Updated ESG standard launches, with stock quality and EDI focus

SfH said the most recent update also helps the sector to keep pace with relevant international frameworks, making it easier for adopters to demonstrate their ESG credentials.

The standard has been updated to align with frameworks including the Task Force on Climate-Related Financial Disclosures, the Sustainability Accounting Standards Board and Streamlined Energy and Carbon Reporting.

Version 2.0 will require adopters to adhere to a ‘comply or explain’ approach in their responses. For example, where they are unable to report against all criteria, adopters are expected to outline the steps they are taking and the timeframe within which they expect to be in a position to provide the data.

The updated standard has also introduced an expectation that housing providers report year-on-year results. SfH said this framework will help the many housing associations that are developing sustainability strategies demonstrate their performance over time.

Annual comparisons will also allow other stakeholders, such as residents, to see how their landlord is performing, SfH said.

The updated standard has also changed the order of criteria to E-S-G, putting environmental first to align to the standard practice across sectors. This is after version 1 put the ‘S’ first to recognise that housing providers are at their core social businesses.

SfH has said it will now look to review the standard on an annual basis if required.

Adopters will be expected to report against version 2.0 by the end of October 2024. It is therefore expected that the previous iteration of the SRS (version 1.2) is used for upcoming October 2023 reporting.

SfH said that in future it intends to play a “more active role” in supporting adopters of the SRS by monitoring and sharing updates and insights on emerging legislation, guidelines and reporting requirements.

This may result in update reports of the relevant information for the sector. This will make the process of updating the SRS a “more streamlined process” in future years, SfH said.

The trade body said it will also continue to encourage the sector to adopt ESG reporting to demonstrate its “positive contribution to addressing critical environmental and social issues”.

Brendan Sarsfield, chair of SfH, said: “The social housing sector has shown it is willing and able to push the envelope when it comes to ESG, and the SRS adopter community has grown from strength to strength.

“We have been engaging regularly with housing providers and funders to update the SRS and are grateful for their input which has helped strengthen the SRS. I’d also like to say a big thank you to the SfH team.

“The social housing sector has a very credible ESG story and [is] committed to helping tell that story in a clear and measurable way.”

Sarah Smith, board member at SfH who led the consultation process, said: “After months of engagement with dozens of funders and housing providers, we are pleased to share version 2.0 of the SRS.

“The standard will continue to be developed in a way that is useful for housing providers to develop their ESG strategies and report on their individual ESG performance in a consistent, comparable and transparent way.”

Imran Mubeen, director of treasury at Bromford, said the SRS has been a “game changer for the social housing sector” and has helped the 46,000-home housing association secure £150m in funding this year.

“It enables housing associations to communicate their ESG story through a clear and comprehensive channel and enables our performance to be to be evaluated against our peers by our customers, colleagues, funders and other stakeholders,” he said.

“The SRS continues to be a central feature on our investor roadshows and was instrumental in delivering £150m of new funding with investors this year. We continue to call for the promotion of golden metrics to accompany the broader disclosures and welcome a future where our data is audited before it is published.”

The Investment Association, a trade body whose members manage around £10tn of assets in the UK and beyond, previously released an updated version of its governance and disclosure guidelines for housing associations seeking funding from capital markets, in November 2022. This called for “greater disclosures” including around stock quality and complaints data to “identify potential for discriminatory treatment”. 

Hugo Gordon, senior policy advisor at the Investment Association (IA), welcomed version 2.0 of the SRS.

“The IA welcomes the updated Sustainability Reporting Standard and looks forward to continuing to work with Sustainability for Housing and all market participants as we evolve market practice to better suit the needs of investors, housing associations, and most importantly tenants themselves and our environment,” he said.