How investors’ focus on ESG is influencing the UK housing sector

First, ESG is shifting the debate about the role of social housing. For the past 10 years, this has been framed around the number of new homes that we are building or are proposing to build.

Development is, of course, an intrinsic part of what we do. But we’re not just developers. Similarly, while renting out homes to people is what we do, we’re not just landlords.

The social part of social housing is core to what we do and who we are. And the advent of ESG requirements of lenders has focused attention on our social purpose as social housing organisations.

In order to build new homes and maintain our existing homes in the future, we have to deliver social impact for our lenders. ESG, then, has created a golden thread between the homes we build and maintain and the core services we provide to our residents and communities.

The second takeaway for me was around the opportunity that ESG provides for community investment colleagues within social housing organisations. For too long, community investment has been seen as a ‘nice to have’, rather than as a core part of who we are.

When a previous government proposed a rent cut, the first budgets that were earmarked for cuts were those run by community investment colleagues.

Now, there’s a recognition that community investment is at the core of how we operate.

Take the example of rental income. Prior to the COVID-19 pandemic, many income teams worked in isolation from their community investment colleagues. Now, income teams are taking ownership of debt advice and financial literacy programmes because they recognise that by delivering the latter, they can reduce rent arrears.

In some organisations there are informal – and in one case, formal policy – decisions about not evicting residents because of rent arrears. By supporting residents, whether through debt advice, welfare advice support or direct financial payments, organisations will save money and protect income streams over the longer term.

Internally, then, the value and importance community investment is being recognised, partly because of the importance of ESG. 

“Greater Manchester housing providers state that they collectively contribute £1.2bn in gross value added to the economy there. How much larger would that figure be if every UK social housing organisation was able to measure its social value impact in the same terms?”

The third takeaway from the session was encapsulated by a comment from one of the panelists, when she said that if we want to attract more ESG funds, we need to get better at telling our story.

This isn’t just about how we tell the story of our impact as individual organisations. It’s also how we tell the story of our impact collectively.

Since we launched our impact measures in May, we’ve been able to tell the collective story of how the sector has responded to the COVID-19 pandemic. The statistics make for impressive reading.

If we aggregate the figures across the sector, they would indicate that social housing organisations collectively have provided almost £4m in financial assistance, made more than two million welfare calls and provided more than 440,000 residents with advice and guidance sessions, and made more than 320,000 food interventions since the COVID-19 pandemic began.

Imagine if we were able to tell a similar story about our collective social impact. Greater Manchester housing providers state that they collectively contribute £1.2bn in gross value added to the economy there. How much larger would that figure be if every UK social housing organisation was able to measure its social value impact in the same terms?

Our roadmap for the future of social value in social housing sets out a way that we can do this together.

It will enlarge the social housing sector’s ‘UK social value bank’ so that it includes environmental values, economic values and refreshed and enlarged well-being values, which can then be applied across the business of social housing.

The roadmap will enable social housing to evidence its social impact, using the same methodology, underpinned by robust statistical evidence.

Yet we have to do that collectively. As a sector, there is no value in social value unless we work together. It’s why we joined with numerous social housing organisations and investors in endorsing the Sustainability Reporting Standard for Social Housing. 

The social value roadmap won’t just make it easier for us to tell our story individually and collectively in order to attract ESG funds. It will also make it easier for ESG funders to make decisions about those loans, to monitor their investments and report back to their shareholders about the tangible difference their money is making to the people’s lives and communities across the UK.

Housing associations are already driving forward their own environmental agendas, determined to move towards being carbon net zero organisations. By expanding the UK social value bank to include environmental values, social housing organisations will have the ability to speak to and measure all parts of the ESG framework.

The future of ESG and community investment is exciting. It will result in surprising connections within organisations, across the sector and with external sector organisations. It will unleash creativity within the sector and bring in more resources so that we can realise our social purpose.

Together, we can do more.

Andrew van Doorn, chief executive, HACT