of-life tires strategy. ELTs also represent an interesting material and recovery pathway. We track waste as part of our Michelin sites Environmental Footprint. We have made great process in reducing waste and continue to develop reduction strategies.|
|Raw Materials Procurements||Reliable sourcing and sustainable use of raw materials as part of the production process, including natural rubber and supply continuity||To more effectively anticipate, prevent and manage supply continuity risks, procedures have been introduced to centralize purchasing across the globe. In addition, Michelin is developing tires that are lighter, in order to reduce the use|
of raw materials. The company is deploying a 4R approach to materials to encourage reduction, reuse, recycling and use of renewable inputs.
|Impact on Suppliers||Economic development, education and empowerment of suppliers, including basic human rights||We respect the rights of our suppliers and assist them as necessary in reaching sustainable development expectations.|
|Road Safety Awareness||The impact of road safety and the role Michelin can play to promote safe driving habits||We advocate for safer tires and a safer way of driving on a global scale, including the sponsorship of driver safety programs around the world.|
|Community Involvement||Ensuring positive community impact through engagement in community development, including education, employment, health, safety, philanthropy, disaster relief, etc.||We have strengthened our successful community relations programs in 2013 with aggressive goals by 2020 for employee community participation. The company has also launched a Michelin Foundation to support communities around the world.|
|Access to Mobility||The global transportation environment and how changes can positively impact affordability and accessibility||Michelin believes in universal access to affordable mobility, and supports this human right through the Michelin Challenge Bibendum. We walk our talk|
through a multi-brand strategy and navigation tools.
|Responsible workforce management||Responsible management of the workforce and fundamental employee rights across the world: Protect, Respect and Remedy, supported by social dialogue.||Michelin is committed to responsible and respectful management of its workforce – this also includes employee rights and labor relations, with a renewed focus on social dialogue. Recently, Michelin shareholders supported management’s proposal and elected an employee representative onto the Conseil de Surveillance.|
|Employee Engagement||Creating the conditions to motivate employees to embrace the company,|
its purpose and goals
|This is a key asset of the company and we want to maximize employee engagement as part of the company’s 2020 ambitions. Actions are taken at all levels and all areas to contribute to building the right conditions and we measure progress annually through a company-wide employee survey.|
|Employee Development & Diversity||Wide commitment to employee development (learning and career opportunities) across the world, respecting people and valuing differences|
Michelin believes that everyone has potential and ensures that its people
have multiple opportunities for training and personalized careers.
|Health & Safety||Ensuring safe, healthy practices and operating environments for all employees and promoting well-being||We have a 100% health and safety approach and are committed to the continuous improvement of life at the workplace|
|Sustainability Governance||Policies and structure contributing to the company’s environmental and social performance||Michelin has a robust sustainability governance featuring supervision from|
the Conseil de Surveillance, a Michelin Performance and Responsibility Council led by the chief executive officer, a sustainability operating committee, and a global network of sustainability representatives.
Michelin performance and responsibility: the six 2020 ambitions
The material issues identified represent the sustainability challenges that matter most to Michelin’s stakeholders and to Michelin’s business performance. The six Performance and Responsibility ambitions for 2020 were designed to ensure that Michelin’s sustainability approach addresses its most material issues.
With all business processes, the Michelin materiality approach will be reviewed to identify opportunities for improvement. While every effort has been made to ensure the accuracy of the assessment, some subjectivity is inherent in materiality assessments.