Many organisations in the not-for-profit (NFP) sector have signalled an interest in sustainability, despite the majority of these entities not being caught by the new mandatory sustainability reporting regime.

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

There are a number of reasons why NFPs should be thinking about incorporating sustainability into their decision-making processes. Some of these include:

  • Responding to donors and funders that increasingly expect NFPs to take steps to alleviate environmental and social harm
  • Attracting employees, volunteers and board members that want to work with organisations that share their values
  • Cost savings through, for example, reduced energy and water use, rethinking waste management, and increasing employee and volunteer wellbeing
  • More robust and therefore better quality risk management
  • Being prepared for the eventuality of governments and regulators requiring sustainability information in tender and grant applications.

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.

Planning for sustainability

Although climate change is in the spotlight at the moment, NFPs should consider that sustainability goes beyond this – it encompasses social and governance matters too which often go to the very heart of an NFP’s objectives.

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

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 timeframes for these actions.

Mandatory climate reporting and NFPs

Many NFP entities do not report under Chapter 2M of the Corporations Act 2001 as they are ACNC-registered charities. This scopes them out of the climate reporting requirements meaning they are not required to prepare a sustainability report.

NFPs that are structured as companies limited by guarantee (such as clubs and community groups) that are not registered with the ACNC may be the exception to this depending on their size. A company limited by guarantee with annual consolidated revenue of $1 million or more, meeting any of the other sustainability reporting thresholds, is required to prepare a sustainability report.

If your organisation is interested in learning more about implementing sustainable practices, please reach out to one of our HLB advisers.