Environment: For nonprofits and philanthropies that focus on climate change, sustaining the earth and animals, and environmental justice, their work may meet the highest standards under the environmental lens. However, out of the thousands of nonprofits and philanthropies in the US, those focusing on the environment are relatively few. Other organizations should identify their impact on the environment and consider changing behaviors that contribute to climate change and other negative environmental impact.
Social: Nonprofits are required to have a mission that benefits the public in order to receive their tax exempt status and thus, by definition, nonprofits generally provide more social benefits than for profit organizations. That said, nonprofits are known for less than generous treatment of their employees with low-pay, high stress, and burnout. Can and should nonprofits examine and change the dynamic that allows nonprofits to fight for equity in the outside world but not do the same inside their organizations?
Governance: Good governance is critical for all organizations. How well a board functions can determine how successful an organization will be. Boards are responsible for fundamental decisions that affect the organization’s impact on environmental and social issues. For example, how should an organization with reserves or an endowment invest their funds? Should investments be aligned with mission or go beyond mission to address social and environmental issues? Boards also determine executive compensation. Should they consider the disparity between the ED’s and other employees’ compensation as part of their determination?
While nonprofits may be careful to avoid investing in areas that are directly in conflict with their missions, this view has generally not broadened to ESG investing.
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