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Charities, climate change and good governance

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Charities face risks and opportunities which stem from both local and global events. COVID-19 has been an overriding risk theme in the last year, but is not the only global issue which has local implications. The consequences of our changing climate is another example. 

At the WS Charities Conference earlier in 2021, I ran a poll asking delegates to respond to this statement: “In our charity, we already have a strategy to mitigate and respond to climate change.”  20% said yes, 67% said no, and 13% said they didn’t think their charity needed such a strategy. Looking ahead to COP26 in Glasgow later this year, there will be charities who want to be on the front foot when it comes to investing time thinking about, and acting on, these issues. The starting point is to reflect on the way climate change will, and may already be, affecting your beneficiaries, staff, volunteers, trustees and other stakeholders. 

Have your trustees considered climate change risk?

In general terms, charity trustees must act with care and diligence in relation to the charity and its assets. Identifying the risks to which the charity is exposed is part of that picture. For example, let’s assume you are a conservation charity with assets including land. How is the land being affected by our changing climate? Is erosion an issue? Do flood events affect it?  For all charities owning a building, what are the financial risks associated with climate change?  Is your building being damaged by more extreme weather events than in the past?  Is this affecting your insurance arrangements? More generally,  where does your charity operate? If you’re near the coast, how will sea level rise around Scotland affect your charity? If you support older beneficiaries or have health-focused purposes, are you aware of how heatwaves can impact those with cardiac, kidney or respiratory disease? 

In looking at how resilient your charity is to climate change risks, questions to consider include the charity’s ability to pursue adaptations or processes to protect your people and other assets.

COVID recovery and climate action can go hand-in-hand

COVID-19 forced a change in how trustees gather for board meetings.  Online meetings have become a norm. With no travel time to factor in, some charities have found improved trustee attendance at board meetings and more focused decision-making. Trustee and staff recruitment have evolved, where geography is neutralised and a broader pool of potential candidates opens up. As and when gatherings become possible again, charities will face decisions about whether to convene online or in-person. What sort of occasion now merits an in-person get together?

An area to consider here relates to meetings and travel. Which meetings will stay online? Will your board meetings remain online, fully revert to in-person, or alternate? Will you create new protocols around when ‘business travel’ is acceptable, which could have both environmental and financial benefits for your charity? 

How climate-friendly are your investments?

A theme I covered at a recent webinar looks at how climate change is increasingly a factor for those charities with an investment portfolio. In past years, this tended to be framed as a narrow question of whether or not to invest in oil and gas companies. Now, the choices are far broader, and it’s possible to go further and consider a climate lens applied to selecting all investments your charity holds, seeking a financial return from those companies well positioned to operate and succeed in a lower carbon society. OSCR’s investment guidance covers the background to how trustees can approach investing. It includes case studies showing examples of how charities have taken account of environmental factors in reaching decisions about their investments, reflecting that a range of approaches are possible. 

For more information about how charities can think and act both strategically and practically on climate change, SCVO has hosted a webinar on ‘How to be a climate confident trustee.’  The panel included speakers from Zero Waste Scotland and the Environmental Funders Network. You can view a recording of the webinar here