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As materiality matrices are an emerging tool, research on their construction and use is limited. Even so, this and our own analyses make clear that most companies give only the most cursory explanation for how their matrix is put together. Yet it is this explanation that makes the materiality matrix most useful for the company's audience. In 2011, Framework LLC published "The Materiality Bridge," which examines the extent to which companies use materiality analysis as a tool for reporting and strategy by evaluating companies on CR Magazine's list of 100 Best Corporate Citizens for 2010 and 2011 for evidence of materiality discussion in their most recent sustainability report.11 Of the 100 companies, 51 conducted a formal materiality process to identify and prioritize sustainability issues, but only 13 produced a visual representation of the results.12 An analysis of 195 GRI-based reports from Brazilian companies in 2013 found that 98 published materiality information in their sustainability reports.13 Eighty-three of them disclosed which topics they considered material and 60 used a materiality matrix. Forty-three companies published between 5 and 10 material topics, with another 28 publishing between 11 and 20. Neither study examined how the matrix was constructed or used.

A 2011 report from Fronesys14 reviewed the matrices of 31 companies to offer recommendations for how this management tool can be improved.15 The most salient of these include the need for companies to disclose the underlying processes and scoring mechanisms used to create the matrix, to increase the level of detail in how they assess the impact of issues, and to review the results against peers in order to avoid inexplicable anomalies. Although the report also covers variance in the axis labels and the range of constituencies along the stakeholder and company axes, it focuses mainly on the scoring of issues and how they compare across companies.16 Two metrics are developed to analyze these issues. The first, "Issue Coherence Level (ICL)," measures how the same issues are scored by different companies.17 The second, "Materiality Convergence," assesses the overlap between companies and stakeholders concerning the importance of a given issue.18

Fronesys's analysis assumes that there is enough underlying similarity in how materiality matrices are constructed that this kind of aggregate analysis, particularly the ICL, can be done—an assumption whose validity is undermined by significant discrepancies in matrix construction. As we will discuss, the following aspects are subject to variation: how the X- and Y-axes are defined (and even which is X and which is Y); whether there is only a "present" or also a "future trend" aspect to either axis; how issues are defined, identified, and ranked; the degree and nature of engagement for determining issues and their weightings; and, for the stakeholder axis, how various stakeholders are weighted to get to a single dimension of "stakeholders"—or even "society." Comparing matrices across companies is also directly contrary to our treatment of materiality in the previous chapter. What is material for a firm is entity-specific and must be determined by that firm and ratified by its board of directors.

A comparison of two companies in the same industry, Ford and Daimler, illustrates the impact of these differences. Each has a fairly sophisticated approach to its materiality matrix. (Appendix 6A, "Comparing Ford and Daimler's Materiality Matrices," discusses each firm's matrix in some detail.) The two car companies use inverse definitions of each other's X- and Y-axes, and Daimler defines each simply in terms of "importance," implying the present. In contrast, Ford incorporates a future dimension into the company axis of "current and potential." It also uses yet another framing for the stakeholder axis, basing it not on magnitude but on acceleration ("increasing concern"). Important differences in the process and degree of explanation used to identify issues and their importance for both the company and stakeholders also exist. When the very definitions of each axis and the processes used to identify and rank issues differ, the resulting matrices will be different as well. This is certainly the case with Ford and Daimler.

While the companies' use of different issue descriptions and format for placing those issues in the matrix makes it harder to compare the two, distinctions can be made. For Daimler, customer satisfaction (in the top right-hand corner), (see Figure 6A.2) integrity and compliance, attractiveness as an employer, training and professional development, innovation and development, and business partner integrity management all rank very high. These or rough equivalents do not appear in Ford's High Impact, High Concern box. Ford is more concerned with public policy issues, water, sustainability of its supply chain, and the company's financial health. Not surprisingly, climate change issues rank high for both companies. Because of the entity-specific nature of materiality, we deduce that the differences between the issues identified in these two close competitors' materiality matrices is largely a function of differences in their definition of significant audiences.

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