Foundation releases first ESG report in China’s charity sector

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How should foundations contribute to environmental protection? To answer that, the Shanghai-based Adream Foundation recently released the first-ever ESG (Environment, Social, and Governance) report in China’s charity foundation sector.

Adream Foundation’s inaugural ESG report was unveiled during its 2022 Annual Report Conference. The report covers various aspects such as environmental commitment, social initiatives, and governance enhancements, aligning with the Sustainable Development Goals. While praised by some sector professionals, concerns remain about the necessity and potential challenges of ESG reporting for philanthropic organizations.

The ESG report encompasses three key dimensions – Environment, Social, and Governance. Under the environmental aspect, for example, Adream expressed its dedication to improving certification and auditing processes when constructing its operation centers, so as to minimize negative impacts on the local environment. In addition, the foundation will increase the emphasis on environmental education and sustainable development in their courses to include more topics of nature education.

At the social level, internally, Adream promised to improve their staff management and training systems to ensure fairness and equal opportunities. Externally, they committed to long-term funding for educational charity projects, supporting infrastructure and talent development within the sector.

Regarding governance, the foundation aims to continuously improve the level of internal governance through substantive issues assessment, risk control and other measures. In line with their mission, they will continue to advocate for educational philanthropy through project innovation, policy advocacy, and collaboration between government and society.

As an organization committed to promoting educational equity and developing quality education, Adream Foundation’s ESG report aligns with the Sustainable Development Goals — particularly SDG4 (Quality Education), SDG8 (Decent Work and Economic Growth), and SDG10 (Reduced Inequalities). It ensures compliance with relevant laws and regulations, respecting stakeholder privacy during research, and investigating Adream’s social impact.

Some experts in the sector, such as Zhang Sheng from SynTao, a leading ESG consultancy in China, emphasize that ESG reporting is not a burden to NGOs and that information disclosure based on relevant indicators is advantageous.

Zhang believes that early adoption of this international concept in the charity sector will yield future development opportunities and views Adream’s report as a pioneering example.

Zhang notes that the report primarily focuses on the social aspect of ESG disclosure, however, there are gaps in information regarding electricity consumption, carbon emissions, and other areas, raising questions about achieving carbon neutrality with the organization’s nearly 90 employees.

According to Zhang, at present, the external requirements for ESG information disclosure of foundations are still relatively lacking.

Wu Chong, a representative from Adream, said that the report is just their first step in terms of ESG communication. He added that the organization had made a lot of attempts in the process of information disclosure and explored various paths by learning and adapting to the standard system set for companies.