Nonprofit leaders and board members are aware that donors and others, including regulators, are increasingly looking not only at their performance but also at how they reach their goals.
ESG (Environmental, Social, and Governance) standards and principles are a way to demonstrate an organization’s commitment larger societal issues. They show how an organization behaves in terms of sustainability and social conscience, covering environmental impact, diversity and inclusion, and finances, with a focus on leadership.
In an era where transparency, accountability, and social responsibility are paramount, nonprofits are turning to technology as the catalyst for achieving ESG transparency.
ESG Requires Scrutiny
The practice of ESG means scrutiny on your own internal procedures:
- Are you hiring with diversity in mind?
- Do your employees work in a climate that is accepting and accommodating of differences?
- Are your board trustees and CEO trained and up to date on current ESG best practices?
It also requires you to track your dealings with external groups. Here are some examples:
- Are you partnering with a group that, while it feeds children, also generates an unsustainable amount of environmental waste?
- Do you buy T-shirts for volunteers that were made in inhumane conditions?
- Do you receive donations from a company with a track record of employee complaints?
The credibility of your organization depends on identifying and managing these issues.
Transparency Delivers a Competitive Edge
Transparency on your ESG efforts can give your mission-driven organization a competitive edge. It’s also a way to stand out from the crowd, by showing you are ahead of the curve. For example, BDO’s Nonprofit Benchmarking Report shows that only 18% of nonprofits surveyed report evaluating their vendors, partners, and funders for their alignment to ESG policies and actions.
Reporting demonstrates your strong commitment to ESG principles. In fact, reporting and transparency are integral to ESG, Timothy McClimon writes in Forbes. ESG reporting “is the identification of relevant material issues that are important to an organization’s stakeholders, the creation of goals and targets to positively address these issues, and the public reporting on a firm’s progress toward these targets and metrics,” says McClimon.
Download our white paper “Understanding ESG for Nonprofit and Non-Governmental Organizations” to discover the risks and benefits of adopting and ESG strategy, and how to measure the impact of your ESG efforts. Download now and start achieving your ESG goals.
Technology is The Key to ESG Transparency
Identifying, tracking, and reporting ESG metrics sounds like an extra layer of work for nonprofit staff, who are already working hard to fulfill the goals and mission of the organization. Volunteer board members who may not have the background and knowledge on ESG need information and support.
That’s where technology in the form of board management software comes in. Nonprofit and charitable organization boards, CEOs, and staff can take advantage of technology specifically designed to ease the burden of reporting and help deliver transparency on ESG to stakeholders.
Here’s how technology in the form of board management software helps with ESG reporting and transparency:
Data collection: Tracking and compiling data on ESG goals means collecting the right information from different sources. Once information has been identified, staff will be able to use board management software to input and update metrics. Data collection is at the heart of ESG transparency and reporting. It also allows board members to get real-time information and metrics that will enables them to make informed and timely decisions. Up-to-date reports on your ESG efforts can be stored in a secure repository.
Surveys and questionnaires: Information from partners, donors, and employees form crucial data points for ESG. Automated surveys and questionnaires can gather that information and turn the raw data into customizable reports for ease of use. Boards can evaluate and assess ESG metrics and capabilities through these responses, ask follow-up questions, and obtain additional information from respondents. Survey responses can be saved and analyzed over time to assess trends and improvement lines. These surveys can be sent internally to staff and externally to potential and current funders, partners, and volunteers. The board also can use surveys to evaluate their own knowledge about ESG goals.
Training: Volunteer board members need training and support on ESG topics, especially for new members who are not up to speed on the importance of ESG. The information from data, surveys, regulations, and the board’s self-evaluation can be used to develop customized training for individual board members, as well as group training using a facilitator. Training can be recorded and stored for board members to use at their convenience. Board training hours and topics should be reported as an important metric toward ESG goals because it demonstrates the board’s commitment to ESG principles.
Remote collaboration: Virtual meeting platforms and collaboration tools allow board members to convene, discuss, and review ESG progress from anywhere. With board management tools, current and older reports and data can be easily gathered and are accessible to all board members. A document library on your board platform makes it easy to create, store, and share ESG documentation, such as documents, handbooks, policies, and training videos.
Access and engagement: Reporting your ESG efforts and accomplishments to partners, donors, clients, and the public allows them to see that your organization is dedicated not only to its mission, but also the betterment of society. It allows your organization to showcase your accomplishments and identify where efforts need to increase. Your reputation and status as thought leaders in your industry, and among your partners and competitors, are enhanced by not only your ESG efforts but also your willingness to communicate your position clearly and consistently.
The Synergy Between Technology and Transparency
No matter where you are in the process of adopting and implementing ESG principles for your board and your organization, reporting your efforts to your partners and community will enhance your reputation.
Regular and consistent reporting will reveal trends and patterns that will help you make informed decisions for the organization and for your own board training and succession plans.
You can harness the power of technology to streamline data gathering and reporting, improve transparency, and build ESG capacity on your board. By doing so, you will enhance your reputation and capacity to attract like-minded volunteers and funders, strengthening your ability to reach the goals of your organization.
BoardEffect is designed with the unique needs of volunteer boards in mind. Our nonprofit board management software streamlines board processes, enhances communication, and promotes accountability, helping you to become an efficient and effective board.