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A source of opportunity in social housing

How are providers of social housing addressing ESG (Environmental, Social and Governance) issues? What additional opportunities has this provided? David Perry explains.

ESG, sustainability, and social value investment are terms well-known to many participants in the living sector, not least to registered providers (RPs) of social housing, who may feel that they have been doing ‘this’ for many years and now everyone else is just catching up.

To some extent that is true. RPs have long been assessed on governance and viability standards, their asset management teams are deeply aware of energy efficiency and whole life costings, and RPs, by their very nature, are embedded in and engaged with the communities that they serve.

However, ESG now represents something much more for RPs and, as a sector, is increasingly a source of significant opportunity for these organisations to do more, more often, and more cost effectively.

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In terms of measurement, management and monitoring, it becomes a collection of metrics hung on three key hooks, including some or all of the following (and many more):


  • Addressing net zero carbon in the housing stock and beyond – energy supply vs fabric first, housing stock upgrade/retrofitting and development
  • Green procurement and supply chain management
  • Renewables and energy efficiency
  • Green buildings
  • Clean transportation
  • Environmentally sustainable land uses on schemes


  • Community building and community sustainability
  • Tenant engagement and customer satisfaction
  • Reducing homelessness
  • Promoting diversity
  • Addressing affordability and tenure mix in developments
  • Addressing 'heating or eating' issues and fuel poverty
  • Placemaking activities


  • Board training and competence
  • Addressing gender pay gaps
  • Diversity and inclusion
  • Board appointments and tenure structures
  • Internal pay ratios
  • Sick leave metrics
  • Internal policies and procedures

A route to funding

While the Regulator of Social Housing undoubtedly will look more at ESG credentials over time, as they are a good regulatory performance indicator, the real driver for ESG is the desire of activist investors to broker positive change through social value investment. This has been demonstrated in recent years with the publication of ICMA green, social and sustainability bond principles, and the LMA green and social loans principles to give guidance for what the markets want to achieve.

Much of it comes down to measurement, management, and monitoring – do it, but record that you have done it, using performance indicators that are stretching but also material to the organisation’s overall business and able to be benchmarked.

Reflecting RPs’ collaborative approach to addressing change, this need for ESG reporting to be transparent, consistent and comparable resulted in a sector working group creating a voluntary reporting framework based on sector-relevant standards – leading to the November 2020 Sustainability Reporting Standard for Social Housing.

Is it successful? A quick internet search will tell you it is. Bromford, a major Midlands RP, has signed a number of sustainability-linked loans tied to energy efficiency targets, and other facilities to reduce gender pay gap. Clarion has been reported in the press as raising £350m through an oversubscribed bond issue. Overall, research suggests that the ESG-wrapped capital issuance to non-profit RPs exceeds £4 billion. These are not small sums of money.

Attracting investors

ESG for RPs is not about attracting customers – because RPs are typically addressing need in their areas of operation rather than, strictly, attracting customers from elsewhere. It is more about attracting investors, who provide the funding infrastructure to support RPs’ operations and ambitions, allowing them to deliver better services and support to their customers. And, overall, because ESG has been a significant component of what RPs have done for a long time, the sector is well placed to exploit this route to market.

However, ESG represents more than just sourcing funding and recording numbers – it allows RPs, as major community participants, to ‘tread more lightly’ with what they do and, as a consequence of having done many of these things for a number of years out of sight, now to access activist social investment funding in a meaningful way as a return on their embedded ESG processes, and to have the confidence and resourcing to look to do more.

Having a formal ESG framework allows RPs to reduce their environmental impacts and generate positive social value impacts through the way in which they fund their core operations and future ambitions. ESG represents a great opportunity to RPs to drive and embrace positive change, and deliver real returns for their communities.

David Perry is a partner at Shoosmiths.

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