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Growth of ESG financing


ESG financing is becoming increasingly important in the social housing sector as can be seen by recent sustainability bonds issued by Clarion and Aster, Platform’s launch of an EMTN programme under which it can issue sustainability bonds, and the NatWest Group affordable housing social bond, the proceeds of which are to be allocated to its social housing portfolio of lending.

ESG financing is still a “work in progress”.  It is driven by investors who want to invest ethically but with a financial return.  Investors need to know that their investments are ethical and will have a positive and social impact, and are not being sold to them as “green” when they are not.  In order to assess the ESG performance of organisations investors require access to non-financial information via corporate disclosures.  There are several voluntary reporting frameworks, all based on self-reporting on a voluntary basis but as yet there is not a system of globally accepted and consistent ESG reporting standards subject to external audit.

As a result a number of regulatory regimes are increasingly focusing on ESG financing including the EU and UK governments and it is likely some form of standardised disclosure/reporting framework will emerge.  In the meantime the voluntary disclosure framework for RPs, known as the Sustainability Reporting Standard for Social Housing has been accepted by a number of RPs and funders and is already being used for ESG reporting and disclosures.  ESG is a natural source of finance for RPs and they should make the most of the opportunities ESG offers.

Please click here to read our full client briefing on ESG Financing.

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