The basics of writing an ESG strategy

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ESG stands for environmental, social and governance – it’s the term used to talk about the sustainability of commercial and non-profit organisations. As the climate crisis rages and social change accelerates, ESG is fast becoming one of the most important indicators of organisational health.

 

As charities have social good at their core, they tend to pass under the ESG radar, but how long will donors, partners, and suppliers hold off asking questions about the sector’s ESG credentials?

 

Some charities are already starting to take action on ESG. For example, The National Trust has pledged to sell its remaining investments in oil worth approximately 4% of its £1billion of assets. 

 

For charities that haven’t begun to think about ESG, an ESG strategy is a great place to start.

 

 

How to write an ESG strategy

 

If your heart is sinking at the thought of writing yet another strategy, consider making ESG an addition to your wider organisational strategy – it doesn’t need to be a book!

 

Here are the basics to include:

 

 

Conduct a materiality assessment

 

Fancy term, but it basically means asking the people you serve, your supporters and anyone else that your charity really matters to which bits of ESG they care about most. The assessment should also look at which ESG factors are likely to have the most impact on your organisation, the people who work for you and the communities you work in.

 

 

Use a framework for your assessment

 

There are a few ESG assessment frameworks out there, but the most commonly used is the United Nations Global Compact. It’s the world’s largest corporate sustainability initiative and includes 17 sustainable development goals (SDGs) that companies and charities can contribute towards.

 

 

Where are you now?

 

Alongside your materiality assessment, look at your current state. Ask yourself how you measure up against each of the SDGs with a focus on the way you operate as an organisation.

 

Look particularly at your internal operations – are you an environmental organisation that doesn’t recycle or an education charity that doesn’t invest in staff training?

 

For charities, assessing ESG is partly about ensuring that organisational values are applied consistently, not just where there is greater scrutiny.

 

 

Set objectives

 

If you map out where you are with ESG against where all the people who matter to your charity want you to be, you can measure the gap. Set objectives that are achievable and timebound to close or at least begin to close that gap. You may be working short-term ESG objectives into your yearly strategy or considering long-term aims as part of a three-, five-, or ten-year strategy.

 

 

Identify barriers

 

What is standing in the way of you meeting your ESG objectives? Work out any potential barriers and workshop how they could be overcome. Does meeting your objectives require additional budget or skills that your charity doesn’t have in-house, for example?

 

 

Create a roadmap

 

Articulate how you will meet the ESG objectives you have identified in a plan. Think about who will ‘own’ and take ultimate responsibility for ESG at your charity. Who will lead on ESG projects and who will need to be involved?

 

Aside from staff, you will also need to identify any tools and services you might need in order to deliver the plan. Tot up the time and financial investment needed and include that in your roadmap.

 

Timetable the activity by breaking it down into steps; identifying the milestones where a check on progress against objectives should take place.

 

Your objectives and roadmap should give your board the information they need to assess how well the strategy aligns with your charitable aims and any risk involved.

 

 

Set KPIs

 

 

Your strategy and the activity in your roadmap will need to be measurable. Pick out a key performance indicator for each objective and state clearly what success would look like for your ESG programme overall.

 

A critical measure of how well you’re doing at ESG is how well your people and their communities are doing - the people you serve, supporters and your staff. Checking in with them regularly will give you an indication of how it’s going.

 

 

Report

 

Report back on your progress with ESG - especially when you have something to shout about! Showcase your ESG record in your annual report and on your website.

 

Donors and funders are already beginning to use ESG in their funding criteria and Generation Z (people born between approximately 1995 and 2010) have been shown to place sustainability at the top of their decision-making process.

 

By Investing in ESG now, charities can increase the sustainability of their fundraising pipelines, live their values on the inside as well as on the outside and truly sustain the communities they exist to serve.