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Investors with over £1 trillion of assets under management throw weight behind social housing ESG reporting standard

Photo by Super Straho on Unsplash

Thirty-six lenders and investors have now adopted a UK social housing ESG standard, including Legal & General, M&G Investments, abrdn, Schroders and Aviva.

Some of the biggest names in the investment world have described an Environmental, Social and Governance (ESG) reporting standard for UK social housing as the “go to” framework for the sector.

The Sustainability Reporting Standard for Social Housing (SRS), launched in November 2020, has now received the backing of 36 financial institutions, including investors whose assets under management are in excess of £1trn.

These institutions also represent the majority of the £90bn of private investment in UK social housing, include Legal & General, M&G Investments, abrdn, Scottish Widows Schroders and Aviva, along with leading sector lenders including Lloyds Bank Commercial Banking, NatWest, Barclays and Santander.

The SRS has so far been adopted by 68 housing providers of different sizes from across the UK who manage more than 1.5m homes – equivalent to 34% of England’s social housing stock. A report out yesterday from Sustainability for Housing (SfH) – which oversees the sector standard – reveals the extent to which ESG reporting is shaping investment in UK social housing, and the impact it is having on the sector’s approach in areas like sustainability.

Decarbonising millions of existing social homes is a major priority for the sector and the UK government in the context of the country’s net zero targets.

A survey in the report found that more than half of lenders and investors think reporting against the SRS is “becoming expected” of housing providers. Meanwhile, more than a third of housing providers said the development of their ESG reports had led them to accelerate the implementation of planned ESG actions.

SfH, whose board includes senior figures from both the housing and the financial services industry, believes the SRS will ultimately increase private investment in affordable housing which will in turn help ease the UK housing crisis.

Brendan Sarsfield, Chair of the SfH board and former chief executive of housing association Peabody, said: “The report reflects the huge progress social housing providers have made on their ESG journey.

“The Standard has provided the spark needed to improve the sector’s relationship with investors while starting on much needed ESG-focused work that will benefit residents.”

Since the start of 2021, 25 housing providers accessed the debt capital markets issuing £5.9bn of public bonds of which 81% were linked to ESG. Of these, 13 housing providers were adopters of the SRS, issuing over £3.4bn of ESG linked public bonds representing close to 60% of the total raised since 2021.

Many funders note that they view the adoption of the SRS by a housing provider as an indication of the provider’s commitment to sustainability. And while ESG is still at a relatively early stage in the sector, funders are also using SRS reports to understand how far it is integrated into business operations as well as future planning.

Mr Sarsfield added: “I am immensely proud of the work done so far but the report represents the beginning of a long journey.

“We will update the SRS so that it continues to stretch landlords on their sustainability commitments and gives an honest picture of how the sector is performing when it comes to ESG.”

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