Pan-European sustainable label will ‘broaden pools of capital’ for HA
Clarion Housing Group’s adoption of a new pan-European ‘Certified Sustainable Housing Label’ aimed at affordable housing companies will help to diversify the range of investors it works with, it has said.
Picture: Getty
Sharelines
The provider joined two other housing providers in adopting the label, Gewobag in Germany, and Vilogia in France, when it announced its accreditation on 12 November.
The initiative, created by German consultancy Ritterwald, aligns with the green and social bond principles issued by the International Capital Market Association (ICMA), and mirrors the impact investment principles of the United Nations.
It evaluates providers against 30 individual criteria, and Clarion will undergo regular external assessment to maintain the accreditation.
Gareth Francis, director of treasury and corporate finance at Clarion, told Social Housing that the association wants to use the label to articulate its story on social and environmental value.
“Primarily, we want to communicate our commitment to [environmental, social and governance] to the external world, to our stakeholders, who are our existing and potential new funders, but also our customers and our communities,” he said.
Read more
He said that the measure would enable Clarion to benchmark its performance in the sustainability field against other affordable housing providers across Europe, and that it could also help it to attract a broader range of investors.
“If you look at the green bond market, the social bond market, you can see that there are investors who have mandates who can only invest in green, social and sustainability bonds.
“So it is absolutely helpful for us every time that we are out selling debt that we have a corporate label that recognises our efforts on sustainability because it clearly opens up further pools of capital.”
Mr Francis said that it was not possible to say whether the label could have a pricing advantage, but he added: “I personally feel that, over time, there will be a disbenefit to not doing this, so it’s a question of how long this is a USP for us as to how much of a benefit we will see.
“Certainly it will provide an obvious route to market for impact funds and it should broaden the pools of capital that can and want to invest in us.”
Mr Francis’ comments came as Social Housing reported that a new sector initiative had launched to build consensus on an approach to environmental, social and governance reporting in UK social housing. Clarion and Ritterwald were both confirmed as core partners in the advisory group.
Sustainable Housing Framework
Adoption of the label with Ritterwald means that Clarion will raise funding through a new Sustainable Housing Framework, which will be used to finance or refinance assets or activities that are classified as sustainable. This will include funds raised through its £3bn European Medium-Term Note Programme.
To assess the proportion of its stock that is eligible to be funded through the framework, Clarion has separated its buildings into three groups, with only the first of these – the core residential portfolio – eligible for proceeds raised under the framework. The two other groups, comprising residential housing developed for open market sale and commercial property, are not eligible and will be funded through alternate means.
Clarion then calculates the share of assets that could be financed by using the framework. Alongside this, Clarion’s activities as a landlord, a developer and an investor in the community are assessed across ‘social’ and ‘green’ criteria through the label.
Mr Francis said: “[Broadly] speaking, we would expect most of our fundraising to be eligible under the ICMA social bond principles whilst we are looking for an increasing amount of the capital we raise for new build development to be eligible under the ICMA green bond principles.”
Hear from Ritterwald, Clarion and panellists from across the impact investment and affordable housing sectors at the special afternoon stream ‘Impact investment and ESG in UK social housing’ at the Social Housing Annual Conference on 4 December in London
- © Social Housing
- All rights reserved