It's not really at the level of expandable folders or anything, but you can
kind of organize things by prefixing similar things into groups that make sense to you. If the name of the material is one, continuous string (like "Skin" or "perfect_diamond"), selecting the Prefix option from the right-click menu will let you type any word in and then add that to the front of the material (logically, example: "Gemstones: perfect_diamond"). You can also just add a word to the front manually, of course, by renaming (which the Prefix option will do automatically if it's not a continuous string anyway). Not perfect, by any means, but at least you can have things that make sense to you together in the list.
I.e. Instead of
-diamond
-hair
-rough_concrete
-ruby
You'd get
-Gems: diamond
-Gems: ruby
-Industrial: rough_concrete
-People: hair
Gets the job done to a pretty significant degree, anyway.