The UK social housing sector’s updated environmental, social and governance (ESG) standard has been published following an extensive consultation process involving housing providers, funders, and other key stakeholders.
Sustainability for Housing (SfH), which oversees the development, promotion and strategic direction of the Standard, said that version 2.0 further enhances a framework for housing associations to assess, monitor and report on ESG issues, which the sector recognises are key to their organisational success.
Since its inception in 2020, the Standard has been adopted by more than 100 housing providers of all sizes across the UK. The Standard has also been adopted by 36 funders with more than £1trn of assets under management, including Legal & General, M&G Investments, abrdn, Schroders and Aviva, and leading banks such as Lloyds and Natwest.
It remains the only comprehensive ESG reporting standard designed for the UK social housing sector and has been developed with the expertise of professionals in the sector.
The 2023 version places an even greater focus on sector priorities and particularly resident issues, with specific questions aimed at improving transparency around how adopters are dealing with the issues of damp and mould in the sector, along with questions around net zero targets and a greater focus on equality, diversity and inclusion (EDI).
The most recent update also helps the sector keep pace with relevant international frameworks, making it easier for adopters to demonstrate their ESG credentials. The Standard has been updated to align with frameworks including the Task Force on Climate-Related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB) and the Streamlined Energy and Carbon Reporting (SECR).
Adopters will now need to adhere to a ‘comply or explain’ approach in their responses. For instance, where they are unable to report against all criteria, adopters are expected outline the steps they are taking and the timeframe within which they expect to be in a position to provide the data.
SfH has also introduced an expectation that housing providers report year-on-year results. Many housing associations are developing sustainability strategies and this framework will help them demonstrate their performance over time. Annual comparisons also allows other stakeholders such as residents see how their landlord is performing.
The version 2.0 consultation process ran for several months and was managed by impact advisory firm and SfH secretariat, The Good Economy. It included in-depth interviews with housing associations and funder adopters of the Standard, along with a public consultation that returned responses from around 40 organisations, including the Investment Association [can we name a few key names here as otherwise could sound a bit thin but many were either expert or representative bodies]. This was then followed up with further interviews, guidance from technical experts and work to ensure alignment with international standards and reporting frameworks.
The process also addressed specific queries and concerns, such as consistency and methodology for calculating Scope 1,2 and 3 emissions, whether or not to include ESG ‘golden metrics’ and questions around verification and assurance.
SfH has said it will now look to review the Standard on an annual basis if required.
Brendan Sarsfield, Chair of SfH, said: “The social housing sector has shown it is willing and able to push the envelope when it comes to ESG, and the SRS Adopter community has grown from strength to strength.
“We have been engaging regularly with housing providers and funders to update the SRS are grateful for their input which has helped strengthen the SRS. I’d also like to say a big thank you to the SfH team and
“The social housing sector has a very credible ESG story and are committed to helping telling that story in a clear and measurable way.”
Sarah Smith, board member at SfH who led the consultation process, said: “After months of engagement with dozens of funders and housing providers, we are pleased to share Version 2.0 of the SRS.
“The Standard will continue to be developed in a way that is useful for housing providers to develop their ESG strategies and report on their individual ESG performance in a consistent, comparable and transparent way.”
Imran Mubeen, Director of Treasury at Bromford, said: “The SRS has been a game changer for the social housing sector. It enables housing associations to communicate their ESG story through a clear and comprehensive channel, and enables our performance to be to be evaluated against our peers by our customers, colleagues, funders and other stakeholders.
“The SRS continues to be a central feature on our investor roadshows; and was instrumental in delivering £150m of new funding with investors this year. We continue to call for the promotion of golden metrics to accompany the broader disclosures, and welcome a future where our data is audited before it is published.”
Hugo Gordon, Senior Policy Advisory at the Investment Association, said: “The IA welcomes the updated Sustainable Reporting Standard and looks forward to continuing to work with Sustainability for Housing and all market participants as we evolve market practice to better suit the needs of investors, housing associations, and most importantly tenants themselves and our environment.”
To see the rationale behind all changes between SRS v1.2 and v2.0, and the full SRS v2.0 criteria, please click on the links below:
• SRS v2.0: Consultation feedback and technical update summary
• SRS v2.0 Criteria