Why does ESG matter to charities?

Why is ESG of importance to charities when they already make such a positive difference to society?

Because there is still much to be done about how charities undertake their valuable work, and many do not yet communicate to stakeholders all the things they do well, in a systematic and measurable way.

And because two thirds of millennials consider the social and environmental commitments of an organisation when deciding where to work.

And, as RSM highlighted in their ESG report of March 2022, there are various other reasons for charities to get serious about ESG, including:

  • to demonstrate value and responsibility to funders;
  • to provide partnership opportunities with companies which want to engage with sustainable and responsible charities – and giving those charities the opportunity to hold those businesses to account; and
  • to drive improvements in operational efficiencies.

But in our times of constant change and challenge, how do charities make a start on their ESG journey – whether that is towards net zero; opening their organisations to all talent, wherever it may come from; or in investing their available reserves to achieve a positive impact, as well as a financial return?

You cannot start a meaningful journey unless you first know where you are now. That’s why Shoosmiths has created a high-level compliance audit tool to help organisations understand their ESG performance, and to highlight where they might look to improve: ESG 360 | Shoosmiths lawyers

Many charities will already be familiar with and follow the Charity Governance Code. For now, this audit tool, which is made available without charge, focuses not specifically on charity governance, but instead on numerous other aspects of a charity’s operation where, because of its privileged and trusted status, the public, the media, government and other commissioning bodies and funders would expect it not to lag behind the business world, in which investors increasingly insist upon ESG performance, in areas such as:

  • the disposal of waste and use of resources 
  • health and safety
  • supply chain management
  • cybercrime and data breaches;
  • data privacy.

ESG 360 requires completion of a questionnaire which results in charities receiving a personalised report providing a Red, Amber or Green rating for each area, along with commentary and suggestions for improvement. 

And on the afternoon of Tuesday 20th June our regulatory team behind ESG 360 will provide an overview of the feedback received to date from those who have completed the questionnaire and will consider the areas of greatest likely risk to charities – at the moment and in the short to medium term. Our team will be joined by RSM who will introduce their recent research update on their 2022 report “What does ESG mean for the charities sector?”, and by Charities Aid Foundation who will explain about how investing a charity’s available reserves can further its ESG goals: An introduction to ESG for charities - 20 June 2023 | Seminar invitation: An introduction to ESG for charities - 20 June 2023(BLANK) (vuture.net)


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.


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