UK Housing ESG Framework Updated to Meet Sector Needs
The United Kingdom's social housing sector has unveiled an updated Environmental, Social, and Governance (ESG) standard after extensive consultation involving housing providers, financiers, and key stakeholders.
Managed by Sustainability for Housing (SfH), the organisation responsible for developing, promoting, and guiding the standard, version 2.0 represents a significant enhancement. It offers housing associations a robust framework to evaluate, monitor, and report on ESG matters, which are recognised as pivotal to their overall success.
Since its inception in 2020, over 100 housing providers of varying sizes across the UK have adopted this standard. Additionally, 36 financiers with assets exceeding £1 trillion, including prominent names like Legal & General, M&G Investments, abrdn, Schroders, Aviva, and major banks such as Lloyds and Natwest, have embraced it. Importantly, this standard remains the sole comprehensive ESG reporting standard tailored for the UK social housing sector, developed with insights from industry professionals.
The 2023 iteration places increased emphasis on sector priorities, notably resident concerns. It introduces specific questions aimed at enhancing transparency regarding the management of issues like dampness and mold in the sector, as well as inquiries concerning net-zero targets and a heightened focus on Equality, Diversity, and Inclusion (EDI).
The latest update also aligns the sector with relevant international frameworks, making it simpler for adopters to demonstrate their ESG credentials. The standard now corresponds with frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), and Streamlined Energy and Carbon Reporting (SECR).
Adopters are now required to follow a 'comply or explain' approach in their responses. In cases where they cannot report against all criteria, adopters are expected to outline the actions they are taking and provide a timeline for data provision.
Furthermore, SfH introduces the expectation that housing providers report their results year-on-year. This aids housing associations in showcasing their performance over time, and it allows stakeholders, including residents, to assess their landlords' performance.
The consultation process for version 2.0 spanned several months and was overseen by the impact advisory firm and SfH secretariat, The Good Economy. It included in-depth interviews with housing associations and funders who had adopted the standard, as well as a public consultation involving around 40 organisations, including the Investment Association. Subsequent steps involved additional interviews, guidance from technical experts, and alignment with international standards and reporting frameworks.
This comprehensive process also addressed specific concerns such as consistency and methodology for calculating Scope 1, 2, and 3 emissions, the inclusion of ESG 'golden metrics,' and questions regarding verification and assurance.
SfH has committed to an annual review of the standard if necessary.
Brendan Sarsfield, chair of SfH, commented, "The social housing sector has shown its commitment to advancing ESG, and the SRS Adopter community has grown stronger. We have collaborated closely with housing providers and funders to enhance the SRS, and I'd like to extend my gratitude to the SfH team."
Sarah Smith, a board member at SfH who led the consultation process, added, "After months of engagement with numerous funders and housing providers, we are pleased to unveil Version 2.0 of the SRS. This standard will continue to evolve in a way that aids housing providers in developing their ESG strategies and ensures consistent, comparable, and transparent reporting of their individual ESG performance."
Imran Mubeen, director of treasury at Bromford, stated, "The SRS has been a transformative force in the social housing sector. It provides housing associations with a clear and comprehensive channel to communicate their ESG story and evaluate their performance against peers, benefiting customers, colleagues, funders, and stakeholders. The SRS remains a central feature of our investor roadshows and played a crucial role in securing £150 million in new funding with investors this year."
Hugo Gordon, senior policy advisory at the Investment Association, expressed support for the updated Sustainable Reporting Standard, emphasising the importance of collaboration to better serve investors, housing associations, tenants, and the environment.
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Source: Scottish Housing News