NFPs set to ‘embrace sustainability with purpose’: HLB Mann Judd

HLB Mann Judd has noted a “mission-driven” interest in sustainability across the not-for-profit (NFP) sector in an effort to positively contribute to growing climate concerns and requirements.

Michelle Warren, director of the firm, said the increase in interest made sense based on the general positive nature and goals of NFPs.

“This interest makes sense as NFPs are mission-driven, and applying a sustainability lens to their operation could expand the ways they create positive and minimise negative impact on the planet and society,” she said.

“Key to devising a sustainability plan is identifying those environmental, social and governance matters that are most important to the organisation. This involves engaging with key stakeholders such as employees, volunteers and clients and asking what matters most to them.”

As NFPs are ACNC-registered charities, they do not report under Chapter 2M of the Corporations Act 2001 and therefore are not included within the mandatory climate reporting requirements.

However, Warren said NFPs should still consider sustainability and understand that it goes beyond climate change and encompasses social and governance matters usually relevant to NFP objectives.

Reasons why NFPS should consider incorporating sustainability into their decision-making process included responding to donors and funders that increasingly expect NFPs to take steps to alleviate environmental and social harm, as well as attracting employees, volunteers and board members who want to work with organisations that share their values.

Warren added that NFPs should also consider sustainability for cost savings, such as reduced energy and water usage, rethinking waste management and increasing employee and volunteer wellbeing.

Sustainability would also allow for NFPs to develop more robust and better-quality risk management and be more prepared for the future if governments and regulators asked for required sustainability information in tender and grant applications.

Though NFPs were not caught by the newly introduced mandatory climate reporting regime, HLB Mann Judd recommended that NFPs structured as companies limited by guarantee and not registered with the ACNC double-check their reporting requirements, as they may be the exception based on their size.

This was linked to the fact that a company limited by guarantee with an annual consolidated revenue of $1 million or more, meeting many of the other sustainability reporting thresholds, was required to prepare a sustainability report.

“While NFPs are in a unique position to drive positive change, the reality is they often lack the in-house expertise and financial resources needed to implement sustainable practices within their organisations,” Warren said.

“While the outcome of this exercise will be different for every NFP, it will inform the organisation as to the key sustainability issues to focus its efforts on. A roadmap may be a helpful tool to identify and plot out manageable actions, and assign ownership of and set time frames for these actions.”