The numbers speak for themselves – with more than 2,300 charities and institutions of a public character (IPCs) in Singapore, the charity sector holds significant potential in driving national and global sustainability goals.
In fact, with growing concerns about sustainability and corporate responsibility, it is crucial for charities and IPCs to start incorporating ESG practices into their operations. In this blog, the second of a 2-part series, we will explore how these organisations can begin their ESG journey and the benefits it can bring to both their cause and stakeholders.
Related Read: How Charities and IPCs in Singapore Can Embark on ESG – Part 1
Stage 3: Driving ESG Initiatives
Following the establishment of charities’ ESG strategy comes the implementation of ESG initiatives. While charities are expected to have robust experience in the social aspect of ESG, they may not be as familiar in the environmental facet.
Decarbonisation
One potential environmental initiative that charities can undertake is decarbonisation. Decarbonisation refers to the reduction of greenhouse gas (GHG) emissions. This can be achieved through a variety of methods, such as:
- Boosting energy efficiency
- Switching to low-carbon energy sources
- Using other environmentally friendly practices
A charity’s carbon footprint can be referred to as its total GHG emissions. The Greenhouse Gas Protocol creates comprehensive international standardised frameworks to measure and manage GHG emissions across public and private sector operations, mitigation actions and value chains.
We will use this protocol as a reference to provide additional information of how charities can begin their decarbonisation efforts.
How to Start Decarbonisation
Charities must measure their carbon footprint before they begin their decarbonisation efforts. They can first quantify their Scope 1 and Scope 2 emissions before progressing to Scope 3 after. Scope 3 emissions usually make up the biggest portion of a charity’s carbon footprint.
Depending on its activities, a charity’s bulk of Scope 3 emissions may be due to purchased goods and services, capital goods, and investments.
We look at a brief definition of Scope 1, 2, and 3 emissions:
| Scope 1 | Scope 2 | Scope 3 |
|---|---|---|
|
Direct Emissions: Sources owned or controlled by the entity, such as stationary and mobile combustions |
Indirect Emissions: Sources owned or controlled by the entity, such as emissions from purchased electricity |
Indirect Emissions: Sources not owned or controlled by the entity but are part of its upstream or downstream value chain, such as the usage of products donated to charities |
Reducing a Charity’s Carbon Footprint
Charities can start tackling their carbon footprint by reducing operational emissions through strategies to drive sustainable practices. Addressing Scope 2 emissions is more likely to be straightforward because of the nature of their operations.
For example, charities can invest in energy efficient upgrades, renewable energy, or reduce energy consumption.
On the other hand, for Scope 3 emissions, charities with advanced ESG maturity should review their entire value chain emissions to determine areas to be reduced through philanthropic actions.
One example is considering conducting detailed research and supply chain ESG due diligence on product suppliers, distribution channels, and products purchased regarding donations.
Delivering a Successful ESG Strategy
Charities should establish intermediate goals, define roles, provide training, and implement the prepared actions routinely to ensure the ESG strategy’s success.
Some core considerations charities should have include:
- Aligning realistic goals with the result using milestones
- Defining roles and responsibilities by identifying suitable members and creating a project management team
- Building ESG capacity through targeted training
- Engaging key stakeholders
- Monitoring achievements and communicating results through sustainability reports
Stage 4: Communicating ESG Performance
Charities are urged to disclose ESG-related information to convey their ESG practices and efforts to donors, employees, beneficiaries, and wider communities.
How to Communicate ESG Performance
Charities can communicate ESG performance through:
| Sustainability Reports and Annual Reports | Policies and Frameworks | Official Websites, Media, and News |
|---|---|---|
| Charities can start by creating an ESG section in their annual reports. They can create sustainability reports to display detailed information on ESG performance after they have sufficient ESG maturity. | Charities can create and disclose ESG-related policies and frameworks that show good quality of governance. | The most flexible method of disclosure is reporting via the charity’s website, social platforms, and media. This provides stakeholders with regular and active updates on their initiatives. |
Determining What to Communicate
Reporting can provide charities with a way for charities to communicate their contributions to sustainable growth. Here is a simple framework to guide charities in deciding on what to communicate to their stakeholders:
| Sustainability Reports and Annual Reports | Policies and Frameworks |
|---|---|
| ESG Governance |
|
| ESG Topics |
|
| ESG Strategy |
|
| ESG Policies |
|
| ESG Initiatives |
|
Adjusting to Recognised Sustainability Reporting Frameworks
Charities that are more advanced in terms of ESG maturity can think about using a recognised sustainability reporting framework when preparing their ESG disclosures.
There are some internationally recognised ESG reporting frameworks and standards today, such as the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, IFRS S1 and IFRS S2.
Considering the non-profit nature of charities, they can consider using the Global Reporting Initiative (GRI) Standards. The GRI allows an organisation to either report its key ESG impacts or focus on certain issues and appeal to a wide range of stakeholders.
| Facet of GRI Standards | Details |
|---|---|
| Objective | The GRI Standards allow organisations to publicly report |
| Structure |
The GRI Standards are a modular system made of 3 series of Standards:
|
| Reporting Process |
There are 3 key steps in the reporting process in accordance with the GRI Standards:
|
| Disclosure Format | Reports using the GRI Standards can be published in different formats and made available across at least 1 location. Reports must have a GRI content index that makes reported information traceable and enhances its trustworthiness and transparency. |
It can be used for all organisations regardless of size, sector, or location. While its use is encouraged, it is not compulsory. Hence, charities should consider how applicable the framework is to the charity and its operational model and its usability while meeting the objectives of the charity’s stakeholders.
Charities should follow GRI reporting principles to achieve the quality and precise presentation of information. This will enable users to make informed assessments of the charity’s impact and its role in sustainable development.
How Can InCorp Help?
By adopting ESG principles, charities can unlock opportunities such as attracting new funding sources, retaining skilled talent, and improving operational efficiency. ESG practices also enable them to engage with stakeholders in more innovative ways, strengthening transparency and accountability. This, in turn, builds greater trust with donors, beneficiaries, and the wider community.
Conversely, overlooking ESG initiatives can lead to risks, including a decline in stakeholder confidence and missed chances for funding and resource optimisation. Embedding ESG principles into their operations enables charities to actively support sustainable development while driving meaningful social impact for the communities they serve.
At InCorp, we specialise in providing expert guidance to charities seeking to enhance their reporting practices. Our team can help you with sustainability reporting to align with the GRI standards, ensuring accurate and transparent reporting that resonates with stakeholders and supports your mission.
From setting targets to align your charity’s goals and outcomes to measuring the performance of ESG topics, we are committed to helping you achieve compliance and improve your impact narrative. With years of experience in sustainability and corporate reporting, we aim to empower charities with the tools and knowledge needed to meet their goals effectively. Contact us to get started today!
FAQs about ESG in Singapore for Charities and IPCs
What are the ESG practices in Singapore?
- Some ESG practices in Singapore include mandatory climate reporting for required companies, as well as the implementation of internationally accredited frameworks.
Is ESG mandatory in Singapore?
- Yes, it is mandatory for all listed companies to disclose their sustainability practices.
What are the major ESG standards?
- Some major ESG standards include the IFRS Sustainability Disclosure Standards and Global Reporting Initiative (GRI) Standards.
Learn how our experts can help you take the first step!
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