Social housing borrowing vehicle to set up bonds tied to sustainability

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MORhomes, a borrowing vehicle for the UK social housing sector, has announced that environmental, social and governance (ESG) performance of all borrowers will now be examined as part of the application process.

ESG refers to the measuring and reporting of environmental, social and governance performance to provide insight into the organisation’s stewardship of economic, environmental, human, and social capital.

The sustainability-focused loans build up on social bonds announced by the PLC in 2018, which require each borrower (which must be a not for profit registered UK housing association) to also have a corporate objective to develop new housing or deliver other assets with high social impact.

The new sustainability bonds, which will set a requirement for all MORhomes bonds, take a step further to include an organisation’s environmental performance and governance.

Patrick Symington (Credit: MORhomes)

Patrick Symington, CEO of MORhomes, commented on the announcement: “Tackling the housing crisis and creating lasting change has always been part of our ethos at MORhomes.

“The new Sustainability Bond Framework and questionnaire we are planning are testament to this.

“We are proud to have developed a new and genuinely unique approach to assessing the environmental, social and governance impact of our current and prospective housing association borrowers which is also quick and simple to complete.

“For socially conscious investors, the social housing sector is perfectly placed to demonstrate the powerful, long-term impact it is having on individuals, communities and society as a whole.

“From a sustainability perspective, there is real commitment from housing associations to safeguard the future of the planet and we are encouraging all our borrowers and shareholders to adopt the Sector Reporting Standards and show us how they are meeting the requirements through the questionnaire assessment.”

Applicants will be asked to fill in a pre-borrowing questionnaire with an 11-point ESG assessment, covering themes such as energy performance certificates and makeup of their housing stock.

The questions in the assessment have been aligned with Sector Reporting Standard and has been reviewed and validated by Ritterwald.

Borrowers are also encouraged to adopt the new Sustainability Reporting Standard for Social Housing, a sector-wide initiative launched in November.

MORhomes is one of the early adopters of the Reporting Standard, which seeks to set a consistent approach to ESG-reporting for housing associations to produce information for lenders and investors to use.

Constituted as a PLC, the shares of MORhomes are owned by over 60 major not-for-profit UK housing associations, with its public debt traded on the London Stock Exchange.

The sustainability-focused bonds are expected to launch at the same time as the borrower’s annual Sustainability Impact Report to their investors.