In response to requests from investors for better ESG data, social housing bond issuer The Housing Finance Corporation (THFC) has reported the ESG performance of its borrowers, hoping other investors will follow suit.
Findings include 100% of its currently funded housing associations meeting building safety and quality standards, all using independent surveyors to gauge resident satisfaction, and 95% of new builds holding A-B EPC ratings.
THFC is a UK affordable housing aggregator, with £7.9bn of lending to around 160 housing associations in England, Wales, Scotland and Northern Ireland.
In 2020, a working group was convened by housing associations and investors, led by impact consultancy The Good Economy, to develop a sector-specific framework for ESG disclosure. The ESG Social Housing Working Group was established in response to the plethora of requests for ESG data from investors, and the need to harmonise and streamline this process.
The result was the Sustainability Reporting Standard for Social Housing (SRS), a voluntary reporting framework covering 48 criteria across ESG considerations such as zero carbon targets, affordability and safety standards. The working group partners included Insight, M&G, LGIM Real Assets, Big Society Capital and the Impact Investing Institute.
Sophie Lawrence, senior ethical, sustainable and impact researcher at Rathbone Greenbank Investments told ESG Clarity at the time: “We are very supportive of the SRS, having provided in depth comments to The Good Economy’s white paper and committed to becoming an early adopter of the standard. The standard will be a key driver of improved disclosure in the sector.
“This is essential in enabling comparison of social housing providers across the sector through a comprehensive and transparent assessment of their management of social and environmental issues.”
Reporting criteria
At the end of September 2021, THFC’s funding company bLEND published the results of its reporting against the SRS criteria of the 16 housing associations in its current funding pool.
Piers Williamson, CEO of THFC, said: “We want to help housing associations be leaders in shaping the provision of ESG data. Our decision to go it alone and collect and publish the aggregated performance of our funding pool will make us and our sector more accountable, transparent and aligned to the Sustainability Reporting Standard.”
In the report, Funding Housing, Making Impact, it measured its borrowers against affordability and security criteria, building safety and quality, the ability of residents to have a voice, resident support, the environmental rating of housing, structure and governance, the demographics of housing boards and trustees and staff wellbeing.
In affordability, it found borrowers are undertaking retrofit works, from component replacements (e.g. boilers, heat pumps, windows, doors) and fabric-first approaches, to the use of solar panels and battery storage systems to give tenants control over their fuel bills.
In building safety and quality, it found all its borrowers were up to date with gas, fire and Decent Homes Standards compliance, while in resident voice, it found more than half of the borrowers had a tenant representative on their board.
For environmental ratings, 65% of existing stock had EPC ratings of A-C against a sector average of 60%, while 95% of new builds were A-B.
Finally, in structure and governance, all borrowers were registered with a regulator, the correct governance code and all demonstrated “robust risk management procedures”.
Some 42% of the housing association boards were women, 11% Bame and 7% disabled. The average age on boards was 54 and average tenure 3.1 years. And in staff wellbeing 56% of borrowers paid the real living wage and the mean gender pay gap was 8.3%.
Brendan Sarsfield, CEO of Peabody and chair of Sustainability for Housing, said: “This story of impact we know is becoming increasingly important for all our stakeholders, including potential investors, residents and their communities.”
