Giving Compass' Take:
- Brigit Helms, writing for Forbes, explores three reasons why it would benefit nonprofit organizations to adopt ESG practices.
- How can donors help support nonprofits in ESG? What are the potential barriers or pitfalls?
- Read more about steps toward a social impact market.
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The growing importance of environmental, social and governance (ESG) principles is imperative to create a more equitable and sustainable future. ESG isn't just a buzzword in the business world; it's a powerful tool that can shape the trajectory of nonprofits and their impact on the world. Organizations that embrace ESG principles position themselves as catalysts for positive change, setting a new standard for responsible and impactful operations.
As a leader of an organization that supports social enterprises, I see the direct value that ESG can bring to the long-term sustainability of an organization. Integrating ESG principles can enhance an organization's reputation and resilience in an evolving marketplace.
Here are three compelling reasons why I believe ESG matters to nonprofits and how it can shape a sustainable future.
Much like businesses, nonprofits can become agents of change through investment decisions. Smaller nonprofit organizations can align financial decisions with their mission by initiating incremental steps like opening an account in a community bank focused on women- and minority-owned businesses or investing in green bonds issued by organizations that fund environmentally friendly projects. Larger nonprofits can partner with specialized ESG investment firms or directly invest in companies that generate measurable positive social and environmental outcomes alongside financial returns, like affordable housing developments and renewable energy initiatives.
In an era where transparency is paramount, an ESG framework serves as a beacon of trust and authenticity. Monitoring and reporting ESG metrics to stakeholders demonstrates a commitment to transparency, sets an organization apart and attracts like-minded corporate funders. The global business landscape recognizes the importance of ESG as a criterion for partnerships and investments.
Perhaps the most compelling reason for nonprofits to adopt ESG practices lies in the power of Generation-Z, with their unique position in shaping the future landscape of philanthropy and social impact. Recent research reveals that "two-thirds of U.S. adults actively seek and follow sustainability issues." This trend is even more pronounced among Gen-Z, who represent approximately 27% of the U.S. population.
Read the full article about ESG and nonprofits by Brigit Helms at Forbes.