Esg Toolkit Ngos

ESG Toolkit
for NGOs
Content Page
1. What is ESG? 2
2. Why does ESG matter for NGOs? 4
3. Stakeholder Engagement and Materiality Assessment 6
4. Setting of Sustainability Strategy and Targets 9
5. Risk and Impact of Climate Change 11
6. Health, Safety and Well-being of Employees 16
7. Impact on the Community 18
8. How to Report on ESG Matters 20
9. Board’s Oversight and Responsibilities 22
10. Appendix 1: The 17 Sustainable Development Goals 25
11. Appendix 2: Reference Links to GRI and ISSB 26
ESG Toolkit for NGOs 1

1 What is ESG?
ESG stands for Environmental, Social, and Governance and is commonly thought of as ‘sustainability’.
It has largely become mainstream in the business world globally - and ESG is also applicable to NGOs.
Your NGO is already engaging and working with ESG issues, but might not call or frame these as ‘ESG'
issues. With ESG continuing to see increased attention from corporate partners and funders, this Toolkit
aims to shed light on how ESG is applicable to NGOs, and how NGOs can leverage ESG to connect with
stakeholders and further their mission.
ESG includes your organisation’s actions towards your staff, beneficiaries, funders and the communities
you operate in. ESG issues also represent risks and opportunities that will impact your NGO’s ability to
create positive long-term value.
The table below summarises some of the most common ESG topics in each of the three pillars (i.e.
environmental, social and governance) for typical NGOs:
Environmental
Carbon emissions Impact of climate change Use of natural resources
Collaborating with staff and other Helping beneficiaries prepare

Pollution and waste
NGOs on environmental issues for climate’s impacts
Social
Human capital Health, safety and well-being Training and development
Engagement with stakeholders and

Relationship with beneficiaries Data security
communities
Governance
Board diversity Executive pay Responsibility and accountability
Audit, risk and internal controls Anti-corruption Policies and procedures
Each of these three pillars is important and has topics that overlap with other pillars. For the purposes of
this Toolkit, we will focus more on the environmental and social pillars.

1 What is ESG?
An Overview of ESG’s Background

You may have noticed business behaviour and Corporate Social Responsibilities (CSR) activities have
expanded in recent years, from traditional philanthropy and volunteering to cover a more in-depth
incorporation of ESG and sustainability. This includes evaluating and acting on climate’s impacts to the
organisation, listening and acting on staff feedback, and strengthening governance mechanisms to build
trust.
The ESG acronym was introduced in the mid-2000s in a United Nations report1, but the concept itself is
not new. Corporates have largely been dealing with ESG issues, though not as integrated as they are
nowadays, and NGOs have long been tackling work that relate to environmental and social issues. The
formalisation of the United Nations’ Sustainable Development Goals in 2015 further shed light on the
idea of shared and sustainable prosperity for people and the planet 2, in line with the ESG theme.
A combination of factors, including increased awareness and pressure from consumers and employees
on corporates to operate more responsibly, solid ESG practices boosting financial performance 3, and
continued investor interest and pressure, have led to ESG’s vigorous development and sustained growth.
In response to this shift, companies from the world’s largest conglomerates to local SMEs have been and
continue to articulate their ESG performance to investors and stakeholders. Over 60 stock exchanges in
the world now have written ESG guidance4 and many require listed companies to comply with ESG
related regulation. Hong Kong Exchanges and Clearing Limited (HKEX), as an example, first introduced
its ESG Reporting Guide in 2013, and continues to update its disclosure requirements 5.
In a move to standardise ESG metrics and reporting, ESG’s growth has also led to the creation and
adoption of several international ESG frameworks, including the Global Reporting Initiative (GRI)
Standards and the International Sustainability Standards Board (ISSB). The latter is actively being
incorporated into local jurisdictions’ reporting requirements, including for Hong Kong.
Global Reporting Initiative (GRI)
GRI was founded in 1997 and created the GRI Standards, one of the world’s most widely
used standards for sustainability reporting, it is used by organisations, including Apple, the Walt
Disney Company, and the Young Men’s Christian Association (YMCA). This independent
organisation works with a range of stakeholders, including businesses, investors, civil society, and
policy makers to develop the GRI Standards. They are headquartered in the Netherlands with
seven regional offices, including Hong Kong (Greater China Region) 6.
International Sustainability Standards Board (ISSB)
ISSB, established by the IFRS Foundation in 2021, aims to deliver a comprehensive

global baseline of sustainability-related disclosure standards. As there are many sustainability
standards on the market, the ISSB’s significance is in its action to harmonise standards - this will
allow ESG information to be more consistent and comparable. The inaugural standards were
issued in June 20237.
1 Forbes, Demystifying ESG: Its History & Current Status

2 The 17 UN SDGs
3 ESG and Financial Performance: Uncovering the Relationship by Aggregating Evidence from 1,000 Plus Studies Published between 2015 - 2020
4 Sustainable Stock Exchanges
5 HKEX Rules and Regulations
6 About GRI
7 ISSB issues inaugural global sustainability disclosure standards
1 Why does ESG matter for NGOs?
ESG is becoming a necessary practice for businesses. It requires them to be transparent with
stakeholders and presents important opportunities for NGOs.
As businesses become more serious about their ESG efforts, they will be increasingly conscious of which
NGOs to work with, in order to align with their ESG and overall strategy. Investors familiar with the
corporate world and ESG’s importance will also begin to consider ESG in other organisations they have a
stake in, including NGOs. Some NGOs are picking up on the ESG movement themselves and more
explicitly adopting ESG.
Meeting stakeholder expectations
In response to growing demand from stakeholders for NGOs to be held more accountable, including from
funders, partners, and the public, NGOs have cause to strengthen their public accountability. The
adoption of ESG practises, along with ESG reporting, will increase NGOs’ transparency and credibility as
important contributors to sustainable development.
Funders consider ESG integration key to facilitating long-term sustainability and profitability. Wider
stakeholders are also expecting increased ESG actions.
‘Responsible investing is becoming increasingly common among both for-profit and non-
profit organisations. A 2022 ESG survey found that over half of foundation assets are
allocated to ESG investments’.
Callan 8th Annual 2022 ESG Survey
‘Consumers and employees wish to see organisations do more on ESG. 83% of

consumers think companies should be actively shaping ESG best practices and 86% of
employees prefer to support or work for companies that care about the same issues they
do’.
PwC Consumer Intelligence Series 2021 Survey on ESG

1 Why does ESG matter for NGOs?
Increased relevance and connectivity
Corporates are looking to work together with mature NGOs with good governance and a clear strategy.
A clear ESG and overall organisational strategy makes it easy to identify points of synergy, increasing the
potential of more effective collaborations between NGOs and corporate partners.
It is important how your NGO relates and communicates to your stakeholders, including funders, partners
and the public. With greater awareness and adoption of ESG, NGOs gain greater understanding on the
common language of corporates and funders. Furthermore, NGOs can also better relate and
communicate with stakeholders through using the same language or ESG framework. While the
harmonisation of global sustainability standards (for example, the ISSB) is yet to be mandated on NGOs,
it signals an increase in consistent ESG reporting - which is in line with stakeholders’ expectation.
Hence, by familiarising with and adopting ESG, NGOs build a stronger common language with their
stakeholders and this may help to foster more meaningful partnerships.
ESG presents a holistic view of how an NGO carries out its mission
ESG may seem irrelevant to NGOs when their core mission is already closely related to an ESG issue,
but ESG extends beyond an NGO's purpose - it is also about its operations. In other words, a more
holistic view of how an NGO is carrying out its mission.
The work of NGOs should not only aim to enhance society’s well-being, but to accomplish this goal in a
sustainable manner. For example, an NGO that assists in providing fresh water to developing countries
may need to consider its relevant environmental impacts and labour practises in carrying out that
mission8.
Further, ESG elements in how an NGO operates (for example, in the purchasing of supplies, or the
quality of governance) pose risks and opportunities that translate to practical concerns and topics of
interest for funders. These topics also correlate with the matter of funding.
Related to the earlier point on increased connectivity, having a firmer understanding of ESG, its
implications, and your NGO’s role may also yield more effective communication and alignment with
funders. By executing ESG strategically and operationally in your NGO, you will also be contributing to
the ESG performance of your funders.
This ESG Toolkit aims to provide an overview of ESG tailored for the NGO audience and practical
takeaways to support NGOs in strengthening their implementation of ESG.
8 Overseeing environmental, social and governance matters: A not-for-profit boards of directors framework

2 Stakeholder Engagement and Materiality Assessment
Many corporates undertake an exercise called SEMA (Stakeholder Engagement and Materiality
Assessment), which can also help an NGO to identify its sustainability focus areas and overall
sustainability strategy. Active engagement with stakeholders leads to an understanding of stakeholders'
needs and expectations, which can help an NGO improve its organisation's efficiency and effectiveness.
Defining an NGO stakeholder

A stakeholder can be thought of as any individual or group that has an interest in your NGO. They may
be directly involved, such as employees, board members, funders, corporate partners, and beneficiaries.
They may also be more indirectly involved, such as volunteers, corporate partners on one-off
partnerships, media contact points, and the wider local community.
Put another way, stakeholders are individuals or groups that your NGO has a significant effect on and are
in a position where their actions can have significant effect on the ability of your NGO to effectively carry
out its work9.
Why is SEMA important?
Staying relevant and

Informs priorities Builds credibility
connected
Active and intentional SEMA results will not only be Through conversing and
engagement with an asset to include in the understanding stakeholder
stakeholders will help NGOs NGO’s ESG report - insights needs and thoughts, SEMA
stay abreast of stakeholder gained from SEMA will be will indirectly build credibility
priorities and concerns, as useful in informing an NGO’s and accountability. This
well as build connection and ESG priorities, which will in serves to deepen trust
relationships with turn facilitate development of between the NGO and its
stakeholders. a clear overall sustainability stakeholders.
strategy.
Tips on engaging your stakeholders10

Identify your stakeholders and slice and dice as relevant
After identifying your stakeholders, NGOs can consider identifying relevant sub-groups. As different sub-
groups are likely to have different priorities and concerns, pinpointing sub-groups can facilitate more
effective communication.
Sub-groups of funders may include major funders, first-time funders, and monthly funders. Major funders
may care more about the NGO’s long-term strategy and governance, whereas monthly funders may care
more about the NGO’s impact reporting and the effectiveness of their work. Slicing and dicing stakeholder
groups may assist an NGO in identifying what your stakeholder groups care about to a more specific
degree.
9 GRI G4 NGO Sector Disclosures

10 Key Nonprofit Stakeholders and How to Steward Them - Donorbox
Identify your communication strategy
As different stakeholder groups will have different priorities, NGOs can target relevant communications
accordingly. Not every campaign needs to be shared with every group - it may be more effective to have
selective and personalised communications to build relationships.
To facilitate effective communication with stakeholder groups, NGOs can assign a specific point of contact
to each stakeholder group. This will serve to facilitate clarity and avoid a case where several staff
members reach out to the same stakeholder group with potentially conflicting messages.
Points to consider for your SEMA exercise

Prioritisation questions for all stakeholders
• Ask stakeholders to rate the significance of relevant ESG topics (for more details on relevant
ESG topics, see the ‘Board Oversight and Responsibility’ section of this Toolkit).
• Consider asking stakeholders for their view of your NGO’s current performance on these issues.
This will provide a more holistic picture of perception, expectation, and actual performance.
• Use a standardised scale, for example 1 to 6, 6 being the most material, so this quantitative data
can be analysed afterwards.
• Consider including a short description of the issue for the purpose of aligning individuals filling in
the survey on ones that may be up to interpretation.
• Remind stakeholders there are no correct or incorrect answers to these questions. This is based
on their current view of your NGO and no additional knowledge is required.
Tailored open-ended questions
• Echoing a prior point that stakeholder groups (and sub-groups) will have different priorities and
concerns, consider tailoring questions to these groups to deepen your understanding of their
perspective.
• For example, asking your NGO’s community beneficiaries about which initiative they personally
found most helpful may shed light on which ones are making the most impact.
• Relating to strategy and priority areas, your NGO’s funders may be a relevant group to obtain
feedback on these topics.
• Regarding specific environmentally friendly measures that can be implemented, your NGO’s staff
may be most familiar with the practical day to day operations and could speak to this.

Executing the SEMA exercise
1. Surveys: Online surveys are an accessible method to run the SEMA exercise. As it is a less personal
medium, be mindful to questions stakeholders may have.
2. Focus groups / live polling and discussions: If resources are available, a more in-depth exercise
can be considered, where more planning is required but sessions may yield additional insights. By
bringing individuals from the same stakeholder group together, whether in person or online, and
creating an environment where they can discuss their polling results (i.e. how they rated the
significance of ESG issues) - NGO representatives can take notes on areas they agree and disagree
on. A focus group creates space for more lively discussion and this avenue may help shed light on
topics stakeholders feel strongly about, along with more underlying context.
3. After the exercise: Analyse the insights - you may choose to split the data according to stakeholder
group, for example by internal and external stakeholders.
4. Put these insights into action: Incorporate findings into the NGO’s overall organisational and ESG
strategy. Consider also sharing the results with your stakeholders to foster trust and continue the
conversation.

3 Setting of Sustainability Strategy and Targets
A sustainability strategy is key to aligning both internal and external stakeholders on priorities and the
integration of ESG in your NGO. The material topics determined from your stakeholder engagement
exercises are important in informing your organisation’s ESG and overall strategy. Sustainability targets
come alongside to support the execution of the sustainability strategy, and these both serve to increase
accountability.
Why have a sustainability strategy?12

• Engage internal and external stakeholders: Clarity on your NGO’s direction and long-term goals on
sustainability help external stakeholders make sense of your current activities. Transparency on the
‘why’ and ‘how’, and not just the ‘what’, help build clarity, accountability, and even support through
offers of expertise.
• Increase alignment with your staff: A clear sustainability strategy also helps align internal
stakeholders, especially your staff, on the larger picture of their day-to-day work. With greater clarity
and personal investment on the overall strategy, this could boost employee morale and ownership of
work.
• Maximise performance with clear priorities: A by-product of a clear sustainability is clear focus
areas - there will be increased coherence on which areas need prioritisation, which will help drive
decisions on resource allocation. This facilitates more efficient work among staff when they are faced
with competing priorities and more meaningful conversations with stakeholders.
Reminders on developing your sustainability strategy

When developing your sustainability strategy, do leverage your NGO’s existing mission and vision. There
is no need to reinvent the wheel - your sustainability strategy is meant to be aligned and consistent with
your NGO’s overall strategy, and link to the organisation’s overall objectives.
Remember to consider highly material issues identified from your SEMA exercise (see the ‘Stakeholder
Engagement and Materiality Assessment’ section of this Toolkit). These results will help inform priorities
for your NGO's sustainability strategy, as well as its wider organisational strategy.
12 Sustainability Strategy: Simplified

3 Setting of Sustainability Strategy and Targets
Why set sustainability targets?

Sustainability targets support the execution of your sustainability strategy with clear objectives.
Furthermore, stakeholders view targets as a sign of ambition and tool for accountability.
Guidance on sustainability targets

• Highlight the ‘Specific’ and ‘Measurable’ part of the SMART framework 13, targets should include
specificity in not only the ‘what’, but also the ‘when’ (i.e. a deadline year, and if the target includes a
percentage, what year is the starting point to compare it against), and also the ‘who’ - assigning a
target to a designated person who can take charge of it.
• In addition to the SMART framework, targets should be relevant to material ESG issues and the NGO’s
top priorities. In other words, the achievement of the target advances both the NGO’s sustainability
strategy, as well as the NGO’s core mission.
• If you are just starting out, consider setting qualitative targets first, before moving into quantitative
targets. Qualitative targets are more directional, while quantitative targets are more rigorous and
measurable and can enable more robust reporting.
• For long-term targets, consider breaking down a large goal into smaller tasks or interim targets to make
it more manageable.
SDGs as a framework to reference

The United Nations’ Sustainable Development Goals (SDGs) can serve as a helpful reference for your
NGO’s sustainability strategy and target setting exercise. The SDGs may be more relevant for an NGO
compared with other international sustainability frameworks, given their recognition as common language
across sectors, and a more comprehensive coverage of high level topic areas that NGOs also have
a stake in.
In selecting the most relevant SDGs to your NGO14,
• Identify the SDG targets you can best contribute to advancing. Not all 17 SDGs will be equally
relevant and applicable to your NGO. For example, if you are an Education focused NGO, consider
which target(s) under ‘SDG 4 Quality Education’ your NGO is most well placed to advance, and use
those targets to formulate your strategy and inform your targets.
• On the other hand, consider your NGO’s priority risks and the main areas of any negative impact to
people or the environment as a result of your NGO operations. For example, if you are an Education
focused NGO and tutoring activities are accompanied by large amounts of printouts – you can consider
selecting SDG 12 Responsible Consumption and Production Target 12.5 (a target focused on reducing
waste generation through prevention, reduction, recycling and reuse15) to work on.
Note similar to how the 3 pillars of ESG, the SDGs are also very much interconnected and should not be
tackled in siloes. For more context on the SDGs, please refer to the Appendix 1: UN SDGs.
13 SMART (Specific, Measurable, Achievable, Relevant, Timebound): goal methodology that helps guide individuals to
achieve their goals
14 Integratingthe SDGs into Corporate Reporting: A Practical Guide ESG Toolkit for NGOs 10
15 SDG 12 Ensure sustainable consumption and production patterns
4 Risk and Impact of Climate Change
In recent years, the awareness of climate change has pivoted from how organisations need to be mindful
of their negative impact on the environment to how climate change will pose real risks and opportunities
to organisations. NGOs should increase their awareness to these imminent issues and have action plans
and tools in place to adapt their work to meet these challenges.
How might climate change affect your NGO’s work and the communities you
are serving?
Examples of how rising temperatures may impact human health16
• Higher temperatures may cause occupational health hazards, especially for those working
outdoors and cause more heat stroke and dehydration.
• Greater demand for electricity may lead to blackouts and brownouts that affect people who rely on
electricity.
• Greater rates of violent crime may occur on hotter days.
How rising temperatures and extreme weather events may affect NGOs’ work
• For organisations like Habitat for Humanity: hot temperatures will affect volunteers’ ability to build
homes, and where it focuses its operations and volunteer efforts.
• For sustainable agriculture organisations like One Acre Fund and Plant with Purpose: rising
temperatures will affect crop yields and communities’ access to food, and water shortages may
cause crop failures.
• For education focused organisations like Pencils of Promise, extreme weather events will affect
children’s access to going into school and web access if power lines are down.
• For water focused organisations like charity: water, warmer water leads to higher evaporation rates,
which may decrease drinking water supplies.
One common thread from the above examples is an environment with higher volatility, caused by more
frequent and apparent climate related risks and disruptions. This stands in contrast to a relatively stable
societal environment.
Generally, NGOs are more equipped to step in for man-made accidents and less for natural disasters -
NGOs will need to rethink how to build contingency for the latter as climate risks and opportunities will
grow to become more apparent on our current trajectory.
Climate risks and opportunities

The two main types of climate-related risks impacting NGOs can be categorised into what’s called
‘physical’ and ‘transition’ risks.
Physical risks arise from the physical effects of climate change17. Droughts, floods, sea level rise, rising
temperatures are all examples of physical risks.
16 Being Prepared for Climate Change – Checklists of Potential Climate Change Risks
17 Adapted from the Open Risk Manual
Transition risks are risks that come with a societal shift toward a more climate-friendly future18. Policy
and legal, technology, market, and reputation risks fall under transition risks. Examples specific to NGOs
include, increased funder and stakeholder expectations on ESG integration or areas relating to ESG, such
as data transparency and the increased adoption of renewable energy (which may be particularly relevant
for NGOs working in the clean energy field).
Identifying your climate risks and opportunities

You may reference the below graphic for a process to identify physical and transition risks that are
relevant to your NGO19,
Consider possible physical risks: Consider whether any of

these risks impact the
NGO’s or its operations:
Heat Water Sea level
Consider waves Stress rise
NGO Physical risk: Does it affect the
focus area NGO’s operations, labour or Identify
Flooding Frequency and severity
of extreme weather supply chain etc? relevant
physical and
Transition risk: Does it affect transition
Consider possible transition
Consider risks: the NGO’s compliance, risks
geographic operational costs, depreciation parameters
location
of assists or revenue etc?
Policy and legal Technology
Level of impact: To what
Shifting societal preferences and extent does it affect the NGO’s
expectations on NGOs business operations?
Use your NGO’s focus area and your geographical locations of operations and service as the guiding
topics to inform which risks are most relevant to your organisation.
In the second box from right, consider the below factors to help you prioritise risks20,
• Severity: If the event will lead to severe impact for the NGO, the NGO’s stakeholders and its
community, consider it as higher priority. Factors under this include financial loss, loss of strategic
partners, and reputation damage.
• Likelihood: If the event has a higher chance of happening, consider it as higher priority.
• Vulnerability: If the event will put the NGO in a vulnerable position with significant time and resources
needed for recovery, consider it as higher priority.
Note that opportunities are also included in the title of this sub-heading because when an organisation
is well-prepared for a risk, they can well turn that into an opportunity.
Opportunities may also arise from cross-sector action. For example, with ESG becoming more
mainstream in the corporate world globally, corporates’ adoption of renewable energy will likely increase.
NGOs working in this area of affordable and clean energy (e.g. We Care Solar, Give Power) may see
increased demand for collaborations and smoother efforts to scale up their operations and impact.
18 Adapted from GRESB

19 Adopted from HKEX Guidance on Climate Disclosures
Examples of real life non profits responding to climate impacts
Oxfam Hong Kong

Advocacy for sanitation workers who face extreme heat at refuse collection points 21
Oxfam Hong Kong is advocating better conditions for sanitation workers who often work under extreme
heat conditions, amplified by record-breaking high temperatures. Poor ventilation and a lack of
appropriate resting facilities for workers to cool down exacerbates the issue. Oxfam published its study
‘Sanitation Workers’ Working Conditions at Refuse Collection Points (RCPs) in Extreme Heat’, which
found that the average temperature in RCPs is 32 °C, and urges climate adaptation measures for the
most vulnerable people. As for practical action, Oxfam Hong Kong is also distributing portable neck or
waist fans to 4,000 sanitation workers.
Red Cross
Climate Checklist for programme planners to maximise long term impact22
The Red Cross’ work focuses on disaster relief and a lesson shared by the organisation is short-term
interventions yield only short-term impact, and consideration of future climate scenarios (see section
below for more details) is needed for meaningful long-term change.
Sri Lanka Red Cross Society (SLRCS) has put out a Climate Smart Programming Checklist
to ‘mainstream climate change adaption and mitigation into its programmers’ and strategically incorporate
climate change’s impact and analysis into its work23.
The purpose of the checklist is to guide users to identify and address climate change issues
systematically at each stage of the project cycle to ultimately maximise the effectiveness
of initiatives.
This list may be a helpful reference on climate change’s importance for an NGO’s focused on disaster
relief:
Integrating Climate Change in project / programme cycle – why is it important?

Integrating climate change is a process. It’s objectives are to:
1. Ensure climate risks to programme / projects are considered and the project / programme
activities and approaches are adjusted to address these risks.
2. Reduce risks posed by current and future climate trends.
3. Ensure project / programme activities are appropriate, effective and do not harm, ie do not
exacerbate vulnerabilities of communities.
4. Strengthen sustainability and impact or the project / programme.
Source: Red Cross’ Climate Smart Programming Checklist
21 Extreme heat at refuse collection points leave two-thirds of sanitation workers unwell – Oxfam HK
22 Climate Smart Programming Checklist for Practitioners and Programme Planners
23 Ibid.
A selected portion from the checklist:
1. Environmental context
a. Have you considered what are the current weather-related hazards* affecting the target □Y □N
area? i.e. what risks may be exacerbated by ongoing or expected changes in climate?
*Weather-related hazards could be changing rainfall patterns, cyclones, (also known as

typhoons and hurricanes), thunderstorms, hailstorms, tornados, blizzards, heavy snowfall,
avalanches, coastal storm surges, floods including flash floods, drought, heat waves and
cold spells, other hydro-meteorological hazards.
2. Socio-Economic and Cultural Context
a. Has there been an identification of social or economic groups within the community □Y □N
that are particularly vulnerable to the (weather-related) risks that may be exacerbated
by climate change?
b. Have you assessed how the current climate patterns and future climate scenarios will □Y □N
affect livelihoods?
Note: In analysis consider the following:

• Who will get most affected? □ Y □ N
• How will they get affected? □ Y □ N
• How will this affect related industries? □ Y □ N
Source: Red Cross’ Climate Smart Programming Checklist

Supplementation information: Climate scenarios
You can think of the phrase ‘different climate scenarios’ as referring to future scenarios with different
climate projections. For example, one climate change scenario is ‘Net Zero’, a stringent scenario where
the world limits global warming to 1.5C. Another climate change scenario is ‘Business as usual’, where
current policies continue and lead to higher climate risks 24.
Scenario analysis is a more advanced tool which NGOs can use to formulate strategies to different
climate scenarios.
• Rather than an exercise to predict the future, scenario analysis is a tool for your organisation to
formulate effective plans that stand up well to near term and future climate risks 25.
• The initial process of setting up a scenario analysis will not be without its challenges, but in the long
run it will be well worth the effort for how it prepares your organisation’s response to climate change.
• NGOs can start with qualitative scenario narratives or storylines to explore climate change implications
to the organization26.
To prepare for different conditions, consider developing two scenarios: one stringent, and another
business-as-usual.
Here is an overview of factors from each scenario27. Even if you don’t undertake scenario analysis at this
stage, the information below may serve provide a helpful backdrop for context to formulate your priority
risks in the prior ‘Identifying your climate risks and opportunities’ section.
Stringent scenario Business-as-usual scenario
Global environmental Controlled global temperature Continued rise in global

changes increase (about 1.7C by 2060) and temperature (about 2.4C by
sea level rise 2060) and sea level rise
Climate change impacts Stable (e.g. decrease in crop yield of Significant (e.g. decrease in
2% by 2080) crop yield of 14% by 2080)
Economic development Inclusive – environmental limits Profit driven and fossil fuels
and models considered, shift to a renewable dominant – resulting in high
energy driven economy levels of greenhouse gas
emissions
Climate policies and The norm for countries, corporates, Policy inertia – lack of climate
implementation organisations to have relevant and policies and implementation due
detailed climate pledges that are being to institutional or other obstacles
implemented
Level of commitment and Organisations (NGOs, governments, Organisations (NGOs,

collaboration corporates) committed to working governments, corporates) siloed
together to achieve lower-carbon and lack of system change
operations
24 NGFS Scenarios Portal

25 Guidance on Climate Disclosures – HKEX
26 TCFD Technical Supplement on Scenario Analysis ESG Toolkit for NGOs 15
27 Refer to page 17 of Guidance on Climate Disclosures – HKEX for a more complete picture
5 Health, Safety and Well-being of Employees
Health, safety and well-being of employees are a foremost issue in the social pillar (the ‘S’) of ESG. In
addition to advancing the NGO’s mission, it is important to act within the NGO’s operations including
paying attention to staff needs.
Employees’ health, safety and wellbeing are the backbone of an organisation – positive strides in this
area lead to greater team morale and lower rates of burnout and turnover.
Some granular elements and examples of initiatives under this topic include:
• Working environment: Hygienic space, air quality, natural light, an organised system to recycle or
dispose of old files and materials.
• Mental health support: Expert training on topics relevant to NGO staff, such as dealing with high stress
working environments and avoiding burnout, subsidised professional counselling, etc.
• Workplace activities and resources that foster well-being: Resting facilities, mindfulness activities,
such as stretching and meditation.
• Remote working options: Flexibility in terms of start and end time for work, as well as remote working
options.
• Open conversations: Availability and receptibility of two-way conversation between staff and
leadership - staff are the ones closest to the ground and dialogue fosters trust and ownership.
• Training: Availability, quality, and quantity. A tangible way to invest in employees, this could look like
the NGO stepping in to subsidised conferences or a course for personal and professional.
Development.
• Gender equality: Disclosing gender pay ratio, percentage of women in leadership positions, and
taking steps to improve these areas, such as enacting a mentorship programme.
• Whistleblower policies: To voice out concerns and facilitate a fraud free working environment.

5 Health, Safety and Well-being of Employees
Case study – Greenpeace28

Safety and anti-pandemic response: In response to the pandemic, Greenpeace launched a ‘Duty of
Care team’ to specifically focus on staff needs and step up care on physical and mental health across
Greenpeace’s global network of 26 independent regional organisations.
Wellness: An Employee Assistance Programme was launched in 2021 for all staff. The Programme
provided employees with resources and support on well-being from a more holistic angle, including
emotional health and access to counselling sessions.
Case study – Tung Wah Group of Hospitals29

Inclusive hiring: Among other ESG initiatives, one to highlight from Tung Wah Group of Hospitals
(TWGHs) is a policy that encourages employment of people with disabilities since 2009. This relates
to the diversity and inclusion aspect of the social pillar of ESG. In addition to encouraging mechanisms
in the hiring process that gives higher consideration to applications from individuals with disabilities,
TWGHs also strives to outsource, where practicable, to operators that employ people with disabilities.
28 Greenpeace International Annual Report 2021

29 Tung Wah Corporate Social Responsibility
6 Impact on the Community
Despite many NGOs having a public mission aligned with creating positive impact in the community, even
for established NGOs there is often a lack of systematic and standardised consensus on reporting impact
with clear metrics and frameworks.
The target audience, complexity, and depth of each NGO programme create the potential for multiple
definitions of impact, which can result in many ways to conduct an impact assessment. Meanwhile,
studies have demonstrated that funders are demanding NGOs to have more rigorous impact
assessments. Thus, there is a strong need for wider adoption of consistent ESG-related frameworks to
inform stakeholders more effectively.
Impact assessment is valuable both to funders and for an NGO’s internal decision-making. Conscious of
the challenges posed by resource constraints and lack of expertise, below we have summarised
perspectives and examples that can help you begin to consider what impact assessment will look like for
your organisation.
• When assessing impact, go down to project or programme level rather than assessing general overall
impact of the NGO. This facilitates greater specificity30.
• Consider collaborating with university researchers or corporate consultants who can provide additional
expertise to tailor impact assessment for your NGO.
• The how - avenues of impact assessment include interviews, focus groups, statistical techniques and
randomised control trials (RCTs). For example, some NGOs carry out impact assessments through
RCTs to compare impact outcomes between a certain community and a control group (communities
that do not receive the intervention).
Other frameworks to consider

Social Return on Investment (SROI)31
SROI is one approach used to measure value, especially social value, such as social equality and
environmental sustainability. What sets it apart is its ability to assign a monetary value to these impacts in
relation to their corresponding cost.
30 Impact assessment in a non-government organisation – CIMA

31 HKI-SIA SROI
6 Impact on the Community
Social Return on Investment (SROI) focuses on answering five key questions:
1. Who changes? Identifying all stakeholders affected by the investment.

2. How do they change? Note the starting point is what changes stakeholders experience, not the
NGO’s set targets.
3. How do you know (the change is as a result of your investment)? Valuing transparency and an
evidence-based approach.
4. How much is you? Taking into consideration the larger picture and other inputs and influences.
5. How important are the changes? Discussion on relative value and impact, as well as which
changes are most important.
You can use the SROI approach to gain a more holistic understanding of your NGO’s impact on the
community by simply starting with a conversation within your NGO. An example 32:
How do you identify your stakeholders?
Hold a group discussion Difficulty level: easy Time: 30 mins
1. Bring together a small group of staff, volunteers, board members, beneficiaries and the wider community.
You may find this easiest to do as part of a regular management meeting or perhaps a planned
consultation event.
2. Ask your group ‘who are the people and organisations we make a difference to?’ and list the answers on
a flip chart.
3. Prompt for more by asking ‘who do we affect indirectly?’ and ‘who do we affect in a negative way?’.
4. Finally ask which of these groups and organisations you currently talk to or liaise with and which you do
not. Are there any people or groups or organisations you may make a big difference to but who you don’t
talk to? What would you like to do about this?
Total Impact Measurement and Management

PwC’s Total Impact Measurement and Management (TIMM) framework 33 measures non-financial impacts
to identify opportunities and assists organisations in maintaining a positive impact on society. TIMM
achieves this by valuing impacts across four main quadrants: social, environmental, tax, and economic.
This approach allows for more effective communication with different stakeholders.
The social, environmental, and economic impact are especially relevant for NGOs. When your
organisation is deciding between different options, such as scaling up an existing programme, or
beginning a new programme and refining existing methods, or adopting a new technology-based solution,
consider it from these angles to help inform you on a more holistic view each choice’s impact.
• Social impact: The consequences of your NGO’s activity on society, such as health, education,
livelihoods, and community cohesion.
• Environmental impact: Your NGO’s effect on natural capital, such as greenhouse gas (GHG) and
other air emissions, waste, and water use.
• Economic impact: Your NGO’s impact on livelihoods and economic opportunities, such as on jobs
and upskilling.
32 For further reading: Starting out on Social Return on Investment – a guide to SROI
33 PwC Total Impact Measurement and Management
7 How to Report on ESG Matters
NGOs are encouraged to disclose ESG matters regularly to build accountability on what funders are
increasingly seeking.
There are several benefits that come with ESG reporting
• Funder angle: Accountability, transparency, stakeholder confidence

• Progress/effectiveness angle: Clarity on actual impact and impact of NGO’s operations
• Talent angle: Recruitment and retention, job satisfaction
• Morale angle: Organisation culture, morale, alignment
• Community perception: ‘Brand loyalty’, perception by public
Consider gradually increasing disclosure of ESG matters in your existing annual or impact reports.
Although there is no uniform standard on how ESG matters for NGOs are required to be disclosed,
you may reference the summarised guidance in this Toolkit as well as the below principles 34 for effective
ESG reporting.
• Conciseness: Focus on the priorities of the NGO and stakeholders, as well as material information.
Consider a one pager summary of ESG matters to ease digestibility to readers.
• Consistency: Consistent metrics and qualitative indicators allow for a clearer understanding of the
NGO’s progress over time.
• Comparability: Reference how your peers are disclosing to enable funders and stakeholders to draw
insightful comparisons on performance.
GRI as a framework to consider

Many businesses, in Hong Kong and globally, are actively using the Global Reporting Initative (GRI)
as a framework to report on ESG matters. NGOs can also consider the GRI, as it has put out guidance
tailored for the NGO sector. As broader context, there is currently no standard and mainstream practice
on social issues reporting that we are aware of.
34 Adapted from the SDG Practical Guide

7 How to Report on ESG Matters
Below is an overview of content GRI has organised for the NGO Sector. An example of a NGO who has
disclosed according to GRI is the YMCA of Greater Toronto. If your NGO is not yet ready to report, this
could serve as a helpful resource to start considering and actively discussing among your staff.
Specific standard disclosures

Category Economic Environmental
Aspects* • Economic Performance + • Materials
• Market Presence • Energy
• Indirect Economic Impacts • Water
• Procurement Practices • Biodiversity
• Resource Allocation + + • Emissions
• Socially-Responsible investment + + • Effluents and Waste
• Ethical Fundraising + + • Products and Services +
• Compliance
• Transport
• Overall
• Supplier Environmental Assessment
• Environmental Grievance Mechanisms
Category Social
Sub- Labor Practices and Human Rights Society Product Responsibility

categories Descent Work
Aspects* • Employment • Investment • Local • Customer Health and Safety
• Labor/Management • Non-discrimination Communities • Product and Service Labelling
Relations • Freedom of Association • Anti-corruption+ • Marketing
• Occupational Health and Collective • Public policy Communications +
and Safety + Bargaining • Anti-competitive • Customer Privacy +
• Training and • Child Labor Behaviour • Compliance
Education + • Forced or compulsory • Compliance • Affected Stakeholder
• Diversity and Equal Labor • Supplier Engagement + +
Opportunity • Security Practices Assessment for • Feedback, Complaints
• Equal Renunciation for • Indigenous Rights Impacts on and Action + +
Women and Men • Assessments Society • Monitoring, Evaluation and
• Supplier Assessment for • Supplier Human Rights • Grievance Learning + +
Labor Practices Assessment Mechanisms for • Gender and Diversity + +
• Labor Practices • Human Rights Impacts on • Public Awareness and
Grievance Grievance Mechanisms Advocacy + +
Mechanisms + • Coordination + +
*The word topic is used in the Guidelines to refer + G4 General Standard + + Sector specific Aspects.
to any possible sustainability subject . The word Disclosures and G4 Aspects
Aspect is used in the Guidelines to refer to the where sector specific content
list of subjects covered by the Guidelines. has been added.
A dated study in 2005 on NGO’s use of GRI guidelines for sustainability reporting found that benefits of
producing a sustainability report resulted in:
• Ability to identify and begin to quantify the organisation’s most significant areas of environmental,
social, and economic impact, and its organisational strengths and challenges relating to sustainability.
• Enhanced ability to monitor progress over time through establishment of a quantifiable baseline of
current performance relating to social, economic, and environmental sustainability.
• Greater awareness among staff on the organisation’s impact through discussions on data collection
relating to sustainability.

8 Board’s Oversight and Responsibilities
The Board is ultimately responsible for ensuring ESG issues are considered in an NGO’s strategy and the
effective governance of ESG issues. Good governance facilitates accountability and credibility, especially
with NGO Boards overseeing large amounts of funding.
Given NGOs have governance structures with existing committees, it may not be necessary to set up a
new ESG committee to review existing ESG matters. Rather, considering how to weave ESG and board
oversight of ESG matters into the existing governance structure, your organisation can consider setting up
a ESG Task Force. This Task Force could leverage individuals already part of your committee structures
to best make use of resources. They would oversee ESG matters, such as staff training, whistleblower
procedures, and initiatives designed to reduce energy consumption.
In addition, many NGOs have advisors for legal or accounting matters. Your organisation can consider
having an ESG advisor. With growing attention on ESG combined with a general lack of expertise to
drive ESG development, an external advisor has the potential to provide practical guidance for NGOs to
further their ESG work. While it is impractical to have a corporate’s version of a Chief Sustainability Officer
in place at an NGO, your organisation can consider bringing in an external ESG advisor as a starting
point. Taking a step back, this will also tie into ESG matters at the advisor’s organisation, which could
lead to exploration of other synergies and future partnership opportunities.
Steps for ESG oversight

To incorporate ESG matters into an effective governance
framework, NGOs can consider the adoption of the key steps
below.
1. Identify ESG issues relevant to your NGO
The relevance of ESG issues under the three pillars of

environmental, social, and governance will differ depending on
each organisation. For example, issues such as data privacy,
employee health, and community engagement may be relevant
across a large range of NGOs.
At the same time, NGOs are encouraged to consider relevant

issues that extend beyond their immediate mission. For example,
an NGO focused on poverty relief and social development may
also benefit from considering the environmental implications of
their activities. Specifically, this could include the use of plastic
water bottles and how waste is managed both for their internal
and external activities.
While the first graphic in this Toolkit paints a broad picture of what
topics fall under ESG for an NGO, the below graphic drills down
slightly by offering an example of specific issues under topic
areas. These topics also overlap with those in the international
frameworks mentioned before (namely, GRI and ISSB, mentioned
in the section ‘An Overview of ESG’s Background’).

• Energy management
• Carbon footprint
• Employee health Greenhouse • Use of plastic

and safety Gas bottles
• Training and Emissions • Water
development, management
retention Employee Resource • Recycling
• Gender equality Wellness Management • Waste
and non- management
discrimination
Example of
ESG
issues
Board
Practices
Ethics and
and
Security
Oversight
Community
• Data privacy Relations • Policies relating to ESG
• Anti-corruption and issues such as ethical
anti-bribery organisation conduct
• Regulatory compliance • Strategy and effectiveness
• Product/service safety, of performance
• Risk management responsibility and quality • Board nomination process
• Labour practices • Reporting and disclosure
• Access and affordability
2. Prioritise the ESG issues that are most material and will require board oversight
After identifying the relevant ESG issues, an NGO can proceed to shortlist those that are material, or
significant, to the NGO. Materiality should also be informed by how significant an issue is to an NGO’s
stakeholders.
Questions to consider:
• How does this ESG issue relate to our mission, strategy, key pillars/objectives, and key risks 36?
• How do our stakeholders, including the individuals/communities we serve and our funders, view the
importance of this issue? How does it affect them?
To obtain a more in-depth understanding of internal and external stakeholder views on material ESG
topics, NGOs may consider undertaking a ESG materiality assessment (see ‘Stakeholder Engagement
and Materiality Assessment’ for more details).
36 Overseeing environmental, social and governance matters: A not-for-profit boards of directors framework

3. Assign ownership and develop action plans
The next step is to assign ownership of material ESG issues to an individual, committee, or working group,
such as the prior mentioned ESG Task Force. The assigned lead(s) will be the primary party responsible
for oversight and execution of the material ESG issue. They will be responsible for setting relevant goals
for the ESG issues, developing action plans, and allocating and planning for the appropriate resources.
4. Monitor and disclose
Monitoring progress on the relevant KPIs of material ESG issues will, on one hand, assist NGOs in
tracking their development, and on the other, assist NGOs in communicating progress and achievements
to stakeholders, including funders.
Disclosure may include reporting content on the latest status and progress, mitigation measures, and
future initiatives and goals. NGOs can decide the frequency of reporting and whether output will be
included in their annual report or a separate report focused on impact and sustainability. For more details
on reporting, see the ‘How to Report on ESG Matters’ section of this Toolkit.
Conclusion
As stakeholders' interest and ESG expectations on NGOs continue to grow, we hope this Toolkit
serves as a helpful resource for your organisation's ESG journey.
It is never too late to begin, and we encourage NGOs to start early and translate this resource into
applicable actions for their organisation.

9 Appendix 1: The 17 Sustainable Development Goals
The UN Sustainable Development Goals (SDGs)

Adopted by the United Nations in 2015, the 17 SDGs are a set of targets designed to help countries
worldwide achieve economic growth, social inclusion, and environmental protection36. The SDGs are a
powerful blueprint that convey global issues of critical importance to humanity and the environment. The
goals are primarily focused on wide-ranging action by governmental institutions, business communities, and
society. The table below elaborates further on each goal37.
Goal 1: No Poverty End poverty in all its forms everywhere

Goal 2: Zero Hunger Creating a world free of hunger
Goal 3: Good Health and Well-being Ensure healthy lives and promote well-being for all at all ages
Goal 4: Quality Education Providing quality education for all
Goal 5: Gender Equality Achieve gender equality and empower all women and girls
Goal 6: Clean Water and Sanitation Ensure access to water and sanitation for all
Goal 7: Affordable and Clean Energy Ensure access to affordable, reliable, sustainable and modern energy
Goal 8: Decent Work and Economic Growth Promote inclusive and sustainable economic growth, employment and
decent work for all
Goal 9: Industry Innovation and Infrastructure Build resilient infrastructure, promote sustainable industrialization and
foster innovation
Goal 10: Reduced Inequalities Reduce inequality within and among countries
Goal 11: Sustainable Cities and Communities Make cities inclusive, safe, resilient and sustainable
Goal 12: Responsible Consumption and Production Ensure sustainable consumption and production patterns
Goal 13: Climate Action Take urgent action to combat climate change and its impacts
Goal 14: Life Below Water Conserve and sustainably use the oceans, seas and marine resources
Goal 15: Life on Land Sustainably manage forests, combat desertification, halt and reverse land
degradation, halt biodiversity loss
Goal 16: Peace, Justice, and Strong Institutions Promote just, peaceful and inclusive societies
Goal 17: Partnerships for the Goals Revitalize the global partnership for sustainable development
36 UN the 17 Goals
37 UN SDGs: Take Action for the Sustainable Development Goals
9 Appendix 2: Reference Links to GRI and ISSB
Global Reporting Initiative (GRI)

GRI was founded in 1997 and created the GRI Standards, one of the world’s most widely used
standards for sustainability reporting, it is used by organisations, including Apple, the Walt Disney
Company, and the Young Men's Christian Association (YMCA). This independent organisation works
with a range of stakeholders, including businesses, investors, civil society, and policy makers to develop
the GRI Standards. They are headquartered in the Netherlands with seven regional offices, including
Hong Kong (Greater China Region).
Link to the GRI Standards:
https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/
International Sustainability Standards Board (ISSB)

ISSB, established by the IFRS Foundation in 2021, aims to deliver a comprehensive global baseline
of sustainability-related disclosure standards. As there are many sustainability standards on the market,
the ISSB’s significance is in its action to harmonise standards – this will allow ESG information to be
more consistent and comparable. The inaugural standards were issued in June 2023.
Link to the ISSB Standards:
https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/

If you have any further questions about this toolkit, please contact our ESG Disclosure and Consulting team:
Cyrus Cheung
Partner
ESG Disclosure & Consulting
PwC Hong Kong
cyrus.lk.cheung@hk.pwc.com
Natalyn Pow
Senior Associate
ESG Disclosure & Consulting
PwC Hong Kong
natalyn.pow@hk.pwc.com
The information contained in this toolkit is of a general nature only. It is not meant to be comprehensive and does not constitute the
rendering of legal, tax or other professional advice or service by PricewaterhouseCoopers Limited (PwC). PwC has no obligation to
update the information as law and practices change. The application and impact of laws can vary widely based on the specific facts
involved. Before taking any action, please ensure that you obtain advice specific to your circumstances from your usual PwC client service
team or your other advisers.
The materials contained in this toolkit were assembled in 2023 and are based on information at that time.
© 2023 PricewaterhouseCoopers Limited. All rights reserved. Not for further distribution without the permission of PwC.
PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.
Please see www.pwc.com/structure for further details.
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ESG Toolkit

ESG Toolkit for NGOs 1

Carbon emissions Impact of climate change Use of natural resources

Collaborating with staff and other Helping beneficiaries prepare

Human capital Health, safety and well-being Training and development

Engagement with stakeholders and

Board diversity Executive pay Responsibility and accountability

Audit, risk and internal controls Anti-corruption Policies and procedures

ESG Toolkit for NGOs 2

An Overview of ESG’s Background

Global Reporting Initiative (GRI)

International Sustainability Standards Board (ISSB)

ISSB, established by the IFRS Foundation in 2021, aims to deliver a comprehensive

1 Forbes, Demystifying ESG: Its History & Current Status

Meeting stakeholder expectations

Callan 8th Annual 2022 ESG Survey

‘Consumers and employees wish to see organisations do more on ESG. 83% of

PwC Consumer Intelligence Series 2021 Survey on ESG

ESG Toolkit for NGOs 4

Increased relevance and connectivity

ESG Toolkit for NGOs 5

Defining an NGO stakeholder

Why is SEMA important?

Staying relevant and

Tips on engaging your stakeholders10

9 GRI G4 NGO Sector Disclosures

Identify your communication strategy

Points to consider for your SEMA exercise

Tailored open-ended questions

ESG Toolkit for NGOs 7

Executing the SEMA exercise

ESG Toolkit for NGOs 8

Why have a sustainability strategy?12

Reminders on developing your sustainability strategy

12 Sustainability Strategy: Simplified

ESG Toolkit for NGOs 9

Why set sustainability targets?

Guidance on sustainability targets

SDGs as a framework to reference

In selecting the most relevant SDGs to your NGO14,

Climate risks and opportunities

Identifying your climate risks and opportunities

Consider possible physical risks: Consider whether any of

18 Adapted from GRESB

Examples of real life non profits responding to climate impacts

Oxfam Hong Kong

Integrating Climate Change in project / programme cycle – why is it important?

Source: Red Cross’ Climate Smart Programming Checklist

A selected portion from the checklist:

*Weather-related hazards could be changing rainfall patterns, cyclones, (also known as

2. Socio-Economic and Cultural Context

Note: In analysis consider the following:

Source: Red Cross’ Climate Smart Programming Checklist

ESG Toolkit for NGOs 14

Supplementation information: Climate scenarios

Stringent scenario Business-as-usual scenario

Global environmental Controlled global temperature Continued rise in global

Level of commitment and Organisations (NGOs, governments, Organisations (NGOs,

24 NGFS Scenarios Portal