Sector group set to launch standardised ESG criteria

News05 Mar 2020Sarah Williams

An initiative to build consensus on approaches to environmental, social and governance reporting by housing associations has identified 10 core themes and 42 criteria.

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Sector group set to launch standardised ESG criteria #ukhousing #socialhousingfinance

An initiative to build consensus on approaches to environmental, social and governance reporting by housing associations has identified 10 core themes and 42 criteria #ukhousing #socialhousingfinance

The group, which aims to standardise reporting in response to growing investor demand, is preparing to publish a white paper at the end of this month. This will set out for further consultation the group’s proposed core metrics, alongside insight gathered from lenders and investors.

Social Housing was first to report in November that the group had formed, initiated by Peabody and Centrus with research and development facilitated by social impact advisory firm The Good Economy.

Its working group also includes housing associations Clarion, Optivo and Sovereign; investors M&G and Insight Investment; advisors Savills and Trowers & Hamlins; and impact investment organisations Big Society Capital and the Impact Investing Institute.

Meanwhile, sustainability-linked loans to registered providers – where margin is linked to ESG key performance indicators – have now exceeded half a billion pounds, after Bromford and NatWest signed the sector’s first revolving credit facility with a margin linked to environmental factors in a £50m deal in February.

The group has said the themes and criteria it will set out in its white paper are “qualitative and quantitative” and will be “identified as core and secondary requirements to demonstrate strong ESG performance”.

They were developed based on a review of existing ESG questionnaires sent by investors to social housing providers, alongside a series of workshops and consultations with stakeholders in the working group and outside.

Ritterwald has also contributed to the consultation’s work on developing criteria. The firm’s ‘certified sustainable housing label’ combines environmental and social elements, which the new working group has referred to while also looking to incorporate governance.

The 10 core themes

Affordability
Building safety
Resident voice
Resident and community support
Staff well-being
Placemaking
Climate change
Ecology
Board and trustees
Systems and risk management

The group said it intends the white paper to provide a draft approach for housing associations to report on their ESG performance in a “credible, consistent and comparable way”.

Sarah Forster, chief executive of The Good Economy, said: “We’ve been very pleased and encouraged by the high level of engagement in the project across the social housing and investment worlds. All see the timeliness and usefulness of having a sector-standard approach to ESG and impact reporting.”

Anthony Marriott, head of treasury at Peabody, said: “As a starting point, this project seeks to align reporting on a number of key themes that will really shine a light on all the essential, good work that Peabody and fellow housing associations do now, what we can do in the future, and what a strong proposition we are for investors who really want their investment to make a difference.”

Phil Jenkins, managing director at Centrus, added: “The development of an effective and consistent approach for reporting the sector’s strong ESG credentials represents an important milestone in unlocking that future capital investment.”

Impact Investment and ESG Conference

Impact investment is a multitrillion-pound global market.

With an increasing number of entrants attracted to the ‘social’ in social and affordable housing, this new conference will look at the opportunities and risks in this market, and what it might mean for UK housing and future funding sources and partners.

Programme highlights include:

Global overview: defining the spectrum of capital; learning from other sectors
Widening the pool: what ESG labels can bring to housing association bond issuers; the UK story so far
Equity capital: new models for balancing risk and reward in affordable housing
Approaches to measuring social value and making the financial case
Government policy and the regulator’s view

The Impact Investment and ESG event will take place on 15 October 2020 at 133 Houndsditch, London, and while tickets are not available to purchase yet, you can let us know if you’re interested in attending next year by completing this form:

Register your interest for 2020