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The exciting ESG opportunity for charities

The ‘S’ in ESG is what charities inherently do. It’s an area where organisations beyond the charity sector can learn from them.”

- Daniel Chan, Director at PwC

​​In 2023, inclusivity, diversity, social and environmental responsibility is no longer just a 'consideration' for all organisations, but a must.

As businesses of all sizes are expected to become ESG compliant (Environmental, Social and Governance), there is a growing opportunity for charities to partner with companies - small and large - to help them do this.

These partnerships should include SMEs, of which there are 5.5 million here in the UK (a small business is defined as 49 or fewer employees).

SMEs, like corporations, know they must adopt ESG goals and strive to achieve environmental and social governance if they want to be sustainable.

98% of all SME owners surveyed said that an ESG strategy was either very important or important for their business.

- Barclays, survey in 2022

Customers expect businesses to be environmentally sustainable and socially responsible.

So holding themselves accountable to an ESG framework makes sense for SMEs, just as much as it does for corporations. Working with the three pillars of ESG in mind will lead to better customer engagement and client relationships, improve staff retention, as well as reducing risks and lowering costs.

72% of B2B buyers are more likely to purchase from companies that do well on socio-political issues they consider important.

- survey by AMA-NY, ‘The Future of Marketing’

It is also worth noting that ESG reporting standards are evolving, with countries around the world putting regulations in place that will impact all organisations; including SMEs and even charities.

Why charities should help SMEs meet ESG goals.

Many charities now nurture SME supporters, as they have become a growing stream of unrestricted income. And as more small business supporters seek ways of becoming ESG compliant - charities can play a positive role in helping them achieve this.

Almost two-thirds (64%) of small and medium-sized business owners want to improve their environmental sustainability"

- survey conducted by Lloyds Bank

One way for charities to help SMEs start their ESG journey, is to ask them to fundraise by donating a percentage of their sales of a product or service - otherwise known as sales fundraising (something over 1500 charities now encourage businesses to do by using the Work for Good fundraising platform).

But an increase in donations is not the only benefit of helping an SME with their ESG framework.

A partnership with any business will help the charity to achieve its mission.

Charities would be savvy to identify ESG topics they are experts in (social issues, human rights, child care, workplace diversity, ethical manufacturing, food waste, industrial relations etc) and use this data and knowledge to help the SME community to become more inclusive, diverse, socially and environmentally responsible.

The rewards for fundraisers and charities to drive ESG by partnering with SMEs are obvious:

  • Gain loyal business supporters
  • Increase donations
  • Influence 5.5 million SMEs to be more socially and environmentally responsible
  • Use businesses to be champions of change and help charities achieve their mission

Ultimately, the focus on ESG in the business community is a golden opportunity for charities to create partnerships that will help them achieve their goals and drive their mission.

There has never been a better time for business and charity partnerships to work together to make the world a better place.