Why supply chain due diligence is important for charities

The European Union's new Corporate Sustainability Due Diligence Directive makes it compulsory for large EU and non-EU companies to screen their supply chains. The EU argues that this is “to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains.” The initiative could transform how companies address climate change and workers' rights.

Charities are not included in the directive, but not-for-profits may have different reasons to do their due diligence. While fulfilling their mission on the ground is understandably their top priority, partnering with donors and suppliers that have been criticised for social or environmental abuses could damage their reputation and jeopardise their potential for positive impact.

Why it’s important to check the ethics of donors

There are many examples of charities and not-for-profits being criticised for accepting donations from ethically dubious companies.  

A 2023 article by American scientists highlighted that between 2001 and 2018, various health and nutrition-oriented charities, including the British Nutrition Foundation, accepted millions in donations from Coca-Cola, despite its sugar-laden drinks.

The British Nutrition Foundation was criticised on multiple platforms for accepting these funds, including by the prestigious British Medical Journal. And the Health Education Trust said "Organisations like the British Nutrition Foundation which want to be seen as offering independent advice should avoid donations from the food industry or be much more up front about them so the public are aware of the involvement.”

Supply chain checks enable charities to say no to fossil fuel money

Charities are also increasingly rejecting donations from fossil fuel companies. Since 2016, several prominent art organisations, including the Tate, the Royal Shakespeare Company, and most recently the Royal Opera House (which had partnered with BP for over 30 years) have severed ties with oil companies.

These decisions have generally been made after vehement campaigning from artists, the public and environmentalists. The Royal Shakespeare Company said: “Amidst the climate emergency, which we recognise, young people are now saying clearly to us that the BP sponsorship is putting a barrier between them and their wish to engage with the RSC. We cannot ignore that message.”

As public awareness of the climate crisis increases, so does scrutiny of organisations linked to fossil fuel companies and other high emitters. It is increasingly seen as unacceptable for charities and not-for-profits to be associated with companies that are viewed as causing or exacerbating the climate crisis. 

The importance of charities checking their suppliers and partners

As well as being linked to their donors, charities are also linked to their partners and suppliers, all of which are potential reputational risks.

As the EU Corporate Sustainability Due Diligence Directive enters into force, the vast majority of the corporates asked in the latest Corporate Nonprofit Partneship barometer believe that it is likely that companies will need to ensure that their charity partners conduct thorough due diligence to identify, assess, and manage Environmental, Social and Government (ESG) risks.

The uncovering of workers’ rights issues within the supply chain of a humanitarian charity, for example, can completely undermine a charity’s work. In 2019, for example it came to light that Spice Girls t-shirts sold to raise money for Comic Relief to help achieve equality for women were made in Bangladeshi factories where women earned less than £4 a day. They also had unreasonable targets and verbal abuse when these targets weren’t met. The charity’s oversight received significant media attention, leading to uncomfortable apologies from several parties. To avoid such events, and secure the trust of the public for further charity work ,it is essential that not-for-profits conduct proper due diligence checks of their suppliers and partners.

Can due diligence be less time consuming?

Corporate ESG reporting has developed a great deal in the past decade, with many companies taking steps to address these issues. But alongside genuine progress has been greenwash and whitewash, with many companies spending vast amounts to improve their public image, while actually doing very little.  

Lengthy ESG reports can be very time consuming to read, and it is often  difficult to distinguish a genuinely ethical company from one that talks the talk but does not walk the walk.

How the Corporate Research Database can help with due diligence

Ethical Consumer’s Corporate Research Database is the perfect tool to carry out supply chain and donor due diligence fast. Subscribers get instant access to the ethical credentials of thousands of companies.

Each company has an easy to understand ‘Ethiscore’ out of 100, which lets you know at glance whether a company is genuinely ethical and sustainable.

Subscribers are also able to generate ready-made reports, detailing the ethics of current or potential partners, suppliers or donors, at the click of a button. These include key corporate information such as ultimate ownership, and our assessment of a company's approach to numerous ethical issues, including tax avoidance, workers' rights, and climate.

Find out more and subscribe to the Corporate Research Database

We offer different subscription rates depending on whether the subscription is for a commercial business or a not-for-profit / academic institution.

We also offer discounts depending on the size of your institution.

Current prices are also on the main CRD page.