The not-for-profit sector is buzzing with talk of ESG (Environmental, Social, and Governance). Yet, despite widespread awareness, many charities are struggling to translate this buzz into meaningful action. According to the first-ever Eastside People ESG Survey, which polled 78 not-for-profits in England and Wales, there’s a growing interest in ESG practices, but the implementation remains limited.
Key Insights from the Eastside People ESG Survey:
ESG Awareness is Growing, but Strategy Implementation Lags
While awareness of ESG is widespread across charities, 67% of organisations lack a formal ESG strategy. Only 3% have fully integrated ESG practices into their operations. However, nearly half of the respondents are considering developing a strategy, signalling increased engagement in ESG over time.
Social Impact Takes Priority Over Environmental Concerns
Of the three ESG pillars, social impact is given the most attention. Charities reported progress in staff-related issues like flexible working, fair pay, and wellbeing. Environmental concerns, however, were less prioritised, mainly due to resource constraints and competing demands.
Equality, Diversity, and Inclusion (EDI) Needs Strengthening
99% of respondents consider EDI important, but only 44% believe they have made significant progress. Additionally, 69% of organisations reported no Black, Asian, or other racially minoritised leaders at the executive level, highlighting the need for more inclusive leadership representation.
Environmental Progress Remains Slow
Despite recognising the importance of environmental sustainability, only 32% of charities measure their carbon footprint, and just 15% have a formal reduction strategy. Many cited a lack of regulatory requirements and funding constraints as key barriers to progress.
Governance is a High Priority, But Challenges Persist
Governance practices are a key focus, particularly regarding board development and accountability. However, 48% of larger organisations have not undertaken an external board effectiveness review in the past three years, and 39% of organisations had at least one trustee serving for over nine years, suggesting room for improvement in governance.
Impact Measurement Remains a Challenge
While 75% of organisations believe impact measurement is crucial, only 17% reported advanced progress in this area. Many charities acknowledge the need to develop stronger frameworks to evaluate their effectiveness and demonstrate their value to funders and stakeholders.
Why Charities Need to Take ESG More Seriously:
While charities may not face the same regulatory pressures as businesses, there are compelling reasons to incorporate ESG practices into their operations:
Public Trust: Increasingly, the public cares about how charities address ESG issues. Those who are not seen to be taking ESG seriously may find it harder to attract donors, volunteers, and staff. As highlighted in the 2025 Edelman Trust Barometer, NGOs and charities need to work harder to build public trust, which currently ranks lower than businesses.
Value for Money: ESG practices can have a tangible impact on a charity’s bottom line. For example, energy-efficient operations can lower utility bills, and strong governance structures reduce the risk of fraud or mismanagement.
Regulation: The regulatory landscape surrounding ESG is evolving, and charities must stay ahead of the curve to avoid non-compliance as new regulations emerge.
Mission Impact: ESG practices directly impact a charity’s ability to fulfill its mission. For example, environmentally sustainable organisations are better equipped to protect endangered species, and those with robust social impact measurement systems can more effectively demonstrate the success of their programs.
Overcoming the Barriers to ESG Adoption:
The Eastside People ESG Survey found that there are a number of barriers to ESG adoption in the not-for-profit sector. These included:
Lack of awareness: Many charities are still unaware of the importance of ESG factors.
Lack of resources: Charities often lack the resources to invest in ESG initiatives.
Lack of expertise: Charities often lack the expertise to implement ESG initiatives effectively.
The Way Forward: How to Improve ESG Performance:
Moving ESG from being seen as a business trend to an essential for charities is key to driving effective change. Here are actionable steps charities can take:
Develop an ESG strategy: Start by creating a clear, structured ESG strategy that aligns with your charity's mission and values.
Measure and report on environmental impact: Begin measuring your carbon footprint and work towards creating a formal reduction strategy.
Invest in staff development: Staff engagement and wellbeing are critical components of the social pillar. Investing in your workforce’s growth can foster greater alignment with ESG goals.
Embed EDI: Make EDI a core part of your charity’s operations and leadership. Increase diversity at the executive level and create inclusive policies throughout your organisation.
Improve governance: Regularly assess your governance practices, and ensure accountability through board reviews and transparent leadership.
The Time to Act is Now:
While ESG efforts are still largely voluntary for charities, the shifting regulatory landscape and the growing expectation from the public and funders mean that integrating ESG practices is no longer optional—it’s essential. By adopting ESG strategies, charities can enhance their public trust, reduce costs, improve their mission impact, and ensure long-term sustainability.
If your organisation is considering developing a structured ESG strategy for 2025 or looking to create a framework for measuring impact, then get in touch for a free 30 minute consultation with the Ethical Good team.
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