Further research has been published warning that charities are behind corporates in developing policies around environmental, social and governance (ESG) issues.

The latest warning has been made in a report by Investor Update, which involved more than 30 interviews and contributions from leaders across the corporate sector and civil society.

One charity representative surveyed said that “The level of ESG knowledge maturity is very low among charities compared to corporates.

“ESG is seen from a very basic lens such as recycling. Charities still fail to acknowledge the various benefits to the business from ESG whereas corporates have gone through this process of realisation of the importance of ESG through their research and business practice a long time ago.”

Another charity representative warned that “charities are so focused on their own positive impacts that they do not analyse where their negative impacts are”.

The report does note that those charities that are developing strong ESG policies have made use of the UN’s sustainable development goals (SDGs).

This includes ending poverty, promoting inclusive and sustainable economic growth and ensuring there is access to affordable, reliable, sustainable and modern energy for all.

The report adds that these goals are being used by companies to “focus their sustainability actions and build awareness for ESG within their organisations and facilitate stronger communication with their stakeholders”.

“This was echoed within the charity sector with SDGs helping them to reflect the more sophisticated narratives of their corporate partners,” it states.

Although the report notes that support for these goals was “far from unanimous” and there were some concerns raised among interviews about “oversimplification”.

The report also highlights the importance of ‘just transition’ whereby the challenges around climate change are managed. This includes engaging with fossil fuel workers about the change to net zero.

However, the report warns that the level of awareness of this concept “differs” across organisations.

In September, a C&E Advisory Services report raised concerns among corporates around charities’ commitment to tackling climate change.

This found that only a quarter of firms believed charities had “holistic ESG plans and frameworks in place”.

Meanwhile, in October think tank New Philanthropy Capital warned that charities need to have strong ESG policies in place before engaging with the corporate sector on issues such as climate change and diversity.

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

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