Report: The Sustainability Reporting Standard for Social Housing
Sustainability reporting standard launched by the social housing sector to help unlock ESG investment to tackle the UK’s housing crisis.
More than 60 banks, investors and housing associations have today become early adopters of an industry-led sustainability reporting standard designed to unlock institutional investment to help tackle the UK’s deepening housing crisis.
- The Sustainability Reporting Standard for Social Housing (“the Standard”) will address the lack of transparency, consistency and comparability in reporting ESG performance.
- Lloyds, NatWest, LGIM and M&G are among more than 25 investors and lenders already committed to the Standard.
- Social housing is understood to be first UK sector to come together with lenders and investors to create a common sustainability reporting standard.
- Standard offers a blueprint to other sectors where a multitude of ESG reporting frameworks is fuelling inconsistency and a lack of transparency.
- Roll-out of the Standard across the social housing sector will be governed by a new industry representative standards board, which will be operational in 2021.
The Sustainability Reporting Standard for Social Housing was unveiled today by the ESG Social Housing Working Group, a unique collaboration of 18 banks and investors, housing associations, service providers and impact investing organisations.
The working group was set up in 2019 in response to concerns 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.
The aim of the Standard is to provide a voluntary reporting framework for housing providers to report on their ESG performance in a transparent, consistent and comparable way. This will 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.
So far, more than 60 organisations (34 housing associations and 27 lenders and investors) have committed to become early adopters of the Standard. 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.
The Standard covers 48 criteria across ESG considerations such as affordability, fire safety and net zero carbon emissions, which are unveiled in a final report of the working group today. The report follows an earlier draft of the criteria, published in May as part of a sector-wide consultation. The consultation received feedback from more than 400 individuals, including representatives from housing associations, investors, trade bodies, financial experts and tenants’ groups.
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.
Naomi Roper, partner at law firm Trowers & Hamlins, said:
"In a post-Covid world it is clear that putting ESG considerations at the heart of your business is vital for success. The new Sustainability Reporting Standard for Social Housing will help housing providers better articulate their already impressive ESG credentials to potential funders, hopefully opening up a new funding stream in the process. Trowers has been at the forefront of many significant developments in the social housing sector and we were delighted to be involved in this ground-breaking project."
The final report, detailing the Standard and the criteria, can be found here.