You are viewing 1 of your 1 free articles
Tom Paul is Director of Treasury & Commercial at Optivo, and before this was a corporate finance advisor. He’s responsible for ...more
ESG reports will help match lenders seeking an ethical investment to housing association borrowers
Investors increasingly want to know about the ethics of a housing association’s business. That’s why ESG reports will be a crucial tool going forwards, and we’re proud to be leading the way writes Tom Paul
It’s more than a decade since the financial crisis of 2008, and housing associations have since come to depend on the support of debt capital markets investors to fund our long-term investments in new social housing.
Banks have retrenched and are focussing on shorter-dated loans.
So, as a sector, we’ve been listening to investor needs and expectations, looking to help them to help us. We’ve become more transparent and more frequent in our financial report. Back in 2016, Optivo was the first housing association to issue a ‘Trading Update’. These are now common place across the sector and are an
important flow of information into the public markets.
READ MORE
Over the last year or two, we’ve had increasing requests from investors for information about our environmental impact, social impact and governance.
This is known as ‘ESG’. We’ve been able to answer ad hoc queries with ad hoc answers, but it’s been unsatisfactory and we’ve known we need to do better.
‘ESG’ captures the idea there can, or should be, more to investment decision making than the raw finances. Many investors want to actively invest in ‘good’ things, or to avoid making investments in ‘bad’ things.
ESG is a lens through which potential investments are screened.
As a sector, social housing has a huge head start versus corporates. We actively do good and generally adopt sensible governance practices within a regulatory framework. We have a major collective challenge on low-carbon transition, but we also have the resources and appetite to make that happen.
Until recently, however, investors have had more of the information they need about oil majors and tobacco
companies than they have had on us.
In May 2020, The Good Economy published a consultation on a sector-standard approach for ESG reporting. We were part of a small group of housing associations, advisors and investors to sponsor this work, and are really proud we did.
Publication of that report has really pushed the issue forward within our sector. We now wait for results of the consultation process and views on how that work is taken forward.
In the meantime, we’ve taken the plunge and are now publishing an ESG report following The Good Economy proposed template. Now we have something ready to hand to help our investors. And doing it now means we can tie in with the publication of our accounts for 2019/20.
We fully expect the template will change over time as a result of all the consultation feedback, and through trial and error. We wanted to show how achievable this is, and to endorse the work The Good Economy have done.
We’ve some trepidation in going first. But we hope others will come along and do the same. We want them to improve on the template and methodologies we’ve adopted so, when we come to prepare our 2021 report, it’ll be even better.
Together, we can work to a standard across our sector which will help us help our investors to help us.
Tom Paul, director of treasury and commercial, Optivo
