The Elephant in the Boardroom: A Spotlight on the Board’s Role in Materiality-Meta-Materiality

Boards of directors are under increased pressure to ensure effective governance and oversight of complex modern corporations. They must describe the corporation to its shareholders and stakeholders in precise, honest, practical and useful terms. To do so, they must assess information by asking themselves, “Is this significant enough to change a user’s decisions about the company?” In other words, “Is it material?” However, the board often receives divergent reports from four types of experts: the accountant or auditor, the securities or investor relations expert, the corporate lawyer or legal counsel, and the ethicist or social responsibility champion. Each expert applies divergent views of “materiality” to the information he or she supplies to the board. Each is partly right, but no one expert sees the complete picture. This report aims to help boards synthesize the perspectives of different professions into a complete whole—what the authors call “meta-materiality.”