How to build a materiality matrix, step by step

What a materiality matrix is

A materiality matrix is a chart that places sustainability topics on two axes to show which ones matter most. In the classic version, one axis shows how important a topic is to stakeholders and the other how important it is to the business. In the double materiality version, one axis shows the company’s impact on people and the environment, and the other the financial effect the topic has on the company.

The matrix is a way to present the result of a materiality assessment, not the assessment itself. Neither the European reporting standards nor the GRI Standards require the picture; they require the assessment and an explanation of how it was done.

The steps

A materiality assessment that holds up follows the same order.

• Understand your business: activities, sites, value chain and the people affected.
• Draw up a long list of topics, for example from the European reporting standards or the VSME.
• Score each topic’s impact on people and the environment, with evidence.
• Score each topic’s financial effect on the company: risks and opportunities.
• Ask stakeholders, such as employees, customers, suppliers, banks and neighbours, to check the scores.
• Set a threshold, plot the matrix and have management approve the result.
• Write down the method, the sources and who was consulted.

How to score

Use a simple scale, for example 1 to 5. For a negative impact, look at its severity: how serious it is, how many people or how much of the environment it affects, and how hard it is to put right. For an impact that has not happened yet, also weigh how likely it is. For the financial axis, combine how large the effect on costs, revenue or financing could be with how likely it is.

Base the scores on facts where you can: your carbon footprint, accident figures, complaints, customer requirements, energy costs. A score that rests only on opinion is hard to defend.

Reading the matrix

Draw a threshold line on each axis. Under double materiality, a topic is material if it passes the threshold on either axis: a large impact on people or the environment is enough, even if it costs the company nothing yet. In the classic matrix, the topics in the top-right corner are the priorities. Material topics need a policy, actions, targets and figures in your report.

When you do not need one

The EU voluntary standard (VSME) does not ask for a materiality assessment. It asks you to report each disclosure if it applies to your business. A matrix is still useful to choose the priorities of your strategy, but it is not a reporting requirement for a VSME report.

Doing it in Greener Ahead

Sustainability reporting in Greener Ahead follows the VSME, which uses the “if applicable” test rather than a materiality assessment: it shows only the disclosures that apply to your business and records why the others do not. It costs €995 per year with unlimited users, and you can try it free for 14 days without a card. Check the pricing page for current details.

Example scores

Scores for a fictional printing company on a scale of 1 to 5, with a threshold of 3 on either axis.

Mistakes that make a matrix useless

Readers and auditors notice these quickly.

• Every topic ends up material.
• Scores based on opinion without evidence.
• Only management was consulted.
• Impact and financial effect mixed on one axis.
• Done once and never updated.