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Achieving the ‘S’ in ESG: Why is it important?

03/09/2024

With growing consumer demand for ethical business practices and increasing regulatory pressures, ESG principles are not just a compliance requirement – but a strategic approach to sustainability and social impact. In this blog, we outline the importance of a robust ESG strategy and how to achieve the Social (S) component.

What is ESG?

ESG stands for Environmental, Social, and Governance. These are called pillars in ESG frameworks and represent the 3 key areas that companies are expected to report in.

Environmental

This includes efforts to reduce carbon footprints, manage waste responsibly, and adopt renewable energy sources. Companies are assessed on their environmental sustainability practices, and those failing to meet expectations may face reputational and financial risks.

Social

This focuses on how companies manage relationships with employees, suppliers, customers, and communities. It includes labour practices, diversity and inclusion, community engagement, and broader impact on society.

Governance

This refers to the internal system of practices, controls, and procedures a company adopts to govern itself, make effective decisions, comply with legal standards, and meet the needs of external stakeholders. Good governance practices include transparent reporting, ethical leadership, and accountability.

The Importance of a robust ESG Strategy

Ireland has seen a significant shift in how businesses approach ESG reporting, largely influenced by European Union directives. The EU Corporate Sustainability Reporting Directive (CSRD) has now been implemented in Irish law through the European Union (Corporate Sustainability Reporting) Regulations, 2024 which came into effect on 6th July.

Furthermore, Irish consumers are increasingly choosing to support organisations which align with their values. Companies that demonstrate a commitment to environmental, social and governance responsibility are more likely to attract and retain customers, particularly in a competitive market.

Additionally, investors are now factoring ESG criteria into their decision-making processes. Sustainable investing is becoming increasingly popular, and companies with strong ESG performance are more likely to secure funding. Therefore, focusing on a robust ESG Strategy is critical to the future development and overall success of your organisation.

Achieving the ‘S’ in your ESG Strategy

The Social (S) in ESG is a critical component – strong social impact can enhance reputation, attract investment, boost employee morale, and mitigate risks. Furthermore, the Social (S) element of your ESG Strategy is more likely to be effective when strategically developed. A robust Social Impact Strategy plays a critical role in supporting businesses to achieve their broader ESG objectives.

Many organisations require external support to develop the Social (S) component of their ESG Strategy. At 2into3, we partner with your organisation, working at Board and staff level – engaging employees and members of the community to ensure that your Social Impact Strategy is a living document, owned by your organisation. By the end of this process, you will have a defined Strategy that will enable your business to create meaningful change, build stronger relationships with stakeholders and contribute positively to your community.

Taking the first step

If you’d like to enhance the ‘S’ in your ESG Strategy, get in touch with our Director of Advisory Services, Sheena Horgan at sheena.horgan@2into3.com to explore how we can provide guidance and support. For more information on our ESG service, visit here.

5 Reasons to Conduct a Board Effectiveness Review

04/07/2024

What comes to mind when you hear the word “review”? If you think of criticism, judgement, or inspection, you might be approaching it the wrong way. A well-conducted Board effectiveness review provides numerous benefits for both your Board and your organisation, and should be seen as a constructive process instead of a fault-finding one.

Let’s look at five reasons your Board should consider conducting a Board effectiveness review.

1. Leveraging the strengths on your Board

Boards are composed of experts in their respective fields. However, in some cases, the skillsets and experience of individual Board members may not be fully recognised and utilised. A strengths-based Board effectiveness review allows you to map the skills and expertise on your Board and ensure they’re being maximised. When Board members engage in tasks that match their experience, it adds to the Board’s overall effectiveness and contributes to broader organisational success.

2. Aspiring towards best practice in governance

Regular Board reviews are a core requirement in the Charity Governance Code, and as a Board effectiveness review is an indication to your stakeholders – including funders, staff, volunteers and beneficiaries, as well as the public – that your Board is dedicated to best practice, transparency and accountability.

3. Adapting to a period of change

Nonprofits are operating in an evolving political and social landscape. This context demands Boards to be proactive and adaptable; capable of addressing challenges as they arise and identifying potential opportunities.

A Board effectiveness review helps to strengthen Board engagement and collaboration, to ensure that its committees have the appropriate composition and established duties, and that processes and structures are consolidated. This facilitates effective decision-making, leadership, and communication when faced with change.

4. Identifying and addressing gaps

So maybe it isn’t all good, and we’d be lying if we said a Board effectiveness review doesn’t consider areas for improvement. By taking stock of your Board’s its structure, dynamics, processes, people, and performance, you have an opportunity to reflect on what perhaps may not be working as well as it could.

What is important here is to focus on what happens next. After hearing constructive feedback from all your Board members, you can create an actionable roadmap to address any gaps and overcome challenges.

5. Returning to your purpose

Let’s return to the core purpose of serving on a Board and take a moment to reflect on the reasons and motivation behind this commitment. We are reminded of the passion, interest, skills, and desire to give back. A Board effectiveness review serves to remind all Board members of these fundamentals, generating a renewed sense of purpose, clarity, and confidence moving into the future.

Interested in learning more?

Engaging an independent and external third-party perspective in a Board review can offer a valuable objective insight, removing any bias and allowing Board members to be honest and transparent with their feedback. We can work with you to tailor a Board evaluation that reflects the nuances and complexities of your organisation, out of which will emerge constructive recommendations that resonate with your Board members’ experiences.

If you are interested in learning more about what a Board review would look like for your Board, please contact our Director of Advisory Services, Sheena Horgan at sheena.horgan@2into3.com.

Good Governance Awards 2024 Entries Open

11/06/2024

The Good Governance Awards 2024 are are now open for entries, recognising and encouraging adherence to good governance practice by Irish nonprofits.

Any nonprofit organisation in Ireland, whether a charity, company, sports club or community association, can enter its annual report and financial statements into the Awards for free and it will receive individual feedback to help improve future annual reports. The winners will be announced at the awards ceremony in November.

Nonprofits with an annual income of less than €100,000 win 1 free place on a training course of their choice for entering the awards and win 2 additional training places if they are shortlisted to win.

Enter your annual report at The Good Governance Awards here. Entries must be submitted by 11th September.

2into3 Sponsors Good Governance Awards 2024

We’re delighted to be sponsoring the Good Governance Awards 2024. Our Associate Consultant, Catriona Hogan, will be joining the judging panel at the Good Governance Awards in November. The Good Governance Awards seek to:

Acknowledge, encourage and promote good governance practice in the area of annual reports and others areas of good governance practice.
Support and encourage the nonprofit sector to use their annual reports and financial statements to showcase their embracement of and adherence to good governance.
Provide practical examples to other organisations as to what an excellent or very good director’s report and financial statements look like.

If you have further queries regarding this years submission, contact roisin@carmichaelireland.ie.

“We’ve tried – women just don’t want to be on our board” Governance insights for your sports organisation from an international perspective

30/11/2023

Authored by Matt McKerrow, Associate Consultant

As a father of toddler boy/girl twins, I am ever vigilant (and regularly reminded by my constituents) to ensure I am equitable in all dealings, particularly those that pertain to distribution of important resources – like strawberries, or marshmallows.

And OK, whilst two for the price of two does require significant extra resources (time, energy, and effort) – one of the great benefits of parenting dual small humans, beyond the constant gender equity check, is the diversity of experiences, learning, and as a result extra knowledge, that comes and will continue to come from raising a girl and boy the same age at the same time. That’s without considering what they’ll learn and gain from each other in the process. Summary: More work, tricky to balance, but increased knowledge, richer experiences, better and fairer outcomes for all, right? That’s my theory anyway.

Therefore, I can’t help but notice some parallels as the Irish sport governing body sector prepares for the pending 40% board gender balance deadline at year end. Recent media reports indicate the Football Association of Ireland (FAI) [1] [2] and the GAA [3] are among the organisations working earnestly towards change facing into the challenge of meeting the deadline – and I am sure there are others.

Here are some key points to consider for making progress towards balancing your board:

S/he got more than me

Whilst those electing sports boards may not prioritise or appreciate the benefit of the additional experience, knowledge and perspective that having a diverse board brings, it does seem implausible they could rationalise leaving 50% of the funding available to their sport on the table. Especially when this would then potentially be available to be re-distributed to other NGBs, their fellow ‘sport system siblings’. Neither of my 3-year-olds would stand for that.

International perspective

Having spent near equal amounts of time during my 20+ year career working in sports governance in Ireland, as in New Zealand & Australia, I am well placed to compare and contrast the Irish context with others I’ve worked in. I’ve also seen/heard some absolute clangers (refer to this article’s title quote, uttered much more recently than you’d imagine) and gathered some fascinating insights from both hemispheres as national sports systems have evolved to tackle the challenges of board gender balance and board independence.

Governance Principles over time

In a federated country, Australian NGBs (National Sporting Organisations or NSOs as they’re known down under) have long grappled with multiple layers of governance existing together – especially when it comes to the issue of independence.

A first version of the Australian Sports Commission (ASC) Governance Principles were published in 2002 and they have undergone several iterations since, most recently in 2023 [4]. The most recent version is explicit regarding board gender balance at 4.3: “The board (…) should be composed in a manner such that no one sex accounts for more than 60% of the total number of Directors”; and regarding independence at 4.4: “The organisation’s directors should be independent, regardless of whether elected or appointed”.

It is of note that whilst the ASC “Governance Code” has existed for decades, with prescription regarding board composition, a Women on Boards report [5] published in 2020 indicated that up to approximately 30% of funded Australian NSOs did not meet the 40% target that is currently prescribed in the ASC principles at that time. The more recently published ASC Governance Standards Benchmarking Report 2023 [6] depicts a decrease in the gender balance standard (4.4) since 2021, and highlights Diversity, Equity & Inclusion (4.2) as one of the “bottom 5” poorer performing standards where Board Independence (4.4) is among the Top 5.

Which country has it right?

By contrast, New Zealand, which is often compared to Ireland, in land and population size, sadly in terms of 2023 RWC performance, and notably examined in sporting system context detail at the 2018 Federation of Irish Sport Annual Conference – could be said to lead the way in board gender diversity. Sport New Zealand reported near 100% compliance (65 out of 66 funded organisations) with its 40% gender target in 2021, three years after publication of its 2018 Women & Girls Strategy and accompanying policy to impose significant penalties for those organisations not in compliance. Sport NZ report an overall improvement in governance and board dynamics as a result. [7]

Fiercely independent?

Speaking of New Zealand, and at the risk of again mentioning rugby, it is relevant to reference the recently published NZ Rugby (NZRU) Governance Review [8]. A highlighted summary contended the governance of the NZRU, the organisation behind the All Blacks and Black Ferns, is not currently fit for purpose, and offered some strong recommendations.

In contrast to the current issues reported in Ireland within the FAI – as they attempt to re-structure their board to meet their MOU obligations to government to have a 50/50 split of “football” and “non-football” directors [9] – the recommendation of the NZRU review is that the NZRU board be completely independent of constituent directors, instead proposing the inception of a Council structure where representatives of rugby’s stakeholder groups would feed into the governance of the organisation on select and specific terms. In that review, an independent director is defined to be one who is “four years (out of the game or) out of positions of influence within the game”. This may be viewed by some as heavy handed.

Rising through the ranks

For sports organisations with federal structures of governance – eg club> county>province>national, as in Ireland, there is an established practice of Presidents/Chairs/board members progressing “up the ranks”. This is often lauded as an achievement and viewed as an acknowledgement or even an entitlement based on time served within the sport. It would be common that upon election to a higher tier the director would resign from their lower tier appointment, but often one occurs directly following the other, with minimal, if any, time away from influential roles in the sport – and certainly not a four-year stand-down.

Nearly there

In late 2022, Sport Ireland indicated that if the current trajectory to that time were to continue, the target of 40% gender balance on NGB boards would be achieved in 2023 [10]. This can only be viewed as a positive development for Irish sport in terms of the greater knowledge, insight and diversity in board decision making, and overall improvement in governance of the sector.

More to come?

One wonders – if Irish sport is emulating, and close behind, our NZ counterparts in achieving board gender balance targets; our government, via their MOU with the FAI, are already seeking to ensure greater independence on sports boards; and the organisation behind arguably one of the world’s greatest sports teams appears set to be governed by a rigorously independent board – could we, and should we, expect to see the Sports Minister and Sport Ireland setting quotas and targets for board independence similar to those for gender balance in the not too distant future?

Insights

Insight 1

Like ‘em or loathe ‘em – quotas are here to stay

Target quotas are a mechanism that serve the purpose of rallying a sector and allow measurement of progress towards a broader societal aim. Their detractors might say they are crude and tokenistic or may use phrases such as “box-ticking” and “window dressing”. Based on my experience of sports governance across international contexts, they are, and continue to be a necessary tactic to ensure the advantages of board diversity and independence are promoted and achieved for the wider benefit of an organisation’s stakeholders and society at large. With a continuing societal movement towards ESG targets in Ireland and abroad, we are likely to see that measures and quotas will continue across all walks of life, not just sport. Moreover, perhaps board independence is next?

Insight 2

Targeted strategy, investment and quotas are supercharged when leveraged with penalties

With New Zealand as case in point, sports systems that have moved to significantly penalise non-compliance have experienced greater success than those where principles exist without meaningful consequence. It is encouraging to see the firm line taken by the Sports Minister and Sport Ireland threatening a 50% reduction in the allocation from 2024 for all non-compliant organisations, especially in relation to capital grants as well as program funding. The sports sector will wait with interest to see the ramifications for any organisations not achieving the target in the New Year.

Insight 3

S/he who pays the piper…

Many sporting organisations have bemoaned the loss of sovereignty that comes from a government funder dictating terms and imposing what might be seen to be heavy handed conditions upon them. “Who are they to tell us how to run our sport?” Whilst you’d expect a sport’s community are best placed to deliver that sport – it is however worth remembering that if s/he who pays the piper calls the tune, a sport seeking investment from government, sponsors, philanthropists and even from their own members and clubs – must take heed of their wishes in putting together their playlist. Furthermore, it’s not unreasonable to expect that diversity, independence and other ESG factors will feature in their requests.

Insight 4

It’s no walk in the park, but the effort is worth it.

A Richie McCaw quote highlighted in the NZRU Governance Review says: “If you want to be the best in the world, it is going to be hard. If you are not prepared to do that, you are in the wrong room”. Progressing the governance of your organisation so your sport can attract heightened funding and achieve great things in terms of increasing participation, connecting communities, raising profile, and delivering awe inspiring winning performances isn’t easy. But it’s a choice. The process is not glamorous, it takes time, significant effort, considerable energy and you can certainly expect detractors, hurdles, miss-steps, learning experiences, unpopularity, argument, compromise and debate along the way. But that pales in comparison with the benefits as greater knowledge, richer experiences and ultimately the achievement of inspirational outcomes are realised. The final destination is worth enduring the tantrums – just like twin parenting.

Get in Touch

This article is authored by: Matt McKerrow, Associate Consultant, specialising in governance and strategy assignments for NGBs, clubs and other sports organisations within 2into3’s sports sector.

If your sports organisation is interested in gaining support in governance or strategy, contact our Associate Consultant, Matt McKerrow or our Director of Advisory Services, Sheena Horgan at sheena.horgan@2into3.com. For more on our work with sports organisations, visit our page here.

References

[1] Headache for FAI as crucial motion fails to pass

[2] Funding to FAI from Sport Ireland delayed (rte.ie)

[3] Relief as GAA votes for better gender balance on management committee

[4] Australian Sports Commission Governance Standards SGS-final.pdf (sportaus.gov.au)

[5] Women on Boards NSO Board Gender Report (womenonboards.net)

[6] Sport Governance Standards Benchmarking Report (sportaus.gov.au)

[7] Gender-equity-in-governance-sport-nz-3-11-22.pdf (sportnz.org.nz)

[8] NZRGovernance-Review-31-August-2023_web.pdf (nzrugby.co.nz)

[9] Sports minister warns FAI of ‘serious consequences’ if they fail to meet gender balance requirement (msn.com)

[10] Women in Sport Leadership Snapshot | Sport Ireland

What is a Trustee of a Charity?

17/04/2023

Charity trustees are the people who ultimately exercise control over, and are legally responsible for, a charity. If the charity is a company, these people may also be known as directors or board members. The charities regulator provides this definition, and you can see the full guidance here.

Being a trustee on a successful and well governed charity board can be a very rewarding job. The charity and voluntary sector is large and growing, and this is where we can genuinely contribute to societal change and to the improvement of everyone’s lives. Giving your time and expertise to this sector allows you to follow your passions, and to genuinely help and be appreciated.

What do trustees do?

As we have seen, trustees direct and control the organisation. They are ultimately responsible for the success and the future of the organisation on whose board they serve. They normally attend one board meeting per month and perhaps one committee meeting per quarter. However, trustees are always vigilant and alert to the needs of their organisation and are always ready to take care of their organisation in a crisis, or to advise the CEO in times of difficulty.

What do trustees not do?

They are not executives and they do not implement strategy, their role is simply to direct and control. Sometimes, in smaller charities, trustees will carry out some executive duties. These may include assisting with the accounts production or fundraising; but these are not truly executive roles; and ultimately, as the organisation grows, these duties will be taken over by paid employees.

Roles and responsibilities of a trustee

The roles and responsibilities of trustees are set out by the charities regulator here and if your charity is incorporated as a company limited by guarantee or any other type of company, your duties under the companies act are set out by the Companies office here.

The main roles are clearly stated, a director of a company shall:

a) act in good faith and in the interests of the company;

(b) act honestly and responsibly in relation to the conduct of the affairs of the company;

(d) not use the company’s property, information or opportunities for his or her own or anyone else’s benefit

(e) be independent

(f) avoid any conflict between the director’s duties

(g) exercise care, skill, and diligence

(h) have regard to the interests of its employees and stakeholders

Is being a trustee fun?

Yes, being a trustee can be lots of fun, particularly when you are passionate about the purpose of the organisation and its mission. In many cases great charities have been set up by people who are passionate about, for example, animals or children, or the alleviation of an illness.

Being on the boards of such charities nurtures your passion, enables you to contribute to the cause and makes you feel valued and appreciated.

Above all, great boards work well together, they are colleagues; they solve difficult problems in collaboration and ultimately theycan have wonderfully constructive and beneficial working relationships.

What is my next step?

Find your passions and interests and identify charities in this area.
Ask yourself how much time you might have to contribute to the charity.
Research charities in your area, choose the best governed and best organised charity, where you will learn and be able to contribute to the board. Ask them if they have an induction course for new board members to enable you to quickly learn about the charity.
Get your CV ready, with some indication of your skillset, experience and passionate interests.
Consider also other voluntary work that may not initially involve being a board member.

Some useful links for your research:

Contact Us

If you have any further questions on becoming a trustee, contact our Director of Advisory Services, Sheena Horgan at sheena.horgan@2into3.com.