The Sustainability Reporting Standard for Social Housing, has launched today with a significant number of housing associations and funders listed as early adopters of the standard. This significant step for the sector is aimed at opening the door to additional funding sources attracted to environmental, social and governance (ESG) investing and follows a period of widespread consultation of both housing associations and the financial sector.
The standard is voluntary but provides a framework for housing associations to report on ESG performance both transparently and consistently.
So why is this important?
There is a fast growing interest in ESG and many funders and investors are anticipating that ESG will play a more fundamental role in credit processes. This reporting standard will allow lenders and investors to assess the ESG performance of housing associations more easily. It also begins to pave a way for investors looking to impact invest.
It is hoped that this will increase capital flows into the social housing sector at a time when expanding investor interest and funding options is key in addressing the financing needs of the sector. Only earlier this week, Clarion successfully launched its second sustainability bond at an very low coupon of just 1.25 per cent. One of the reasons cited for the competitive pricing was the wide investor interest and greater demand due to the sustainability label.
We are also seeing banks being more interested in ESG and some are providing incentives to improve ESG performance (for example margin reductions for meeting agreed sustainability measures).
In addition to the above, the reporting standard has been designed to help housing associations meet reporting standards required when issuing green, social and sustainable bonds.
Several of the UK’s biggest housing associations (HAs) have joined together with the leading funders to the sector to launch the first sustainability reporting standard for social housing.