Sovereign, along with more than 60 banks, investors, and housing associations has become early adopters of an industry-led ESG (Environmental, Social, and Governance) sustainability reporting standard, designed to unlock institutional investment to help tackle the UK’s housing crisis.
The Sustainability Reporting Standard for Social Housing was unveiled earlier this week by the ESG Social Housing Working Group, a unique collaboration of 18 banks and investors, housing associations, service providers, and impact-investing organisations.
The working group was set up in 2019 in response to concerns ESG investment was being inhibited by the absence of a common reporting standard.
Sovereign says the aim of the new standard is to provide a voluntary reporting framework for housing providers to report on their ESG performance in a transparent, consistent, and comparable way.
This will make it easier for lenders and investors to assess the ESG performance of housing providers and identify ESG risks and opportunities to create positive social and environmental outcomes.
So far, more than 60 organisations (34 housing associations and 27 lenders and investors) have committed to become early adopters of the Standard.
Participating housing associations – including Sovereign, Optivo, Clarion and Peabody – will report against the standard on an annual basis.
Lenders and investors – including Lloyds Banking Group, Legal & General Investment Management, M&G, and NatWest – have agreed to use the standard in their investment and credit policies, processes and/or product design.
The standard covers 48 criteria across ESG considerations such as affordability, fire safety, and net-zero carbon emissions, which were unveiled in a final report released by the working group earlier this week.
The report follows an earlier draft of the criteria, published in May as part of a sector-wide consultation that received feedback from more than 400 individuals, including representatives from housing associations, investors, trade bodies, financial experts, and tenant groups.
Tracey Barnes, chief financial officer at Sovereign, said: “The Sustainability Reporting Standard will play a pivotal role at Sovereign in our approach to performance reporting, enabling further transparency for our customers, investors, and other stakeholders.
“As early adopters of ESG, this will clearly drive environmental improvements and assure Sovereign’s clarity as an organisation of social purpose.”
The Standard will be overseen by a new social and affordable housing sustainability reporting standards board, which will be established in early 2021.
A Governance Steering Committee has been set-up to oversee the establishment of this board, chaired by Susan Hickey, a former chief financial officer at Peabody Trust, with secretariat support from the Impact Investing Institute.
Lord Bob Kerslake, chair of Peabody Trust, said: “The £2 trillion UK sustainable investment market is growingly rapidly, with an increasing focus on the positive impact of housing associations.
“As well as providing new homes, we help alleviate poverty, create jobs and economic prosperity, increase health and wellbeing, and support young people.
“We also have a shared commitment to getting to net-zero carbon as soon as we can, and helping to make cities, towns and communities more sustainable in the future.
“This sector-wide reporting standard makes a significant contribution to the aim of increasing private capital flows into social housing, and will help a better and fairer economy and society to emerge after COVID-19.”
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