From enthusiastic investors with an appetite for green/sustainable investments to sophisticated registered providers with environmental and social governance (ESG) considerations already in their DNA, the notion of ESG has achieved real traction in the social housing sector in a very short space of time.

As a result, we are seeing (and we have advised on) an array of funding arrangements with ESG considerations at their core - from sustainable notes right through to sustainability-linked loans. The sector has even seen its first sustainability-linked term loan with a recent Vivid/Barclays £50m green term loan, (aligned with the Loan Market Association’s Green Loan Principles) hitting the headlines at the very start of the year.

Whilst these developments are great news for the social housing sector, the challenge remains not so much in making ESG activities central to the day-to-day business of a housing association but rather in being able to prove that ESG considerations are already central to a housing association’s day-to-day activities - it is all about telling a good ESG story!

One of the ways in which the sector has tried to address the issue of demonstrating strong ESG credentials is the Sustainability for Housing’s Sustainability Reporting Standard for Social Housing (SRS) - being the first formal standard for recording ESG metrics in the social housing sector. The SRS, which launched in November 2020, has been formally adopted by 90 housing associations and 35 lenders/investors to date.  

Whilst this standard is to be welcomed, it only goes so far in addressing the issue of communicating an organisation's ESG story. Many housing associations that begin their ESG journey find that, with or without the SRS, a fundamental challenge is understanding, documenting, and tracking ESG-related activities in what are often large and complex organisations. The key here, it seems, is to ensure that a housing association’s treasury function is well connected to the rest of a housing association’s business so that all facets of the business are attuned to ESG considerations. The greater the level of collaboration between a housing association’s treasury function and its other business areas, the better the visibility of ESG initiatives and projects and, as a result, the better the ESG data on which a good ESG story can be built.

As the social housing sector faces huge challenges - with the cost of living crisis, inflation, fire safety, decarbonisation, damp, mould and disrepair all front and centre - there is a chance that ESG is put on the back burner. This would be understandable, but ultimately, short-sighted. In light of recent negative press stories detailing incidents of disrepair in social homes and tenant’s concerns being ignored, investors and funders are only going to push for more visibility on ESG. There will always be an ESG story to tell so the key here is to tell it clearly, consistently and with confidence and (most importantly) to keep telling it.