Charities should seize the “perfect moment” and begin to challenge big businesses to address social issues, think tank and consultancy New Philanthropy Capital said.
In a briefing put together with PricewaterhouseCoopers and Share Action, NPC said it was time to put the ‘S’ into ESG.
Environmental, social and governance is the model businesses use to embed positive impacts into what they do.
But NPC said, while ESP strategies commonly focused on environmental concerns, and the UK corporate governance code had led to efforts in governance, there had been “much less focus on the social component”. This was despite “urgent needs thrown up by the pandemic and the cost-of-living crisis”.
The briefing says: “The pandemic has started to shift the focus towards the social aspects of ESG, and the cost-of-living crisis will only intensify this gaze.
“This is a perfect moment for the charity sector to challenge the investment and corporate community on issues ranging from labour practices to human rights.”
It adds: “Currently, 76 per cent of the world’s largest asset managers have a commitment to human rights in their policy documents, but just 4 per cent have a dedicated policy to tackle this. This illustrates the challenge civil society faces.”
ESG said common examples of “pushback” from firms included: the range of issues covered by ‘S’; the perception that the social impact of companies is less financially rewarding; and challenges with data and measurement making it difficult to know where to start.
The briefing goes on to urge charities to sidestep the corporate social responsibility side of a business and instead go for the chief financial officer.
The think tank went on: “Social change is core to charities’ mission and what they excel at, and this gives them an opportunity to be leaders in ESG.”
Leah Davis, head of policy and external affairs at NPC, said: “Social change is core to charities’ mission, providing them with unique knowledge on the ‘social’ aspects of ESG, but they need to act together to create real change.”
NPC’s briefing tells charities to “first look to ensure that their own performance is up to scratch”, by paying the living wage and focusing on equality, diversity and inclusion.
Catherine Howarth, chief executive of Share Action, said: “A common complaint by investors is that there is little data about social issues.
“Charities are in a perfect position to tackle this head-on, by sharing the breadth of evidence the sector has brought together about measuring the impact of social interventions.”