Scottish HA reveals new sustainable finance framework
Wheatley Group, Scotland’s largest housing group, has revealed a new sustainable finance framework (SFF) to expand its funding base.
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The group, which owns or manages more than 93,700 homes, making it the UK’s fourth-largest housing organisation, said the new framework is a response to heightened focus from funders on the environmental, social and governance (ESG) impact of their investments and “their support for low-carbon, environmentally friendly businesses”.
The SFF, which the group says is the first of its kind in the Scottish housing sector, will allow Wheatley to issue a range of sustainable debt instruments, such as private placements, loans and bonds.
Fellow Scottish association Link Group previously became the first registered social landlord (RSL) in Scotland to obtain the pan-European Certified Sustainable Housing Label from German impact consultancy Ritterwald, in December last year. And last month (October) it became the first Scottish RSL to adopt the Sustainability Reporting Standard for Social Housing (SRS), after the initiative opened its remit to include associations north of the border. However, Link did not require a formal SFF for its fundraising exercise.
Asked whether its framework follows the SRS, Wheatley said that it is “not directly linked to ESG reporting to which the Sustainability Reporting Standard applies”.
Wheatley, which has 97 per cent of its assets allocated to social rent, said the SFF has four key components – ‘use of proceeds’; process for project evaluation and selection; management of proceeds; and reporting.
Through the ‘use of proceeds’ approach, and in line with International Capital Market Association (ICMA) principles, Wheatley will spend amounts equivalent to net proceeds raised under the framework to finance or refinance eligible projects. The project categories have been labelled as: green buildings, affordable housing, access to essential services, and employment generation.
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Steven Henderson, director of finance at Wheatley Group, said: “Wheatley is committed to creating ‘Greener Homes, Greener Lives’ across Scotland – and the new SFF framework will be integral to helping us deliver on these goals.
“Our communities are already benefiting from our sustainable investment programme – tackling fuel poverty, reducing the costs of running a home and creating jobs and training opportunities.
“This new framework will help us do even more to improve sustainability and deliver on our ambitious plans.”
Wheatley said it developed the SFF with the NatWest Markets ESG advisory team, while external accreditation for the framework has been published by credit ratings agency Standard and Poor’s (S&P) in a second party opinion (SPO). S&P provided its first ESG accreditation for a UK registered provider in June, for large Midlands association Bromford.
S&P said in its review of the SFF that Wheatley had “committed to allocate the net proceeds of any debt instruments issued under its framework to projects addressing various social and environmental issues”.
“We see it as a strength that the company identifies the social and environmental benefits of their eligible projects, including the eradication of homelessness and reducing inequalities. We also positively note that the framework commits Wheatley to disclosing the amount used for financing vs refinancing,” the agency said.
Examples of projects covered by the framework include construction of new homes with an Energy Performance Certificate rating of A or B, re-financing existing social and affordable housing, and initiatives in the community, including 250 further and higher education bursaries and targeted programmes for 10,000 vulnerable children.
Dr Arthur Krebbers, head of sustainable finance corporates at NatWest Markets, said: “We are delighted to have supported Wheatley in establishing its inaugural sustainable finance framework.
“The framework marks an important milestone for Wheatley’s sustainability journey and the Scottish sustainable finance market more broadly. It provides a transparent and robust avenue for investors to support Wheatley’s ESG projects and initiatives.”
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