Black’s Blog: Navigating the requirements of ESG

Black’s Blog: Navigating the requirements of ESG

Following the latest episode of the Scottish Housing News Podcast in which Nick Pollard and Julie McDowell share their environmental, social and governance (ESG) expertise, Jimmy Black ponders what this means for other housing associations and their boards.

Social landlords are good people. We do good things, like building new houses and letting them. But where do we get the money to do these things? From our tenants clearly, but also from the private markets where fortunes are made dealing in tobacco or currency speculation. Of course, investments can be ethical too.

So we need to be careful who we borrow from. What’s more, financiers now have to take care to whom they extend credit. They are working under Environmental, Social and Governance guidelines, and as ESG develops, so must we.

Increasingly often we will be asked for evidence that we are taking account of climate change, as responsible husbandry of the environment is becoming a requirement for lenders. What could that mean in practice?

RSLs may have to demonstrate that the houses they are building or the heating systems they are installing contribute to net zero carbon ambitions. Choices between demolition or retrofit may be carefully examined.

But its not just about the environment. Social landlords’ behaviour when it comes to evicting tenants may come under scrutiny. Boards may feel obliged to consider the cost to the public purse of temporary accommodation, looked after children, setting up new homes, mental health. Councils know all about those costs already because they generally end up shouldering them.

Then there’s the governance bit. Yes, RSLs are heavily regulated, and demonstrating compliance is already a heavy burden without added ESG.

All this is fairly speculative, but early adopters such as Link and Blackwood have invested considerable time and effort in working out what ESG means for them and how to comply. In Nick Pollard and Julie McDowell, these RSLs have considerable expertise available to deal with the changing environment. The voluntary Sustainability Reporting Standard, which provides guidance on compliance with ESG, is now under review by Sustainability for Housing, after a sector wide consultation.

Nick & Julie appear on our latest Scottish Housing News Podcast and describe the current ESG policy environment with great authority. And as Nick will tell you (if you tune in), there are huge opportunities here for economic prosperity in Scotland. It’s really not just about more rules to follow.

All episodes of the Scottish Housing News Podcast are available here as well as on the following platforms:

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