Two-thirds of charities do not have an environmental, social and governance strategy, research has found. 

Eastside People’s first charity ESG survey, which was supported by the charity leaders body Acevo, has found that 67 per cent of the 78 charities asked did not have any ESG strategy.

The report, published today (29 Jan), found that 30 per cent had a basic ESG strategy – a work in progress focusing on individual components of ESG – while just 3 per cent had a holistic strategy in place.

But the survey, carried out between September and October last year, found that 42 per cent of respondents were considering developing an ESG strategy. 

The report says this shows these charities are “engaged with ESG as a concept but have not yet defined what it means for their organisation”.

Reporting of ESG factors was higher among respondents than the percentage with strategies in place, with 26 per cent saying they provided comprehensive ESG information in a dedicated section of their latest annual accounts.

A further 60 per cent said they provided basic information on ESG factors within their most recent accounts, while just 14 per cent said they did not report on ESG at all.

The report looked at charities’ ranking of the importance of and progress made on different ESG issues, finding that the “most significant gap” was in the area of equality, diversity and inclusion.

Of those surveyed, 99 per cent of charities said that embedding EDI across their organisation was either very important or important, but more than half of respondents said their progress on embedding EDI was still starting out or in the developing stage.

The research found that 69 per cent of respondents had no representation of black, Asian or other racially minoritised communities at executive leadership level, while 32 per cent had no representation of these groups at board leadership level.

The report also found that nearly three-quarters of the charities surveyed were paying their staff the Real Living Wage, but added that 26 per cent said they are unable to afford this.

Progress on environmental issues was found to be lagging behind social and governance concerns, with just 10 per cent of respondents saying they were advanced or advancing in monitoring and addressing the negative environmental impact of their activities.

Just 16 per cent said they were monitoring and addressing of the environmental impact of their assets and resources, while 15 per cent were monitoring and addressing the impact of their workforce.

This was despite the majority of respondents saying they considered the monitoring and addressing of environmental impact to be important or very important, the report says.

Fewer than one-third of respondents were measuring their carbon footprint in some capacity and only 15 per cent of charities surveyed said they had a net-zero plan.

Governance was the area where charities were most advanced, the report says, but it adds that many still have “significant work to do” in order to achieve best practice. 

Just 48 per cent of organisations with more than £1m in income had undertaken an independent review of their board’s effectiveness in the past three years, the research found, despite this being recommended practice under the Charity Governance Code.

It found that 39 per cent of all respondents had at least one trustee who had served on the board for more than nine years, which the Charity Governance Code says should be subject to a “particularly rigorous review”.

Richard Litchfield, chief executive of Eastside People, said the organisation developed the free ESG survey tool because it felt charities should be able to reflect on their environmental footprint, social impact and governance practices, regardless of their size or budget in a social sector context.

He said: “Our intention is for the ESG survey to provide annual sector-wide analysis for more and more organisations, delivering more knowledge and insight year on year.”

Jane Ide, chief executive of Acevo, said: “Feedback from our members is that ESG is becoming an increasingly important part of their day-to-day operations, to optimise their governance, enhance their contribution to the goals of society and minimise their environmental impact.

“We welcome the availability of a free tool that can be used by all charitable organisations and their leaders to understand, assess and optimise their ESG goals.”