On the 20th September, Prime Minister Rishi Sunak announced an overhaul of policies intended to help the UK meet its target of cutting carbon emissions to net zero by 2050.
The prime minister said the UK could afford to adopt a more “pragmatic, proportionate and realistic” approach to achieving net zero.
This policy overhaul from the government leaves Housing Associations in limbo. It is unclear how the Sector should move forward with sustainability and decarbonisation plans.
This means it is more important than ever for Housing to be on top of their ESG reports, as it provides something to rely on in the face of uncertainty.
But what exactly did the Prime Minister’s announcement say, and what does this mean for Housing Associations moving forward?
What did Rishi Sunak’s announcement say?
The Prime Minister announced that targets to get households to switch away from fossil fuel boilers were being relaxed. Alongside this, he announced plans for tougher energy efficiency rules for landlords were being ditched. He also declared the ban on the sales of new petrol and diesel cars was being pushed back, from 2030 to 2035.
Three years ago the government set out its “preferred policy scenario” of all private landlords achieving Energy Performance Certificate rating C. For new tenancies this was from 2025, and for existing tenants it was by 2028.
Tenant bodies are outraged by the abandonment of this policy, amid concerns that the much-awaited Renters Reform Bill might face a similar fate.
Sunak claimed he would still “encourage” households to improve their energy efficiency, but that “under current plans, some property owners would have been forced to make expensive upgrades in just two years’ time”.
Additionally, the Prime Minister declared a 50% increase in financial support for grants under the government’s boiler upgrade scheme. He said he does not want to impose costs on “hard-pressed families” at a time “when technology is often still expensive”.
While this might sound appealing, the 2035 deadline for putting in new boilers remains unchanged. The only new policy being the promise of an exemption for those who would find the switch to heat pumps the “hardest”.
The Prime Minister said this overhaul “doesn’t mean” he is “any less committed to decarbonising our homes”.
A significant portion of these changes will affect the Housing industry in one way or another. This Sector was already making progress towards the country’s net zero goals by enhancing the energy efficiency of many homes, as well as starting to report on ESG through the SRS.
The changes leave many Housing Associations uncertain on how to proceed, as the details of what this means for the Sector has not been made clear by the government.
What is the response from the Housing Sector?
The potential impact of these changes for Housing Associations cannot be ignored. Many in the industry have already come out to share their thoughts on the upcoming changes and what they could mean for the Sector.
Kate Henderson, chief executive of the National Housing Federation, said it is “hugely disappointing” to see the government “row back from its commitments to net zero, particularly on improving the energy efficiency of our homes”.
She stated: “England’s homes are among the oldest and draughtiest in Europe. Making homes more energy efficient is a win-win, not only helping to save our planet, but also boosting our economy by creating jobs and, crucially, saving money.”
Rachelle Earwaker, senior economist at the Joseph Rowntree Foundation, said easing the regulations on energy-efficient homes is “ill advised and ill considered”.
She added: “If we don’t invest in energy-efficient housing and more sustainable and affordable energy solutions, the only certainty is frighteningly high energy bills and poor health outcomes.”
Dan Wilson Craw, deputy chief executive of Generation Rent, said scrapping higher standards for rental properties is a “colossal error” by the government, and that “energy efficiency” is an “essential part of a home’s quality”.
He stated that abandoning these policies is “both cruel and out of proportion to what the prime minister wants to achieve.”
What does this mean for Housing Associations?
Overall, this presents a huge problem for the Sector, which was already challenged with the enormous responsibility of reducing carbon emissions. Now, the industry is confronted with even more uncertainty regarding the government’s objectives.
There are also significantly diminished prospects of securing the necessary funding to aid in decarbonisation.
Rishi Sunak and the government have promised a “pragmatic” transition in which the public continues to rely on gas boilers, ignore the issue of energy inefficient housing, delay the serious adoption of electric vehicles until 2035, and somehow, miraculously, achieve the significant reductions in carbon dioxide emissions necessary to achieve net zero.
The lack of clarity on how to move forward with sustainability plans, and how to give tenants the best quality service possible in spite of government policy, means a challenging road ahead.
All this highlights is that it is more important than ever for Housing Associations to communicate with their tenants, and assure them that their needs are your top priority.
The Sector needs to be able to ensure their environmental efforts are being demonstrated, and the public is made aware of them. Whether this be in energy efficiency and ESG goals or beyond, communication between Housing providers and tenants is crucial.
Additionally, with the possibility of more funding from the government appearing more and more unlikely, financing for Housing Associations is going to become more and more competitive.
With investors and consumers alike focusing on sustainability and ESG, reporting effectively and clearly, and showing your environmental progress is going to be critical in the face of these changes.
The earlier you start reporting, the more secure you can be in the face of instability within the Sector.
Why ESG Reports are more important than ever?
As well as achieving its target of net zero emissions by 2050, the UK government has to meet interim “budgets” along the way. Ministers have yet to flesh out important details of Sunak’s policy changes — such as exactly which households might be exempt from having to ditch fossil fuel boilers — so the impact on emissions is hard to calculate at this stage.
Moving forward, the Sector should continue to strive towards sustainability, and this means focusing on what you can do; ESG reporting, and the SRS.
Publishing an ESG report sets out your clear intentions for your organisation’s future, and its future projects. It includes your current investments and future investments into ESG. This will allow your potential investors to have a complete idea of how their money will be spent.
These announcements may make it seem like ESG should be less of a concern for the Housing Sector. The targets proposed by the government are unclear, and the elections next year may mean that it will all change yet again anyway! However, the Housing Sector has always pushed to be ahead of the curve, when government regulations are lacking, it is up to Housing Associations to provide the best service possible for their tenants.
Furthermore, investors, banks and loan providers will still be focused on providing green loans and ESG funding to Housing Associations. However, access to this money will be increasingly competitive without potential government assistance. The sooner you start reporting the more evidence you will have to provide investors of your year-by-year progress.
The SRS will also soon be launching their Version 2.0. which will address some of the common concerns that investors have. This will also help push the Sector forwards. During these uncertain times it is better to be ambitious than “realistic”, especially with the upcoming changes to the SRS allowing for a “comply or explain” approach.
The SRS helps level the playing field for all Housing Associations in terms of ESG by giving a criteria for them to focus on. Organising a standard allows the whole Sector to come together to determine what matters to them around the E, the S and the G in ESG.
The Housing Sector is one of the nations’ biggest polluters; if Net Zero is to ever be achieved then it is necessary to act sooner rather than later.
How Convene can help you with ESG Reporting
Here at Convene we have developed our own ESG reporting tool: Convene ESG.
Convene ESG is designed for Housing Associations with the assistance of Housing Associations. Our Early Adopters discussed with us what they needed, and with their requirements we developed a tool that would help Housing Associations generate the best ESG reports possible.
With Convene ESG you can compare benchmarks, organise your report, assign sections, automate reminders and input your ESG data and the solution will create a report ready to publish or edit as necessary. You can also input the data once and report against multiple different frameworks. This means you can provide lenders and your tenants with both a TCFD, RITTERWALD and SRS Report without repeating the work every time!
With the SRS Version 2.0 coming out this week, it’s as good a time as any to start ESG reporting.
This updated version has been produced using feedback from Adopters, Endorsers, and supporters of the Standard, and should help your association even further on your ESG journey.
You can find more about how Convene ESG can help your Housing Association here, or you can keep up with our dedicated events including networking opportunities and webinars here.
