Materiality is the compass of our path to sustainable business transformation. It helps to sharpen the priorities related to ESG factors, i.e. environmental, social and good governance of organizations, on which to focus our strategies and actions to protect the Group's ability to create lasting value.
Since 2014, we have been conducting a process of materiality assessment at least every three years and in 2019, also in view of the new Generali 2021 Strategy and the Sustainability Group Policy, we have evolved the methodology of the analysis to achieve a more strategic reading of the context, based on a long-term perspective and a more robust risk-based approach.
We have thus decided to focus the materiality analysis on those systemic changes - for the sake of brevity, we will also refer to them as megatrends - that we expect can significantly transform the business world, the society and the natural environment over the next 10 years, bringing risks and opportunities for the Group, our value chain and the stakeholders.
The new Group Materiality Matrix, approved by the Board of Directors on 6 November 2019, is the result of this analysis: it shows the megatrends that have been carefully assessed and it reflects how they have been prioritized, by listening to internal management and involving the stakeholders to understand on what challenges they expect the greatest commitment from an insurance company with the characteristics of Generali.
The Matrix comprises three clusters of relevance depending on the potential impact of megatrends on Generali and on the possibility of being influenced by the Group, also through our value chain:
- cluster 1: identifies the megatrends assessed as of the utmost importance by Generali's management and stakeholders, to be addressed through strategic initiatives across all Business Units and functions;
- Digital transformation and cybersecurity
- Climate change
- Geopolitical, macroeconomic and financial instability
- Ageing and evolving social security
- cluster 2: identifies the megatrends assessed of significant importance by Generali's management and stakeholders, to be addressed through strategic initiatives of specific Business Units and functions;
- Pandemics and other extreme events
- Growing expectations toward corporate purpose, sustainability practices and transparency
- Change in healthcare needs and services
- Shortage of planet resources and shift to circular/sharing economy
- Employment dynamics and restructuring of business landscape
- Increasing inequality and reducing social mobility
- Evolving lifestyle and consumption patterns
- Women empowerment and minorities inclusion
- Regulatory complexity & need for an integrated governance
- cluster 3: identifies those megatrends that, according to the opinion of Generali's management and stakeholders, are certainly important, but not as significant as the other factors analysed, and which we will therefore monitor.
- Biodiversity losses and vulnerability of our ecosystems
- New households: multi-cultural families and single person
- Social media and unmediated access to information
The priorities outlined by the Matrix that we place at the heart of our strategies to create lasting value for all our stakeholders are clearly reflected in the 2030 Agenda, the international action plan for sustainable development, and they contribute to the achievement of the SDGs, the 17 goals to transform our world set by the United Nations.
As a first step, we have identified ESG factors that are potentially relevant to us in relation to our activities, business strategy and the contexts in which we work. We looked for those systemic changes, also referred to as megatrends for brevity, that over the next 10 years can bring significant risks and opportunities for the Group, our value chain and the stakeholders.
We have examined public documents providing scenario analysis and research on sustainable development policies, issued by international institutions or non-governmental associations, think-tanks, associations and industry forums. We also analyzed key internal documents, such as the Generali 2021 strategy and the results of the Group's risk assessment process, including emerging risks. We also carried out industry and benchmark analyses, examining material topics identified by large insurance groups and companies with relevant experience in the area of corporate responsibility, as well as screening the issues covered by the media. We also looked at analyses of ESG rating agencies and analysts, proxy advisors and SRI investors, as well as international standards for the management and reporting of corporate policies for sustainable development, such as ISO:26000, GRI, SASB and the Global Compact.
In the second step, to assess the relevance of the identified megatrends, we used the Delphi method, which is based on consolidating the results of several iterative cycles of analysis, conducted with groups of experts. More specifically, we presented the identified megatrends to management and stakeholders, asking them to indicate any additions and prioritize them, taking into account both the potential impact of the megatrends on Generali's activities and the possibility that the Group could influence them, also through the value chain, in line with the double materiality perspective.
Internally, we involved, through interviews and focus groups, more than 120 top managers at Group Head Office and Business Unit level, and 50 opinion leaders, selected for their authority and knowledge of the insurance industry or for their ability to provide original and innovative insights. In selecting the stakeholders, we sought adequate representation of all categories of the key Group's stakeholders: retail and corporate customers, suppliers, investors, employees, institutions and regulatory authorities, companies and industry associations, universities and research centres, NGOs and future generations.
To ensure adequate consideration of the risk component of the identified megatrends, the internal assessment also incorporated the results of the Group's Own Risk and Solvency Assessment process.
In the same way, the stakeholder assessment collected with direct engagement was also integrated with desk analysis activities and using artificial intelligence technologies for the quantitative analysis of a large number of documentary sources. In particular, we examined the investment policies of 20 major SRI and traditional investors, the results of demoscopic surveys conducted by Eurobarometer involving a sample of over 114,000 people in Europe and the analysis of a survey conducted with sustainability managers of about 190 multinationals. In addition, through the use of Artificial Intelligence and Computational Linguistics technology, about 1,700 company financial statements, 2,600 regulations and legal initiatives, 4,000 articles published online and over 108 million tweets published between April and October 2019 were analysed.
In order to position the megatrends along the "X" axis of the Matrix, we have aggregated the internal management evaluations with the results of the Group's Own Risk and Solvency Assessment process, while in order to position them along the "Y" axis we have combined the results of direct stakeholder engagement, desk analysis and reading of documentary sources using Artificial Intelligence technologies.
From the combination of the two axes we built the draft Group Materiality Matrix, discussed by the Governance and Sustainability Committee and the Board of Statutory Auditors and subsequently approved by the Board of Directors on 6 November 2019.
We have chosen to provide information in the Annual Integrated Report on the measures taken to mitigate risks and seize the opportunities related to the most material megatrends and on the results we have achieved. Transparency on how we manage these major challenges is in fact an important lever for us to create trust, support the decision-making process of stakeholders and demonstrate the Group's ability to create lasting value over time.