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Attracting Investment to the Social Housing Sector

A recently published ESG reporting standard for social housing could pave the way for a new influx of private investment, says David Cassidy

David Cassidy

David Cassidy
Head of Social Housing

Social Housing’s dilemma

The demand for affordable social housing in the UK has arguably rarely outstripped the supply as much as it does today.

The coronavirus pandemic has served to highlight inequality as communities characterised by inadequate housing have struggled disproportionately with outbreaks of Covid-19. This emphasises the need to maintain existing stock to an appropriate standard.

Housing associations are also passionately committed to providing new, quality, sustainable homes for those in need, but have some tough choices ahead in balancing the twin aims of maintaining existing stock and new supply. The good news is that investment into the sector remains strong but as investment needs grow, which inevitably they will, ensuring the sector has ready access to a more diverse investor base is vital.

Now, as we head towards Spring 2021, and the vaccine rollout is operating smoothly, a fresh window of opportunity is opening up for the sector.

Just as consumers are pivoting towards brands that understand the impact they have on communities and the environment, investors are no longer judging potential investments on financial performance alone – environmental, social and governance (ESG) factors are playing an increasingly important role in their decisions.

The sector has recognised this shift, and Barclays is delighted to be one of the early adopters of the first industry-led sustainability reporting standard for social housing.

Demonstrating ESG best practice

The Sustainability Reporting Standard for Social Housing^ provides a transparent, consistent and comparable way for the sector to voluntarily report on their ESG performance. Crucially, it will enable housing associations to better demonstrate to investors how their activities add social value and have an extremely positive social impact.

We believe that the standard will attract so-called ‘impact investors’ who are hungry for a socially responsible investment as well as increasing investment from existing market participants. This will be invaluable in helping housing associations to continue their essential work towards addressing the housing crisis.

By signing up as an early adopter – alongside some of the UK’s biggest housing associations, funders, and other investors – Barclays has committed to incorporating the standard within our products, policies and procedures. We will of course also be championing the take up of the standard with our current and prospective clients across the industry.

The 12 Core Themes of the Standard

Published in November 2020 by the ESG Social Housing Working Group, the standard was produced through the collaboration of industry leaders and consultation with 400 individuals and 53 organisations across the housing and financial sectors.

The standard is aligned to international ESG frameworks and includes 48 criteria across 12 core themes:

Environmental

Climate change, ecology, and resource management.

Social

Affordability and security, building safety and quality, resident voice resident support, and placemaking.

Governance

Structure and governance, board and trustees, staff wellbeing, and supply chain management.

A Standard for Reporting

My colleague Will Roberts, who is championing the initiative for the Barclays Public Sector team, has noted that given our role within the sector, we sit in a very privileged position where day to day we get to see the incredible positive social impact that the sector has throughout our society. The standard will bring these sustainability credentials to life for those who don’t benefit from such exposure and will help the sector to effectively highlight its societal contribution, as well as demonstrate to those who are at the beginning of their ESG journey what best practice is from a reporting perspective.

In many cases, the criteria that this standard identifies are already being captured and reported on – but it is the standardisation of these that will transform the comparability of data – from large to small housing providers. Housing association will be able to report on their performance annually from October 2021.

With an estimated global market size^ of $715 billion at the end of 2019, impact investors are a significant force in the market and we very much welcome the introduction of this new standard as a method of attracting new interest in supporting social housing in the UK.

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