Charities still have work to do to promote their environmental, social and governance (ESG) credentials, but more are now featuring this work in their annual reports and websites, research has found.

While last year 23% of charities included a section in their annual report that references ESG activity, this proportion has increased to 27% this year.

However, as with last year’s findings, no charity involved in the research included a section specifically labelled ESG, according to the latest update to the research, which has been carried out by finance firm RSM.

Typical activity reported on includes diversity and inclusion data, gender pay reporting, social investment policies, sustainability and environmental impact.

There has been a larger increase in the proportion of charities now including a separate ESG page on their website, up from 14% last year to a third (33%) this year. This includes pages titled “sustainability” or “responsible business”.

A good indication for the public of a charity’s ESG credentials is their adoption of the Charity Governance Code, says RSM. But fewer charities are referencing this, down from 34% last year to only a quarter this time around.

RSM said this could be attributed to a “decline in awareness” of the Code, which was last updated in December 2020.

“These findings confirm the need for the sector to increase promotion of the Charity Governance Code to boost uptake and improve standards with charities striving for best practice,” RSM said.

This update to RSM’s research involved analysing 48 charities as a snapshot in October 2022.

“Our latest research shows that interest in ESG reporting has significantly increased in charities over the past few years. We also found that more charities are now including a section referencing ESG activity in either their website or annual report – these are both great news stories that highlight the growing importance of the topic,” added RSM.

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