Sometimes, we see some confusion when our clients need to combine industry classifications, ‘issues that matter’ (whatever the nature), and their assessment and prioritization with respect to those various industries.
This very need is handled by the Materiality Map concept.
Generally speaking, a classification-based Materiality Map is a matrix that reflects the relevance of a topic for a given industry.
This paradigm is used by different domains, with a very common application being sustainability and corporate social responsibility.
Most data providers or agencies have designed and issued their own Materiality Maps. Each represents their respective views of relevant issues such as the type of environmental topics on which they base their assessments. And each also aligns the relevance of the issue to a specific classification scheme.
One that’s particularly well-known is published by SASB, part of the IFRS (International Financial Reporting Standards Foundation). The SASB Materiality Map is leveraged by a large number of firms and data providers.
While the basics of a Materiality Map are often published openly, its details – the concrete numeric assessment of each given issue-classification pair – are the creator’s IP and usually only revealed with a related license.
When then referring to a full-fledged Materiality Map, one can also use the specific allocations (typically presented as percentages) that the issuer has determined for a given issue-classification combination. In fact, these can go down to granular sub-issues and their impact or relevance to the sector and each subsector within.
Materiality Maps are revisited by their issuers regularly to incorporate the latest research, make adjustments and perform updates to help ensure the determined structure and proprietary assessment values are maintained.