In our latest podcast, Piers Williamson, Chair of Sustainability for Housing, is joined by Executive Director of Regulatory Standards at the Financial Reporting Council (FRC), Mark Babington.
Piers and Mark explore why transparent reporting is critical, political debate vs market demand, the role of international standards in housing reporting, essential governance practices for ESG reporting and how ESG reporting in the housing sector can influence financial reporting.
Below are some of the key takeaways…
The importance of transparent sustainability reporting
Mark reveals that organisations’ sustainability metrics are increasingly being used as determining factors for the investor community, making transparent reporting essential across sectors like housing.
“[It is important] we have a way of undertaking consistent comparable reporting that is not just over the financial metrics, but is also over the impact that a business… has on the planet and the environment.”
Are standards trumping Trump?
Despite political noise, Mark notes that the investor community continues to expect sustainability reporting as they play an important role in investors’ consideration. He explains: “We are seeing slowly, but surely, jurisdictions begin to mandate reporting. We’re seeing it expand.”
Discussing the potential parochialism of international standards, Mark notes the recent development of sustainability standards in Europe, he says: “We’re actually seeing the pull and the alignment of international standards.”
The role of international standards in housing reporting
Piers questions Mark on the UK’s presumed endorsement of the International Financial Reporting Standard (IFRS). Mark highlights how international sustainability standards create a global baseline for organisations to meet various reporting objectives for diverse investors and regulatory expectations.
In regard to what housing associations should look out for, Mark says: ”[That baseline] provides a sort of comprehensive but scalable set of reporting obligations, which if followed, can allow entities to meet their obligations in an effective way.”
Governance best practices for ESG reporting
When questioned on the governance practices that are essential for housing associations embedding ESG reporting, Mark explained that boards must broaden their skills, have an opinion on a wider range of subject matters and share their experiences.
He said: “We can only know that there’s that broad acceptance [for standards] if boards are willing to speak up, if there are things that work well for them to make sure they articulate that.”
Active engagement means boards can help refine and develop the sector’s ESG reporting.
How ESG reporting in the housing sector can influence financial reporting
One of the aims of the SRS is consistency and comparability, Piers and Mark discuss how that aligns with the FRC’s wider work in improving the quality and reliability of reporting.
To ensure there is high-quality and consistent reporting, Mark explains it must meet the needs of a diverse user group. He also highlights that the robust reporting history and database of the SRS and the housing sector strengthens its voice in shaping standards in financial reporting.
He says: “ [The housing sector] is a significant sector in the context of the UK economy… financial reporting is particularly important because there is an interest not only in what you do this year, but there is also a real focus on the long term as well.”
To find out more, listen to the podcast here.
