November 2021. Organisations have started to rethink the way they operate, with the climate emergency, rising economic inequalities and the pandemic all acting as catalysts for change.
As a result, Environmental, Social, and Governance (ESG) is quickly becoming a buzzword in all sectors – it means different things to different organisations in different contexts. This is true of social housing, where the inconsistencies in understanding ESG persist.
ESG is a three-pronged strategic approach that reframes an organisation’s objectives and decision making around environmental, social & governance factors. Embedding ESG means that strong, strategic leadership is supported by a cultural shift that promotes a consideration of ESG at every level. It is also a language that enables the sector to communicate its positive impacts to wider stakeholders. ESG reporting is the communication tool that seeks to formally capture progress towards targets and demonstrate credentials to lenders and investors to secure funding for decarbonisation and new homes.
Our recent survey of 60 public and social sector leaders sought to gauge how organisations view ESG through the lens of the pandemic and identify how the sector plans to move forward. We identified that organisations are at a tipping point in their thinking about ESG and social value as new priorities emerge post-COVID-19, with five critical ESG and social value themes:
1) ESG and social value are a catalyst for broader sector transformation
Although social housing has always been geared towards delivering social value, 90% of respondents felt that embracing ESG can provide a renewed focus and transform organisations’ delivery models. Moving away from a transactional exercise towards fully embedding ESG and social value across the entire organisation will enhance benefits for local communities and service users.
2) Community health and wellbeing, resilience and regeneration are leading social value / ESG outcomes
Our survey identified community health and wellbeing as a key strategy area, with just over half placing it among their top three priorities. It was viewed as more important than efficiency, cost-cutting and digital transformation, which signifies the tipping point for social value. Organisations are looking to build resilience to enable communities to withstand future crises, which is of paramount importance during the pandemic and the increasing frequency and severity of climate disasters such as flooding. Regeneration is another top priority – building sustainable communities over the long term by investing in a wide range of projects.
3) Addressing climate change and decarbonisation are major ambitions, but more tangible action is needed
The Government’s recent net-zero strategy highlighted that public and social sector organisations must lead the way on tackling climate change, which was echoed by 95% of those surveyed. However, a stark contrast appeared, with only 41% of organisations surveyed having a net-zero goal. A key message of the United Nations Cop 26 Conference is that a goal alone is not enough – now is the time for meaningful action and this is true for the housing sector. Detailed decarbonisation plans with short, medium and long-term goals are needed to provide a roadmap to net zero.
4) Gaps emerge in ESG planning and reporting maturity for many organisations
Although responses throughout the survey acknowledged the importance of the sector in tackling ESG issues, there was a stark contrast in the number of organisations that have taken action. Just 32% of organisations surveyed had a social value / ESG strategy or reporting framework in place. Some of the largest housing associations are leading the way, having adopted the Sustainability Reporting Standard for Social Housing and published their first ESG reports. A further 32% expecting to implement an ESG strategy and/or reporting framework in the next three years. The sector must act now to capitalise on social value and funding opportunities by embedding ESG organisation-wide.
5) The sector needs to win the war for socially engaged talent
Having a socially-engaged workforce is a key mechanism for embedding ESG into organisational culture. The sector offers plentiful opportunities to make a direct, meaningful difference to tenants, society and the environment. Only 26% of respondents felt that the public and social sector was an attractive career option for people looking to make a difference on ESG and social value. Organisations should look to attract more socially engaged talent by considering reframing their mission around ESG and social value.
Treating ESG as a transactional compliance or CSR exercise delegated to one individual cannot achieve the social and environmental transformation required in the sector. It is fundamental that ESG is fully embedded strategically and holistically across an organisation in order to effectively manage associated risks and seize the many opportunities available to housing associations.
We all need to start taking these issues seriously today, not only to protect our planet and society for future generations, but to help organisations safeguard their own futures.
If you haven't already, you can click the link below to access your copy of our recent report Demystifying ESG: a pathway to enhance social value in the public and social sector, which provides pragmatic insights into how your organisation can move forward positively with social value and ESG.
Access your copy here