Global Compact Network Singapore

G3.1 and G.4 – what are the differences?

These are the main differences between the two sets of guidelines:

  • Materiality and boundaries: Whereas the previous G3.1 guidelines are comprehensive in its coverage of the economic, environmental, social and governance aspects of a business, the G4 guidelines emphasizes on reporters establishing the areas where sustainability impact matters to an organization. This is known as ‘materiality’, and it compels companies to focus on ‘what matters, where it matters’. ‘Boundaries’ on the other hand help a company define where each impact occurs, and it can be internal or external to the organization.

Together, assessing materiality and boundaries help a company to identify and determine which sustainability areas are critical to its business and have the most impact. In this way, the company is better able to align its sustainability efforts in areas that are most strategic to its business. Its sustainability reports will therefore be more focused, credible and easier to navigate for their readers.

  • Stakeholder Engagement: It is important for a company to understand and engage its stakeholder so that it can establish the materiality and boundaries of its sustainability impact. G4 guidelines emphasize on the role of stakeholder as a key element in the reporting process. A reporting company is required to establish a systematic process for stakeholder engagement as part of its materiality assessment, and this will be included in the report.
  • Reporting options: Unlike sustainability reports produced using the G3.1 guidelines which are given a grade after application level checks, reports produced using the G4 guidelines will be classified under two options – ‘core’ or ‘comprehensive’, depending on the level of disclosure in the report.

For instance, if a company has identified 10 aspects that are material to its operations, it needs to report against at least one indicator for each of the aspect that it has identified in order for its sustainability report to be ‘in accordance’ with the ‘core’ option. To be ‘in accordance’ with the ‘comprehensive’ option, the company would have to report against all the indicators available in the G4 guidelines under the 10 aspects which it has identified as material.

In other words, sustainability reports produced using the G4 guidelines would not have a grade assigned for application level check. Have more questions about G4 guidelines? Click here

Singapore Compact

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