Environmental, Social and Governance reporting – our experiences of early adoption

Sarah Smith, 14 July 2021

Environmental, Social and Governance (ESG) reporting in the social housing sector has come a long way in a relatively short space of time. 

We saw our first sustainability-linked loans in 2019, which were viewed as a differentiator by new banking market entrants to win market share. Appetite increased in 2020 when we saw the bond market ask for ESG disclosures. In response to the growing investor appetite for ESG information, the Sustainability Reporting Standards Working Group was established.

Their work culminated in the publication of the Sustainability for Housing Standard in November 2020. A new board has been created to embed the Standard and promote the sector as a great opportunity for investors to increase their capital allocation in ESG investment. There are now around 90 early adopters of the Standard, of which Optivo is one.

At Optivo, we published our first ESG report in 2020, demonstrating how we performed against the United Nations’ Sustainable Development Goals (SDGs). These are some of the challenges we experienced in producing our first report.

Whose responsibility is this and who are the audience? 

With the initial prompt coming from an investor relations initiative, our work was led by our Treasury Team. But it was a project for the whole business, requiring significant engagement from a number of teams including environmental sustainability, social impact, governance and external affairs. To date, investors and funders are our key external client, with our Board, Audit & Risk, and Treasury Committees all also taking an interest. In the future, the client group could well expand to include grant providers, strategic business partners and residents.

What is the deliverable? 

We are very familiar with statutory financial reporting requirements and every year we follow a well-established routine. But different analysts were seeking performance against KPIs we weren’t reporting on. Last year we therefore ended up with somewhat fragmented reporting on a range of initiatives including SHIFT Sustainability Standard, HACT social value calculator, and Streamlined Energy and Carbon Reporting, plus financial performance. This year we’re starting to streamline our reporting but we still have a long way to go.

Can we align reporting timetables? 

We are writing our second ESG report now and are starting to bring our publication timetable closer to the annual audited accounts.

What about data challenges? 

Don’t underestimate this one. Analysts ultimately want to receive comparable data over time between different organisations. For now, we are focusing on our own metrics and performance. 

What next? 

Expectations are rising and what happens in the future is likely to depend on what our audiences want, what the corporate world is doing and what assurance we may be required to provide.

We’re keen to see more housing associations adopt and report against the Sustainability Reporting Standard. It needs to remain accessible to organisations of all sizes, and seen as a positive enabler attracting more capital and aligning all stakeholders behind the target to achieve net zero carbon by 2050.