The Integrated Reporting Movement: Meaning, Momentum, Motives, and Materiality

Chapter 6The Sustainable Value Matrix

In the previous chapter, we suggested that the board exercise its responsibility to determine integrated reporting materiality through an annual “Statement of Significant Audiences and Materiality.” This Statement forms the basis for the idea of the “Sustainable Value Matrix” (SVM), a tool that expands on the concept of a “materiality matrix.” Like the materiality matrix, the SVM can be used for purposes of external reporting, stakeholder engagement, and resource commitment. It goes above and beyond this, however, in that the SVM can also be used to drive innovation to reduce or even reverse the tradeoffs that often exist between financial and nonfinancial performance. In doing so, it pushes the boundary of the Performance Frontier that represents the typical tradeoffs between financial and nonfinancial performance.¹ When companies see that fostering innovation is one of its benefits, the SVM will become an accelerator for integrated reporting,

A Short History of the Materiality Matrix

While AccountAbility first articulated a formalized materiality determination process in their 2003 report, “Redefining Materiality,”² the materiality matrix emerged, like many management innovations, in practice. For determining material issues, AccountAbility recommended a five-part materiality test embedded in a transparent process of stakeholder engagement, subjected to external assurance—with both the process and results under the direct responsibility ...