The priorities identified at COP26 are not new, but the conference has served to increase the pressure to make progress. For social housing, this includes the issue of sustainability, according to Inenco Dan Pardesi
How has COP26 changed what is expected of social housing organizations when it comes to environmental sustainability, and specifically when it comes to carbon emissions?
Decarbonization, energy efficiency and profitability have always been important for the sector. We have always had ambitious targets for improving energy performance and expected social housing bodies to take the lead in the UK’s national decarbonisation.
What has changed is the emphasis on environmental sustainability. COP26 received extensive media coverage and highlighted the scale of the climate emergency.
The announcement by the government of the Social Housing Decarbonisation Fund and the financing of heating networks is really positive. But there is also pressure on organizations to demonstrate to their customers and stakeholders that they are organizationally sustainable.
There is a degree of polarization in the social housing sector. Some organizations have made great strides in reducing their carbon emissions and increasing their sustainability. Some have recognized that the decarbonization of their stock and the decarbonization of their own operations will occur on different timelines and have sought to set net zero targets with different dates for these two elements.
Where should social landlords expect pressure to increase their own sustainability?
With environment and social governance [ESG] becoming increasingly important from a funding perspective, social owners are going to have to start measuring and managing their sustainability impact in a more defined and reportable way to secure investment.
We have seen larger housing associations succeed in making significant investments through things like green bonds and that will continue. There will be a lot of pressure from banks, funds and investors to ensure that all investments they make in social housing provide the right level of ESG credentials.
Sustainability will also need to be demonstrated to tenants. COP26 showed us how important sustainability is for young people in particular. Organizations are going to see customer demand for energy efficient homes fit for the future. Ultimately, if a social landlord has a very good sustainability record, they are likely to be more attractive to potential clients than another social housing organization that is not as advanced in the area of sustainability and reducing carbon emissions.
From a government perspective, there will be pressure for the social housing sector to take the lead in home energy efficiency and carbon reduction, and rightly so. We are already seeing organizations like the Social Housing Regulator and the National Housing Federation beginning to champion this area.
What do you think of how owners assess their carbon footprint? How can they do it more efficiently?
Some organizations are more advanced than others. If we look at the big housing associations, they have already been reporting their carbon emissions for a number of years. The particular challenge around this is always what you are reporting and where you can get accurate data from.
Currently, organizations tend to report on their scope 1 emissions – direct emissions from things like burning gas to provide heating that is recharged to tenants and residents – and on scope emissions 2, which are indirect emissions from things like transportation for maintenance fleets. .
I think we’ll see more and more people adopting the streamlined energy and carbon reporting guidelines. This is widely used in the private sector by large companies and it involves looking not only at an organization’s direct and indirect emissions, but also up and down the value chain at what are known as Scope three emissions – supplier and end-user emissions as well.
Social housing organizations should start by reporting emissions where the data is available and where the improvement is within their control. Typically this will be around litter one and litter two.