The ESG Social Housing Working Group, a unique collaboration of 18 banks and investors, housing associations, service providers and impact investing organisations, announced today the launch of The Sustainability Reporting Standard for Social Housing. The new Standard aims to unlock institutional investment to help tackle the UK’s deepening housing crisis, by providing a voluntary reporting framework for housing providers to report on their ESG performance in a transparent, consistent and comparable way.
The working group behind the Standard was set up in 2019 in response to concerns that ESG investment was being inhibited by the absence of a common reporting standard. As with many other sectors across the economy, there has been a plethora of ESG reporting frameworks, resulting in reporting that lacked transparency, was prone to inconsistency and was incomparable. Through the establishment of the new Standard, the group intends to make it easier for lenders and investors to assess the ESG performance of housing providers, identify ESG risks and opportunities to create positive social and environmental outcomes.
According to the working group, the new Standard has rapidly gained industry support with more than 60 banks, investors and housing associations signing on as early adopters. Participating housing associations – including Sovereign, Optivo, Clarion and Peabody – will report against the Standard on an annual basis. Meanwhile lenders and investors, including Lloyds Banking Group, Legal & General Investment Management, M&G and NatWest, have agreed to use the Standard in their investment and credit policies, processes and/or product design.
Sarah Forster, CEO, The Good Economy, which led the process of developing the Standard, said:
“By working together, the social housing sector and financial sector have demonstrated how the lack of consistency, transparency and comparability in ESG reporting can be overcome. We’re delighted so many significant lenders, investors and housing associations have already committed to using the Standard and believe it will improve access to finance for the social housing sector – helping deliver quality, affordable housing for all those who cannot afford to buy or rent in the private market.”
The Standard covers 48 criteria across ESG considerations such as affordability, fire safety and net zero carbon emissions, which are being released in a final report of the working group today. According to the group, the Standard will be overseen by a new Social and Affordable Housing: Sustainability Reporting Standards Board, which will be established in early 2021. A Governance Steering Committee has been set-up to oversee the establishment of this board, chaired by Susan Hickey, a former Chief Financial Officer at Peabody Trust, with secretariat support from the Impact Investing Institute.
Sarah Gordon, CEO at the Impact Investing Institute, said:
“This important industry-led initiative brings us one step closer to the adoption of high-quality standards for measuring, managing and reporting social and environmental outcomes across all sectors. A standard approach to ESG reporting will help improve the flow of private capital to the social and affordable housing sector, create more affordable homes across the UK and serve as a blueprint for other sectors that want to put impact at the heart of what they do.”