We are pleased to announce that Centrus has been ranked #1 on the Private Placement Monitor European Private Placement League Table by both deal count and volume for 2021.
To learn more about our work in this area with clients including London School of Economics, South Staffordshire PlC, Henderson European Focus Trust and Melin, click here.
For more information, please contact Maria Goroh, Senior Director – Centrus
Back in 2014, Centrus worked with Cross Key Homes to secure the first Housing Association issued ‘Green Bond’. Since then, we have been pleasantly surprised at the rapid adoption of Environmental, Social and Governance (ESG) accredited and labelled financing in the market. Between early 2020 and mid 2021, the housing sector moved from nearly 100% non-labelled issuance to 100% ESG labelled issuance.
While it is not yet a prerequisite for funding, ESG has become increasingly baked into the ecosystem, both for issuers building this into their reporting standards, as well as on the lender and investor side of the equation where it’s becoming fundamental to the credit process.
At this year’s NHF Housing Finance Conference Centrus Co-founder, Phil Jenkins and Director Lawrence Gill addressed the impact of ESG on the funding landscape. Centrus were joined by Anne Costain, Executive Director of Finance at Stonewater, Brenden Sarsfield Chief Executive Office at Sustainability for Housing and Imran Mubeen, Head of Treasury at Bromford Housing Group.
The most immediate trend has been the rapid adoption of the Sustainability Reporting Standard (SRS). Launched in 2020, the SRS is a voluntary reporting framework, covering 48 criteria across ESG considerations such as zero carbon targets, affordability, safety and resident voice. With over 100 organisations signed up already, the sector has made a great start in adopting ESG reporting, which many believe will become mandatory in the future.
The SRS allows housing providers to report their ESG performance in a transparent, clear and comparable way. Not only does this differentiate the issuer from their competitors, but makes it easier for lenders and investors to assess ESG performance, risks and pursue opportunities.
Beyond the SRS, the next step could be to consider impact reports from an accredited third party. This will allow HAs to quantify how much benefit their actions bring and demonstrate with more clarity how they are generating positive change for otherwise underserved stakeholders.
While a Sustainability Bond, otherwise known as a ‘use of proceeds bond’, involves proceeds being allocated to projects which further the UN’s Sustainability Development Goals (SDGs), a Sustainability-Linked Bond (SLB) has Key Performance Indicators (KPIs) embedded within it. These are specific social and environmental targets aligned both to your sustainability strategy and the SDGs.
Earlier this year, L&Q successfully completed the first Sustainability-Linked Bond in the housing sector. The £300m issue directly linked to the housing association achieving a set of targets around reducing operational carbon emissions, improving the energy efficiency of residents’ homes, and delivering new affordable homes.
As Housing Associations are in intrinsically tied to ESG due to their responsibilities within communities in which they work, this is a clear next step for the sector.
As the use of ESG labelled finance and SLBs become more widely adopted, and the sector inevitably opens itself up to criticism and accusations of greenwashing, the next challenge will be to ensure that these KPIs are set appropriately, transparently and that targets are sufficiently ambitious.
Targets should be about additionality – delivering benefits over and above the borrower’s business-as-usual strategy.
Under The International Capital Market Association’s (ICMA) Sustainability Link-Bond Principles, KPIs should be:
Please get in touch with a member of our team for more information.
