Analysis of Eastside People’s first Environmental, Social and Governance (ESG) survey (supported by partner ACEVO) has found that most organisations (67%) do not yet have a ESG strategy, and very few have a holistic, fully integrated strategy (3%).
Almost half (42%) of participating organisations are ‘considering developing’ an ESG strategy, indicating that they are engaged with ESG as a concept, but have not yet defined what it means for their organisation.
The most significant gap between importance and progress ratings across the whole survey was in the area of Equality, Diversity and Inclusion (EDI). While 99% of organisations said that embedding EDI across their organisation was either ‘very important’ (82%) or ‘important’ (17%), over half (56%) rated their progress in this area as still at the ‘starting out’ or ‘developing’ stage.
The good news is that nearly three-quarters (74%) of organisations are currently paying the Real Living Wage, but a significant minority (26%) are not able to do this.
Progress on Environmental issues is lagging behind Social and Governance in all cases Only 10% rated themselves as ‘advancing’ or ‘advanced’ in monitoring and taking steps to address the negative environmental impact (real or potential) of their activities and services.
In addition, only 16% rated themselves as ‘advancing’ or ‘advanced’ in monitoring and taking steps to address the negative environmental impact (real or potential) of their assets and resources (i.e. buildings) with just under one third (32%) doing any form of carbon footprint measurement compared to 52% in the private sector*2. Moreover, a smaller group still of just 15% have a net zero plan.
As expected, Governance was the area of ESG where charities were most advanced, although organisations still have work to meet best practice and align with the Charity Governance Code.
When looking at trustee boards, only 48% of large organisations (income >£1m) had undertaken an independent review of board effectiveness in the last 3 years, despite this being recommended practice under the Charity Governance Code*3
Furthermore, 37% of these larger organisations had at least 1 Trustee who had served more than the recommended maximum tenure of 9 years. This issue seems to be compounded in small organisations who we surmise have access to smaller pools of candidates, and therefore find it harder to recruit for diverse boards.
Results also found that organisations are struggling to effectively measure and evidence their impact on their beneficiaries and the wider community. While most (75%), said it was ‘very important’ for them to gather evidence on the difference they make to their beneficiaries, relatively few (17%) rated their progress in this area as advanced.
With 96% of respondents agreeing that having a theory of change for how they make an impact, how they achieve it and why they’re confident this is the best approach is very important or important, it is striking that only 22% have a published current theory of change or similar.
Eastside People’s tool is unique in that it enables individual charities and not-for-profit organisations to input their own ESG data and receive individual and comparative feedback about their progress.
The annual reporting tool (which was open for completion by charities and social enterprise across the UK in September and October 2024),*1 complements existing ESG frameworks and standards and aims to be a starting point for more collaboration, peer-support and shared learning across the sector. The organisations completing the tool spanned a variety of cause areas with services from health and social care to conservation, arts and heritage, education, sports and leisure, homelessness and supported housing.
Notes:
*1: The ESG survey is intended to be an annual reporting tool, with a yearly reporting window, when organisations can return to the assessment, using it to record and reflect on their progress year on year. Report data and analysis can be shared with leadership teams, boards, donors and funders, who will be able to use the findings to identify key areas where more proactive approaches and additional resources are needed. The tool was open for completion from 26th September to 6th November 2024
78 not-for-profit organisations completed this round of the ESG survey.
These organisations range in size from micro-organisations, to small, medium and large charities. The largest organisation has an income of £151 million, while the smallest grassroots organisation had income of under £100k. 60, were large organisations with income >£1m
*2: The UK Net Zero Business Census 2024 of 2,005 organisations found that 52% have at least a partial baseline carbon footprint. https://businessclimatehub.uk/wp-content/uploads/2024/09/2024-UK-Net-Zero-Business-Census-Report.pdf
*3: Charity Governance Code: https://www.charitygovernancecode.org/en/5-board-effectiveness?
*4: Survey sign up: https://eastsidepeople.org/resource/esg-assessment/
