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This three-part series takes a look into the 1. Why 2. What and 3. How of ESG reporting for Not-for-Profit organisations.
Environmental, Social, and Governance (ESG) Reports, also commonly known as Sustainability Reports, Environmental Impact Reports or Climate Action Reports have gained increasing global traction in recent years. ESG reporting has become an important aspect for embedding and communicating an organisation's sustainability efforts to broader stakeholder groups.
Whilst traditionally associated with corporations, Charities and Social Impact Organisations (Not-for-Profits) are increasingly adopting ESG reporting as a means to enhance transparency, accountability, and impact measurement. This article delves into the "How" of ESG reporting for Not-for-Profits, providing practical examples to illustrate its benefits.
1. Sustainable Development Goals (SDGs)
The UN SDGs serve as a roadmap for Not-for-Profits, offering a set of broad goals that encompass poverty eradication, quality education, healthcare access, and more. The 17 SDG Goals provide 169 targets and 7,874 actions that Not-for-Profits can take reference from when setting metrics and targets in place for their respective material topics.
This helps alleviate the risk of greenwashing typically associated with organisations who set immeasurable goals and no clear action plan in place. By aligning their work with the SDGs, Not-for-Profit groups ensure that their efforts achieve measurable results and contribute to the overall objective of creating a more equitable and just society.
2. Global Reporting Initiative (GRI) Standard
The GRI Standards are the most widely used sustainability reporting standards by businesses, with an adoption rate of 77%. GRI provides comprehensive disclosures for addressing the ESG pillars and offers great flexibility for organisation’s starting out on their reporting journey. Organisations and Not-for-Profit’s can either report ‘in accordance’ or ‘with reference’ to GRI, depending on their level comfort and maturity.
Recommended for sustainability-mature organisations:
GRI recommends reporting in accordance with the GRI Standards. Under this approach, the Not-for-Profits reports on all its material topics and related impacts and how it manages these topics. This reporting approach provides a comprehensive picture of an organization’s most significant impacts on the economy, environment, and people.
Recommended for organisations starting out in their reporting journey:
If a Not-for-Profits cannot fulfill some of the requirements to report in accordance with the GRI Standards or only wants to report specific information for specific purposes, such as when complying with regulatory requirements; in that case, it can use selected GRI Standards or parts of their content, and report with reference to the GRI Standards.
3. Sustainability Accounting Standards Board Sector Standards
While resources provided by experts on corporate requirements for listed companies may gravitate towards GRI as the go-to standard of choice, Not-for-Profit leaders may want to consider adopting best-practices from other standards as well.
The Sustainability Accounting Standards Board (SASB) Sector Standards enable organisations to provide industry-based disclosures about sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital over the short, medium or long term.
SASB Standards identify the sustainability-related issues (i.e. material topics) most relevant to investor decision-making in 77 industries, and can provide Not-for-Profit’s with a reference point on what areas to focus on.
In the next series, we will deep dive into the state of ESG reporting amongst selected Not-for-Profits, highlighting the key elements incorporated and best-practices for the industry to adopt. Stay tuned.
