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Sustainability>Materiality test process

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Materiality test process

ESG Policy & Practice

ESG Policy & Practice

Materiality Test

Materiality Test Methodology

Samsung Securities annually conducts a materiality test to identify material issues and report on them. We used the Five-Part Materiality Test Methodology by AccountAbility as a reference for the test assessment and introduced the IR Framework and GRI’s definition of materiality.

Composition of Materiality Test Issues and Collection of Opinions from Stakeholders

Samsung Securities identifies its major sustainability issues and reports on them after taking into account stakeholder interests and factors that affect management activities on the basis of GRI standards, international guidelines on sustainability reporting. We construct issue pools so that major issues in the industry are reflected in the materiality test through a review of strategically important KPIs, a review industry trends and full analysis on the external business environment.

Global Benchmarking
  • - Analysis of top domestic and overseas sustainable management companies, key issues surrounding market competitors, and their sustainable management status
  • - Reporting of trends in both domestic and overseas sustainable management
Media Research
  • - Analysis of 1,870 articles and news releases in 2018
  • - 110 print and media companies including national daily newspapers and TV news companies
Analysis of International Standards
  • - Review of international standards regarding sustainable management
  • - GRI Standards, DJSI, and SDGs agendas.
Policy-Strategy Interconnectedness Review
  • - Review of internal issues along with mid- and long-term management strategies and objectives
  • - Review of KPIs and internal performance data

14 material issues

Implementing the Materiality Test and Reviewing Validity

We quantify the "environmental, social, and governance (ESG) impact and “stakeholder impact" created by each of the 14 issues in the constructed issue pool and prioritize these issues. The ESG impact is assessed on the basis of financial factors, non-financial factors, and strategic interconnectedness while the stakeholder impact is evaluated after deciding which stakeholder groups are affected by each issue.

ESG Impact
  • - Analysis of management strategies and KPIs
  • - Impacts from the finance and risk management perspectives
  • - Internal TF survey to review social and environmental importance
Stakeholder Impact
  • - Quantification of benchmarking research results
  • - Analysis of impacts on media and corporate reputations
  • - Review of impact on each stakeholder group
4 core issues
Materiality Matrix and Issue Selection

Materiality Matrix and Issue Selection

Based on the business impact (the X-axis) and stakeholder impact (the Y-axis), we constructed a materiality evaluation matrix. This creates 4 “material issues' which are then evaluated. ‘Medium- and long-term issues’ are those of high importance. Samsung Securities uses the financial, intellectual, human, and social capitals of the 'Capital Model' as the foundation to report on material issues. We also consider the content of each type of capital along with mid-term, long-term, and potential issues.

  • Impact on ESG (Low) : 14. Creation of a financial ecosystem, through venture company funding or other methods, 13. Expansion of responsible investment products and services, 10. Increased stakeholder attendance, 12. Employees’ rights, diversity, and work-life balance
  • Impact on Stakeholders (High) : 11. Business and financial risk management, 6. Social contributions by the financial industry, 5. Sound governance and BoD operations
  • Material Issues (High) : 1. Financial consumer protection, 2. Stable performance and business diversification, 3. Client relations and brand management, 4. Ethical management and compliance with laws
  • Impact on ESG (High) : 8. Hiring, compensation, and employment security, 7. Employee skill and expertise development, 9. IT innovation and development in the financial industry
Capital, Material Issues, Medium- to Long-term/Potential Issue table info
Capital Material Issues Medium- to Long-term/Potential Issue
Financial Capital 2. Stable performance and business diversification 5. Sound governance and BoD operations, 11. Business and financial risk management
Intellectual Capital 3. Client relations and brand management 9. IT innovation and development in the financial industry
Human Capital 4. Ethical management and compliance with laws 7. Employee skill and expertise development, 8. Hiring, compensation, and employment security, 12. Employees' rights, diversity, and work-life balance
Social Capital 1. Financial consumer protection 6. Social contributions by the financial industry, 10. Increased stakeholder attendance, 13. Expansion of responsible investment products and services, 14. Creation of a financial ecosystem, through venture company funding or other methods