The Sustainability Reporting Standard for Social Housing (SRS)

What is the SRS?

The Sustainability Reporting Standard (SRS) is a voluntary ESG reporting framework that has been specifically designed for the Social Housing sector in the UK. The reporting standard comprises of 48 ESG criteria across 12 themes, some of which have several criteria and some with only one:

1. Affordability and Security
2. Building Safety and Quality
3. Resident Voice
4. Resident Support
5. Placemaking
6. Climate Change
7. Ecology
8. Resource Management
9. Structure and Governance
10. Board and Trustees
11. Staff Wellbeing
12. Supply Chain Management

The 48 criteria are divided into 30 ‘Core’ criteria and 18 ‘Enhanced’ criteria, including both quantitative and qualitative measures.

The core/enhanced distinction does not signal differences in importance, but rather the challenge of reporting against them (mainly in terms of access to data and availability of time).

Why was it created?

To provide some context, the need for a specific ESG reporting standard for the sector in the UK can be summarised in the following two points:

1. The sector needed to increase and sustain private capital flows to meet the urgent need for more high quality, affordable housing and improve the environmental performance of existing stock.
   
   
2. The Social Housing sector relied on a presumption that it ticked ESG boxes but with little structure and consistent reporting to back this up.

It quickly became apparent that the absence of any sector standard ESG reporting standard would hinder investment progress. With a myriad of reporting frameworks available, social housing providers were being sent different ESG questionnaires — many of which are not relevant and do not allow housing associations to demonstrate their ESG credentials in an appropriate way.

Who created it?

The development of the standard was driven through a collaborative approach led by The Good Economy, a specialist impact advisory firm and involved multiple other market participants who formed a working group in 2019 which included:

• Housing associations - Peabody, Clarion, Optivo, Sovereign
• Investors and lenders - Legal & General, NatWest, M&G
• Professional advisors - Centrus, Savills, Tower & Hamlins, Ritterwald

The Good Economy together with Ritterwald reviewed the existing ESG questionnaires that were being actively used by lenders and investors. The recurring themes, questions and criteria were then identified, compared and contrasted. Feedback was then fed from all the market participants in the working group during workshops to finalise the 48 metrics in a white paper published in 2020.

What has been the reaction to the Standard?

As of July 2022, 77 housing associations have become early adopters of the SRS, meaning their ESG reports (published or set to be published) are aligned with the reporting standard and report against the standard on an annual basis. The Good Economy have set a target of reaching 150 early adopters by the end of 2022.

The SRS also counts with 37 adopter investors/lenders who have committed to integrating the SRS into investment and credit policies, processes and/or product design. An additional 21 endorsers have committed to promoting the adoption and implementation of the SRS.

According to feedback published The Good Economy’s ‘One year In, the story so far’ review, investors and lenders see the SRS as ‘best practice’ and have begun to move the SRS from a preferred reporting framework to the norm. It is being used by funders to evaluate ESG performance and to assist with pricing investment risk.

How much Capital has been raised?

Since the launch of the SRS, 25 housing providers accessed the debt capital markets issuing £5.9bn of public bonds from the start of 2021.

Over 81% of the public bonds raised were linked to ESG finance via Social, Sustainability and Sustainability-Linked Bonds. Of these, 13 housing providers were adopters of the SRS, issuing over £3.5bn of ESG linked public bonds representing close to 60% of the total raised since 2021.

Sustainability-Linked Loans (SLLs) have also increased in prominence, with SLLs becoming the default lending position for many funders. A significant number of housing providers, of both varying sizes and locations, have begun the transition of their borrowings books to becoming ESG-linked.

How does the SRS align with other ESG Reporting Standards?

It was important for the working group that they followed the best practice guidelines identified by the Impact Investing Institute and to also align with the emerging global corporate ESG and impact reporting standards and metrics so that results can be easily mapped and achieve broad acceptance within the lender and investor community. As a result the SRS has been mapped to the following global standards:

• Sustainable Development Goals (SDGs)
• International Capital Market Association (ICMA)
• Loan Market Association (LMA)
• Sustainability Accounting Standards Board (SASB)
• Global Reporting Initiative (GRI)
• Task-Force on Climate Related Financial Disclosures (TCFD)

Meet the team working with the UK Social Housing sector

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