How Nonprofits Can Leverage ESG

Incorporating ESG aspects may enhance your nonprofit’s mission and growth goals

Environmental, social, and governance aspects (ESG) are factors that measure the sustainability and ethical impact of an organization. Since nonprofits exist to serve and improve the health and welfare of communities, the principles of ESG align well with the goals and values of most nonprofit organizations.

Here are some ways your nonprofit can incorporate ESG:

• Environmental: Your nonprofit can assess its environmental footprint and take actions to reduce greenhouse gas emissions, energy consumption, waste generation, and water usage. Your organization can also adopt green procurement policies and support environmental causes that are relevant to the mission.
  • Example: a nonprofit that hosts frequent events can look at new ways to reduce paper and/or catering waste, etc.
• Social: Your nonprofit may already have programs and initiatives in place that foster a culture of diversity, equity, and inclusion (DEI) within the organization and among partners and beneficiaries. Your organization can also ensure that programs and services are accessible, inclusive, and responsive to the needs of the communities served. Social impact and outcomes can be monitored and reported using relevant indicators and metrics.
• Governance: Adopt best practices in governance that ensure accountability, transparency, and integrity. Engage with your organization’s stakeholders, such as donors, board members, employees, volunteers, partners, and beneficiaries, in a meaningful and respectful way. Your nonprofit can also align its governance structure and processes with the mission and value of the organization.
  • Example: A nonprofit that works on human rights can have a diverse and representative board that reflects its beneficiaries and advocates.

How can your nonprofit benefit from adopting ESG principles and practices?

ESG has become a popular framework in the for-profit sector for investors and customers to evaluate the performance and reputation of businesses. Incorporating ESG practices can help nonprofits solidify their brand reputation as well as attract more funding and new partnerships from stakeholders who value ESG performance. Consider which ESG factors are most relevant to further promote the organization’s mission.

What resources are available to guide nonprofits on ESG integration?

There are several tools and frameworks to help your NFP identify material ESG issues, set goals and targets, measure, and report on their progress, and communicate impact to your stakeholders.

Some of the most widely used ESG resources include:

• The Global Reporting Initiative (GRI) Standards: A set of standards that provide guidance on how to report on economic, environmental, social, and governance topics.
• The Sustainability Accounting Standards Board (SASB) Standards: A set of standards that provide industry-specific guidance on how to report on financially material sustainability issues.
• The United Nations Sustainable Development Goals (SDGs): A set of 17 goals that address the global challenges of poverty, inequality, climate change, peace, and justice.

ESG can benefit businesses and nonprofits alike. Nonprofits can enhance their mission delivery, stakeholder engagement, and organizational sustainability by implementing ESG standards.