Environmental, Social and Governance (ESG) is a collective set of standards that businesses use to measure their impact on society and the environment, and also to show how transparent and accountable their business is.
This article will examine each pillar of ESG and examine how National Housing Group adheres to the standards in their products, policies, and behaviours.
The ’environmental’ aspect is how the company improves its environmental policies, how it finds solutions to combat environmental concerns and limits any future environmental issues. The threat of climate change and depletion of resources has led many consumers to factor in how environmentally sustainable companies are when making certain choices. The variety of environmental concerns is vast, from greenhouse gas emissions to biodiversity, waste management, water management, and energy efficiency. Cutting emissions, combating global warming and decarbonising are important. If we take a building’s energy efficiency as just one example of an environmental aspect, we can examine changes in policies and practices that can be put in place.
With nearly 40% of all greenhouse gas emissions worldwide being attributed to buildings, it is imperative that those within the property market are aware of this impact and take measures to reduce those emissions where possible. A property’s energy efficiency and emissions are now rated against a variety of scales and standards, such as Energy Performance Certificates (EPC) or BREEAM – Building Research Establishment Environmental Assessment Method. For a business to be more environmentally friendly, these standards should be considered before a building or development begins. In fact, the UK Government has proposed the enforcement of an EPC rating of B for privately rented non-domestic buildings by 2030. There is likely to be further regulatory requirements put in place going forward.
Another part of the environmental aspect includes sustainability. The materials used to build or develop properties can be sustainable, meaning they do not deplete natural and non-renewable resources, and they have no adverse impact on the environment when used.
Although these objectives may not be totally obtainable in practice, as part of National Housing Group’s Green Homes Initiative, our properties are built to be as energy efficient as possible. Our construction focus is on efficiency and sustainability and all our products are hard-wearing. We use the following sustainable solutions in our projects:
- Solar panels
- Low energy lighting
- Energy-efficient heating
- Radiant heating and cooling.
Using energy-efficient, renewable or recycled materials lessens the environmental footprint and produces fewer carbon emissions via efficient energy use.
Faringdon Lodge is a great example of our Green Homes Initiative in action. We installed 52 solar panels, and estimate that just over two thirds of the energy generated will be used directly by the residents of the building, with the remaining energy being fed back into the national grid, meaning that residents’ utility bills are reduced. To further enhance the property and to reduce the cost of living, other sustainable improvements including BREEAM rating A+ flooring, double glazing, low energy and sensored lighting and electric radiators were installed. The initiative will help us to achieve the Government’s plan to reach net zero greenhouse gas emissions by 2050 and to raise the minimum EPC standard in all domestic rented properties to band C by 2028. In the last year alone, we have fitted 100 solar panels, 6 biomass boilers, 100 electric Ecostrad radiators, replaced 50 panes of single glazing with double glazing and rolled 3,000m of insulation.
Social is what the company does to improve their social impact both within the company, the local community, and wider community. Social factors include everything from human rights, labour standards in the supply chain, animal welfare, any exposure to illegal child labour to LGBTQ+ equality, racial diversity in the executive suite and staff overall as well as inclusion programs and hiring practices. It looks at how a company advocates for social improvement in the local community, beyond its own industry and even the wider world.
When considering the social aspect of ESG within the property market, this is reflected in how the building will impact society. The focus here is not just on the tenants, but the local community also. Will it support local enterprises, such as cafes and shops, is there access to public green spaces, is the property accessible, for example, does it have step-free access? These questions must be taken into account when considering the social impact of a property.
Our initiatives are community focused. Not only do we provide people with a home in their own community, we also work closely in partnership with charities, local authorities and housing associations, improving the lives of their communities. There is a positive impact of removing homeless people from the streets and getting them into a home. Additionally, by working with existing property stock that is disused and derelict we are improving the communities’ aesthetic and reducing risk levels associated with those properties.
General wellness and health and safety considerations are also part of the social section of ESG. The recent pandemic has meant that hygiene and cleanliness have become more important, meaning more efforts are made to promote cleaning and sanitisation, especially in shared areas. The International WELL Building Institutes’ (IWBI) Well Building Standard is the premier standard for buildings, interior spaces and communities that are looking to implement and measure features that support human health and wellness. This consists of over 100 features over multiple areas such as water, air, light or thermal comfort.
The type of building itself can also fall into ESG considerations. Community centres, for example, are specifically designed to add value to and support a local community, and this would be an ESG building. The same can be said for social housing specifically to help vulnerable adults, such as that provided by National Housing Group. In several of our properties there is an on-site support team for the residents, and at our Mawney Road property the residents also have access to a NHS health and wellbeing team.
Governance is the way the company’s management team advocates for positive change. Governance can include everything from diversity in leadership, equal pay and accounting transparency to how it governs the way it interacts with stakeholders and the industry as well as audits and internal controls and policies. This has been developed from Corporate Social Responsibility (CSR).
National Housing Group is committed to both diversity and inclusion, promoting a working culture that values talent beyond stereotypes and supports all staff to reach their full potential. We believe that this will lead to an inclusive and diverse workplace which will ultimately attract and retain talent, hiring based on approach and attitude as much as skills. We try to create an interdependent culture of shared purpose and encourage participation, autonomy and responsibility with a view to fostering an innovative approach to all areas of work. Employee wellbeing and development are of paramount importance and to that end we encourage staff to undertake professional training annually, and we facilitate one day in the year for personal growth, including paying for classes/experiences.
Governance should also be used to guide policies such as vendor selection and treatment, and be used to prioritise the wellbeing of employees. Companies with a robust ethical and social platform have strengthened operational resilience and are better positioned to withstand crises such as economic volatility.
It is likely that new ESG policies will be introduced by the Government. For example, in November 2021, the Department for Transport confirmed that new buildings in England will be obligated to install charging points for electric vehicles.
With the growing and changing regulations, it is imperative that all entities in the property market examine their own ESG offerings. Not only will this keep them compliant to the necessary regulations that are in place, but it is also an important way to demonstrate that they are doing ‘the right thing’ as a company, employer, and service provider. Society expects more, and the property market needs to adapt.
With the demand for companies to be transparent about their ESG policies and behaviours, National Housing Group will continue to act based on the three important principles of environment, social responsibility and governance. We are proud of our offering so far, incorporating sustainability and eco-friendly practices into all of our properties, and are clear about our social responsibility, committed to making a difference to the homeless community and putting our residents first.