5th July 2021
ESG is an acronym that has been heard a lot recently in the social housing world. It stands for environmental, social and governance, and refers to a way of measuring the performance of an organisation in terms of its environmental and social impacts and risks, and the quality of governance.
The corporate world has been developing ESG strategies and reports for many years now, and investors have become increasingly adept at using these reports to assess and filter suitable investments.
In a bid to help the sector define what should be included in an ESG strategy, The Sustainability Reporting Standard for Social Housing, designed by a working group of housing associations and consultants; has created a reporting standard. This comprises 12 core themes and 48 criteria for ESG reporting allowing for standardisation to be achieved across different organisations. Key themes that are included are climate change and sustainability, corporate governance, human rights and diversity.
The UK is in the midst of a housing crisis, and globally we are having to face the challenges of a climate emergency. As we look to the future, and how we are to solve these problems, it is clear that the social housing sector needs to sustain and increase private capital flows to meet the need for more high quality, affordable housing and improve the environmental sustainability and quality of the properties that already exist. For the sector to deliver on its capacity to help solve the housing and climate crisis, it is vital that funding is aligned to both the financing needs of the organisation and the delivery of positive social and environmental outcomes.
Our survey revealed that nearly 90% of social housing organisations believe that ESG funding is important to the organisation’s ability to meet its future objectives. A good 44% of respondents said their organisation already has an ESG strategy in place and of the remainder, 29% do not have a strategy while 27% are unsure. This all illustrates that even though ESG is growing in importance, there is still ground to cover before it is fully understood and embedded across the sector
The key barrier to developing an effective environmental sustainability strategy, and wider ESG report, is usually having access to the right data. How does an organisation measure its progress, and what does it measure it against when the data points are not available?
Data, data, data
As mentioned, investors have been using ESG reporting in a corporate setting for some time now and have become used to having access to the data that will help support their decision making. The data is the key to being able to assess whether something will be a good investment so it’s not something that can be ignored. For example; do you have a clear understanding of your carbon footprint or utility consumption? The sooner you start comprehensively collecting and reporting on your data points, the easier is it to start improving them.
Our survey asked whether respondents had set any key performance indicators (KPIs) to measure their environmental sustainability progress. Only around half – 51% – replied that they had, while 29% said “no” and a further 20% said they are unsure.
Without having these measures in place, it’s much harder for an organisation to make progress towards its goal, as the saying goes – what gets measured gets managed. All of these metrics have to be underpinned and informed by having access to real-time data, letting you know how any improvements you make are performing. Without this, time could be wasted on implementing the wrong projects or overestimating the impact that something is having on the progress towards your sustainability goals.
But as the survey illustrates, the processes involved in collecting and using data are not always straightforward. Knowing what data should be collected, and by whom? Which individual or team within an organisation is responsible for collecting, collating and reporting this information? And is it timely enough and of good enough quality to be useful?
This is an area that is a huge problem for many organisations, as time, resources and access to the right data points are not always available.
When asked why getting the data was proving difficult, some respondents explained that “There has generally been poor data collection across the business historically,” while another commented that “It is too complicated to get accurate figures,” a third responded, “Even though we have [the data], it has taken two years to get in a good place and there are still gaps, particularly around the supply chain,”.
As the survey demonstrates there is a clear desire for progress to be made in ESG reporting, as the importance of it is clear for all to see. But for some sections, particularly sustainability measures, shortfalls in knowledge, resource and access to the right data points is holding some organisations back.
Having a clear strategy from the start, with clear buy-in across the many teams that are involved, is the number one step in making sure that your environmental sustainability reporting will be persuasive enough when used as part of a larger ESG strategy.