The landscape of philanthropy is evolving, and charities today are finding new ways to strengthen their impact. One approach gaining momentum is the integration of Environmental, Social, and Governance (ESG) principles into charitable operations.
From sustainability initiatives to ethical leadership, the ESG concept offers a framework that aligns with a charity’s mission while enhancing its long-term effectiveness. As this shift continues, organisations that embrace these principles are setting new standards in the non-profit sector, redefining how they engage with communities, donors, and stakeholders.
In this blog, we look at why ESG matters for charities and how it can drive positive change.
What is ESG?
ESG is the acronym for Environmental, Social, and Governance, a framework used to determine an organisation’s business practices and how it fares on sustainability, social, and ethical issues.
Related Read: ESG Reporting 101: What Are the Components of an ESG Report?
Overview of ESG for Charities in Singapore
The Code of Governance for Charities and Institutions of a Public Character (IPCs)
The Code of Governance for Charities and IPCs in Singapore aims to provide board members with a framework to support them in acting in the charity’s best interests and enhance public confidence in the charity sector by establishing governing standards. This code was first introduced in 2007 and later revised in 2011, 2017 and 2023.
Here are some examples of how charities can relate to ESG principles:
| ESG Aspect | What it Involves | Examples |
|---|---|---|
| Environment | How their actions affect the environment |
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| Social | How they handle relationships with stakeholders |
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| Governance | How they govern themselves |
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Latest Amendments to the Code
In 2023, the code was revised to introduce the ESG concept to Singapore’s sector. Under the revised code, which has been in effect since 1 January 2024 and published by the Singapore Charity Council, charities will be expected to implement ESG practices concerning how funds are raised and money is spent.
Larger charities are also expected to establish a 10-year board term limit, a requirement to encourage board renewal and succession planning.
Charities must also enforce a maximum term limit of 10 consecutive years for all board members, with the option to re-elect members for subsequent terms.
Why Should Charities Consider ESG?
ESG has become mandatory for an organisation’s long-term growth and development. Charities are no exception and those that embrace ESG principles and implement them into everyday business practices can lead to measurable benefits and opportunities, such as:
External Benefits
- Attracting ESG-Conscious Donors
Younger generations and corporate partners prioritise ethical, sustainable organisations. ESG can help charities attract and retain stakeholders and supporters keen to contribute sustainably to a cause.
- Enjoying ESG-Focused Grants
Many corporate donors and impact investors prefer charities that align with ESG values. Various government schemes, such as the SG Eco Fund also provide funding and support for projects that advance environmental sustainability and involve the community.
- Stronger Stakeholder & Community Engagement
People are drawn to organisations with intense social missions and ethical leadership. ESG-aligned charities also stand out in a competitive non-profit landscape.
- Future-Proofing and Ensuring Compliance
ESG integration ensures resilience in a rapidly evolving world. By embedding ESG into their mission, charities can enhance their credibility, attract more funding, improve operations, and make a lasting impact.
- Boost Collaborative Opportunities
ESG-focused charities can open pathways to partnerships with other like-minded charities or organisations with similar sustainability initiatives.
Internal Benefits
- Operational Efficiency & Cost Savings
Going green lowers operating costs and boosts efficiency. Sustainable sourcing and ethical supply chains also create long-term savings.
- Enhance Talent Retention
Charities that embrace ESG principles can forge a mission-driven environment that retains talent in the long run. They can also handle the organisation’s workforce more effectively with enhanced social awareness and governance.
What Are the 4 Stages of ESG Maturity?
How does an organisation determine the extent of which they have considered and assimilated ESG topics into its business strategies, decision-making processes, and operations?
The level of integration frequently depends on a mix of factors, such as the charity’s size, resources, and leadership commitment. ESG maturity can generally be categorised into 4 stages:
| Stage | What it Means |
|---|---|
| Stage 1: Growth Mindset | The charity displays an understanding of the issues covered by ESG considerations. It makes an effort to enforce initial steps to establish an ESG framework. |
| Stage 2: Initiator | The charity has set up an ESG framework. It is planning, adjusting, and applying principles of effective ESG management and supervision. |
| Stage 3: Integrator | The charity has assimilated ESG principles into its operations, and executed them. |
| Stage 4: Trailblazer | The charity has matured in ESG and has become a leader in the sector. It has a keen understanding of ESG risks and opportunities and has practical plans to meet its goals while being supported by ESG disclosures. |
Embrace ESG and Start Your Journey With InCorp
In today’s world, ESG principles are no longer just a corporate responsibility – they are also becoming essential for charities and non-profits.
As donors, volunteers, and stakeholders increasingly seek transparency, ethical practices, and sustainability, charities that integrate ESG strategies can enhance their credibility, attract more funding, and create a more meaningful, lasting impact.
From reducing environmental footprints to strengthening governance and community engagement, embracing ESG is not just a trend, but the future of responsible and effective philanthropy.
Contact our ESG team today to find out how you can kickstart your charity’s journey today!
FAQs about ESG for Charities and Institutions of a Public Character (IPC)
What is the difference between a charity and IPC?
- A charity is an organisation established for charitable purposes, such as education, poverty relief, health, or community welfare. On the other hand, An IPC is a charity that has been granted special status to receive tax-deductible donations.
What is the code of governance for charities and IPCs?
- It is a set of best practices designed to help charities and Institutions of a Public Character (IPCs) maintain high standards of governance, transparency, and accountability.
How can InCorp help with integrating ESG into my charity?
- We can assist with a clear roadmap and professional support to implement ESG from start to end, maintaining compliance with the code.
Learn how to incorporate ESG with expert advice today!
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