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Case Study

Not-for-profit makes internal reporting changes to align with its external ESG efforts

An organization that historically reported on external sustainability impact, as opposed to internal operations, prioritized advancing its ESG efforts to become a leader in not-for-profit ESG reporting.
Hiker at top of mountain overlooks open valley
Case Study

Not-for-profit makes internal reporting changes to align with its external ESG efforts

An organization that historically reported on external sustainability impact, as opposed to internal operations, prioritized advancing its ESG efforts to become a leader in not-for-profit ESG reporting.

Baker Tilly was engaged by a mission- and impact-driven not-for-profit organization that uses exploration to educate, advance and protect society and the planet. Since inception, the concept of environmental and social sustainability has been interwoven into its culture through policies, procedures and trainings. The not-for-profit is known among its stakeholders for being a leader in environmental stewardship.

With that in mind, the organization’s internal sustainability journey was of the upmost importance. The not-for-profit wanted to expand beyond its traditional external impact communications to become an industry leader in external environmental, social and governance (ESG) reporting by adopting a corporate-aligned approach. They recognized that creating and publishing a public ESG report to ensure transparency and accountability in the future was a clear and critical next step.

A customized approach

Every organization’s ESG journey is unique. For this not-for-profit, the Baker Tilly advisory team approached the initiative in four phases: project initiation; current-state assessment; risk analysis and plan development; and reporting and communication.

Project initiation

The project plan began by developing a shared understanding of the overall business strategy, goals and resources available. Baker Tilly engaged a core team of cross-functional employees from the not-for-profit. The core team was comprised of project sponsors from the senior leadership team, a project manager, and team members from various departments who worked collaboratively. Education sessions were held to ensure the team had a comprehensive understanding of the opportunities, trends and risks associated with ESG reporting, in addition to specific knowledge surrounding sustainability in the not-for-profit industry.

Current-state assessment

From there, the team conducted a current-state assessment, which is a critical step to evaluating an organization’s maturity with respect to ESG. To understand where an organization stands today, Baker Tilly measures against four levels of maturity: initial, growth, operational and transformational. In this case, the not-for-profit and Baker Tilly team gathered information from a combination of stakeholder interviews, an analysis of current-state documentation including policies, controls, procedures and initiatives, and market research on peer not-for-profit and for-profit organizations with “best-in-class” ESG reporting. This phase included a process to determine the appropriate ESG reporting framework (i.e., Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), Integrated Reporting Framework, Climate Disclosures Standards Board (CDSB) or Task Force on Climate-Related Financial Disclosures (TCFD)) and ESG topics material to the organization and its stakeholders.

After GRI was identified as the appropriate framework, a survey was completed to determine which of the GRI standards were the most important topics to the organization and its stakeholder. With these topics solidified, the not-for-profit was able to align on its plan for data collection and reporting effectively. In addition to GRI, the client wanted to view its ESG progress from the perspective of the United Nations’ sustainable development goals (SDGs). To do so, the advisory team applied recommended guidance by linking material GRI topics to specific SDGs and targets.

Risk analysis and plan development

As part of the assessment, a risk analysis was conducted to identify the key areas of risk, risk impact level, and improvement opportunities across the organization. In order to determine risk, the advisory team evaluated the organization against its data and technology, goal setting and accountability, oversight, processes, and policies, and lastly, their reporting, communication and transparency as it relates to ESG. An internal plan was developed by the not-for-profit to mitigate high risks and implement the improvement opportunities that were presented.

Reporting and communication

In the final phase, a draft report was created for the not-for-profit to publish upon the successful collection of all required data. With Baker Tilly’s guidance, the diverse core team at the non-for-profit provided unique perspectives throughout the process of selecting frameworks, determining materiality and capturing data points. To streamline future reporting, the Baker Tilly advisory team also developed a data management process to both centralize data capture and minimize the burden on the organization’s limited resources.

ESG and sustainability is a nonlinear journey

Implementing an effective ESG reporting strategy can propel an organization ahead of the competition. It doesn’t happen overnight. To be a leader in not-for-profit sustainability reporting, the client took intentional steps, which included:

  • Benchmark and gap analyses of the ESG reporting by its peers in the industry
  • Evaluation of the client’s ESG initiatives and assessment of its maturity
  • Risk analysis based on current-state ESG maturity
  • Execution of an ESG materiality assessment to prioritize certain ESG topics
  • Analysis of stakeholder input as it relates to ESG (stakeholders included representatives from HR, IT, legal, DEI, and strategy and operations)
  • Proposal of a data governance and management process, enabling the cross-functional collection of ESG data which meets reporting standard quality
  • Outline of the structure and help drafting a public-facing ESG report using GRI as the reporting standard while referencing the SDGs as a secondary framework

Taking strides toward a sustainable future

The not-for-profit organization that historically reported on external impact, as opposed to internal operations, prioritized advancing the reporting on their internal ESG efforts. The client established an ESG reporting foundation that can be used for years to come, enabling it to be an industry leader in ESG reporting and transparent communication. Moreover, the client now has a process to assess materiality and ESG reporting frameworks on an ongoing basis. It has also already identified two reporting frameworks, GRI and SDGs, for the upcoming reporting year, as well as material ESG topics to the organization and its stakeholders. The not-for-profit’s newly created data management process supports the requirements of the ESG report, which is expected to be published in the coming months as internal reviews begin.

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Ed Mahon
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