A think tank has warned charities they need to ensure they have strong environmental, social and governance (ESG) processes in place before engaging with the corporate sector on their commitment to issues such as climate change and diversity.

Charities wanting to target businesses on their social responsibility “first need to ensure they have their own house in order”, think tank New Philanthropy Capital (NPC) has warned.

“Charities should first look to ensure their own performance is up to scratch,” said the think tank.

“As far as they can, they should reduce their environmental footprint and pursue better employment practices” in areas such as paying the living wage and promoting equality, diversity and inclusion in recruitment.

“This is both to bring about better outcomes, and to model what best practice looks like for other organisations,” it added.

NPC’s warning follows concerns raised by corporates in a separate report that charities are not committed enough to ESG. This report, by C&E Advisory Services, found that corporates’ view of charities’ commitment to ESG has fallen over the last year and just a quarter of businesses believe charities have effective ESG plans in place.

NPC’s latest advice to charities on engaging with corporates on ESG has been made in an online briefing following an event earlier hosted by the think tank with PwC.

“It is often taken for granted that a charity, by virtue of its charitable status, will operate responsibly but it is important that this continues to be front of mind,” said PwC director Daniel Chan at the event.

Share Action chief executive Catherine Howarth, who also spoke at the event, added: “Ultimately, civil society has this role to be guardians of what is best in this economy, and a more just vision of the economy.”



Charities are recommended to highlight any areas of ESG where they excel at and “bring this expertise to conversations with businesses and the investment sector”.

They are also urged to encourage businesses to avoid a “tick box” approach to ESG, where they are “thinking more holistically about avoiding social harms in all their forms” rather than merely “look like we’re achieving” socially responsible practices.

Using investments responsibly, including for staff pensions, is also encouraged. This can also “be communicated as part of an employment offer to make the charity sector a more attractive place to work”.

Traditionally charities engagement with businesses with ESG has been focused on corporate social responsibility departments.

NPC urges charities to “engage higher up in the organisation, ideally with the Chief Financial Officer, to ensure ESG moves beyond the realm of marketing and PR.

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