Association secures £75m in its first ESG deal linked to repairs performance

Paul Coates, executive director of customer transformation at Bromford, said: “We are acutely aware that there has been increased scrutiny over the performance of housing associations in responding to customers’ repairs requests over the past 12 months, with an increased focus on damp and mould, where the negative impacts on health have resulted in legislation via Awaab’s Law.

“We’ve already been focused on reducing the number of repairs we have open, including investing around £4.5m this year investigating and resolving reports of condensation, damp and mould in our homes and finding long-term solutions to these issues.

“But we’re determined to do more and want to move to a more proactive approach to maintaining our homes that will help us to further reduce the number of active repairs we have from customers. It’s a key part of our corporate strategy and so it makes perfect sense to align this latest funding deal with this goal.”

Imran Mubeen, director of treasury at Bromford, added: “We are delighted to have entered into this new partnership with HSBC UK as they continue to support the social housing sector.

“This deal forms the foundation of a long-term relationship with HSBC UK as we press ahead with our plans to raise over £1bn of new funding by 2031. This £75m facility has been delivered through our sustainable finance framework and will allow us to progress our ambitious development plan, invest in our existing homes, and pursue our decarbonisation agenda.

“We are particularly pleased that the facility is sustainability linked, bringing our portfolio to a total of eight sustainability KPIs across six sustainability-linked loans, all of which align to key objectives in our 2023-27 corporate strategy.”

SLLs, based on principles set out by the Loan Market Association (LMA), see borrowers receive a discount on the margin if pre-agreed targets relating to environmental, social and governance (ESG) goals are met.

However, some within the sector have questioned whether the requirements placed on borrowers are justified by the savings on offer from funders, especially following the updated LMA guidance.

Mr Mubeen said that Bromford continues to see SLLs as a “meaningful tool in giving prominence to and holding us to account on our sustainability journey”.

But the landlord continues “to push back against the growing volume of requirements” from the LMA, he said.

“It is of course important that we have rigorous and independent review of our sustainability performance, but this must be balanced with a recognition of the social purpose and green agenda inherent to our purpose as a social housing landlord, and we must ensure we don’t get lost in a cycle of reporting and process and lose focus on driving outcomes,” Mr Mubeen said.

He said that as well as Bromford providing information on ESG, it is important to ask the ESG journey of the lender and in this case, HSBC shared its own sustainability performance.

The treasury director recently set out in a co-authored comment piece for Social Housing why Bromford sees ESG as a “two-way street”.

Commenting on Bromford’s latest deal, Mr Mubeen said: “We are pleased that HSBC has helped to deliver a balanced approach to this SLL, and that they have shared their own sustainability performance – including areas for improvement on their gender pay gap and carbon emissions – so openly. We hope that this partnership will enable us both to raise our standards in ESG delivery over the coming years.”

Devonshires provided legal advice to Bromford while Addleshaw Goddard acted for HSBC.

Over the past 12 months Bromford has secured more than £450m in new funding, all through its sustainable finance framework, to help finance its programme of housebuilding across the West Midlands and West of England.

This included securing two RCFs worth £127m in January, with both sustainability-linked deals tied to targets to reduce Scope 1, 2 and 3 carbon emissions.

According to its financial results for 2022-23, Bromford invested £56m in its existing homes, a rise from £50m in the previous year.

The group also invested £225m in building new homes, an increase from £180m in 2021-22. It delivered 1,265 affordable homes in 2022-23, 41 more than in the previous year.

Last month, Bromford retained its A2 stable credit rating with Moody’s and Mr Mubeen said the provider would “no longer accept” a credit rating update from the agencies unless they meet with its customers as part of the annual review process.