What is Materiality in ESG investing?
A core consideration in ESG investing; a factor is material if it will drive long-term financial value in a particular business.
Not every ESG factor is material at every company all the time.
A core challenge for ESG investors is to identify the factors that are material to a business at a particular time.
Each corporation tries to access to initiatives such as the Global Reporting Initiative (GRI), Principles for Responsible Initiatives (PRI), and Sustainability Accounting Standard Board (SASB) to define relevant sustainability issues and try to understand their impact on each company's financial outcome.
SASB, in particular, is created to assist corporations for financial disclosures of sustainability information to investors. SASB identified a set of ESG metrics of financial performance across 77 industries.
The information is shown through a Materiality Map that identifies and compares disclosure topics across industries and sectors.
The Materiality Map visually reveals how 26 general sustainability issues manifest across 77 industries.
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