RSM RSM financial experts advised charities to think carefully about their corporate partners.
A new report has warned charities in Britain that they could lose potential donors if they don’t openly discuss their environmental and social impacts.
Research by RSM International found that charities brands could be exposed on social media if the standards of their governance, environment and governance are below public expectations.
The research What does ESG stand for in the Charity Sector?To assess the quality and reporting on these issues,, examines the accounts and online presences of 114 UK charities.
Less than a quarter of charities in the RSM study (23 per cent) had included a section in their financial accounts that looked at environmental, social and governance issues, with no groups hosting sections dedicated exclusively to this on either their website or in their annual report.
Researchers found that charities with an annual income exceeding 25m were six-times more likely to publish details than those with incomes between 5m and 10m. Charities, like private companies are under greater scrutiny than ever.
According to the report, anyone with access to a computer and a phone can search for charities they are involved with.
If practices that are not up to society’s standards, such as improper waste disposal, poor engagement in diversity and inclusion, or excessive remuneration, become known, people will be able to move on. They can also share negative performance information on social media channels, which could expose the charity to reputational harm.
ESG is now more important than ever. Annual reports should include a separate section on the subject. It’s a direct communication with stakeholders that helps keep them informed.
The study included charities randomly selected from a representative sample of regulators in England, Wales, Scotland, and Northern Ireland.
A third of the charities studied have a published governance system, while nearly all the largest charities have published legal requirements on carbon and energy usage.
RSM advised charities to think about their commitments when choosing corporate partners, particularly considering the financial impact of the pandemic.
According to the report, Involvement with charities is an important part of many corporate ESG strategies. Charities must ensure that they partner with a corporate that is strategic for their individual charity’s goals.
