A summary of National Housing Conference 2022

Day one of our National Housing Conference 2022 kicked off with an introduction from James McMorrow and Derek Hogg, who set the scene before an opening address from Shona Robison MSP, Cabinet Secretary for Social Justice, Housing and Local Government.

The Cabinet Secretary acknowledged the significant effort from the sector in meeting its target of 50,000 affordable homes, including more than 34,400 for social rent, despite the adverse impact of Brexit and the pandemic on the construction industry.

Ms Robison outlined the new target of 110,000 affordable homes by 2032, of which 70% will be for social rent and 10% to be in remote rural areas and the islands. More than £3.6bn has been made available in the current parliamentary term to ensure everyone in Scotland has a warm, safe and affordable place to live.

The challenges were also acknowledged, particularly inflation and rising costs in the supply chain, and the cost of living crisis.

The Cabinet Secretary went on to detail the Scottish Government’s Housing to 2040 strategy, which includes plans to introduce a Scottish accessible home standard which all new homes will be expected to achieve by 2025/26.

Derek and James then presented a current overview of the sector, covering the challenges and opportunities, including:

• Achieving net zero carbon emissions and the regulatory framework which is driving the changes at UK and Scottish levels. While housing at the moment contributes around 20-25% of total emissions, there is an opportunity for new housing to meet improved standards and be a bigger contributor to wider efforts.
• The transition to net zero will be a significant challenge for the sector, given that it will have to be achieved within the context of rents remaining affordable, particularly at a time when tenants are being impacted by rising living costs.
• How the funding environment remains positive for RSLs. However, it is expected the market may become more uncertain given inflation putting pressure on interest rates. At the same time, lenders are placing increasing importance on ESG factors as part of their lending decisions, which represents a major opportunity for the sector.
• How ESG principles are already baked in to the social housing sector, given the existing structure of RSLs, their charitable objectives, democratic membership, open decision making process and aims and outputs.

Derek and James summed up their session with the belief that there are many reasons to be cheerful, despite the obvious pressures on providers and tenants alike. The sector is in a strong position. Long-term funding remains available and the sector is tailor-made to maximise the opportunities presented by the ESG agenda.

The retrofit challenge

Day two was hosted by Collette Miller and Euan Pirie, featuring roundtable guests Bryan Leask, Chief Executive of Hjaltland Housing Association, Mike Button, Director of Boxed Energy, and Mark Stewart, Head of Energy, Infrastructure and Sustainability at Johnston Carmichael.

The context was set in terms of the targets laid out in the Housing to 2040 route map, the current emissions performance and the need for Scotland to decarbonise the heating of one million homes by 2030, to help meet the Scottish Government’s 2045 net zero target.

Discussion centred around the challenges and opportunities for social landlords to improve energy efficiency and decarbonise heating systems in housing stocks, alongside other priorities including the ESG agenda, fuel poverty, and meeting new-build targets.

The panel discussed a wide range of existing retrofitting options and challenges, alongside associated issues such as funding, carbon offsetting and ratings. There was agreement that there is no “one-size-fits-all” approach to retrofitting and that landlords will be working through funding challenges in order to meet both their commercial objectives, and their obligations to tenants.

New technologies and systems are becoming more popular, and the belief is that the more they are used, then costs should reduce accordingly.

The panel agreed that a holistic approach and co-operation from government is required to help push forward the net zero agenda.

Sustainable funding

Day three was hosted by Derek Hogg, with guests Samantha Bett from Wheatley Group, Gavin Reid from Scottish Widows and Christopher Yau from Bank of Scotland.

The day was framed by the imminent announcement from the Scottish Government to freeze both private and public sector rents. Given the early nature of this discussion, it was deemed premature to speculate on the impact these measures could have on the sector.

The panel defined what sustainable funding meant to them, touching on their being many positives for RSLs looking to borrow, and ultimately the strong environmental and social outcomes for all.

The speakers then outlined how important ESG principles were becoming, and for borrowers to commit to conditions which led to net zero targets. There is an opportunity for lenders and borrowers to work together to agree principles which work to the common good.

Responding to an attendee question, the panel discussed the risks to RSLs in setting performance targets in sustainability-linked lending. There is a degree of ambition and setting stretch targets for RSLs over and above meeting current regulations. RSLs have the opportunity to surpass current legislation.

To sum up the discussion, the question was posed around energy sustainability versus security in the current economic climate. The panel agreed that sustainability would continue to be important, as it is a long term contributor towards security, and it is already embedded within the sector.

Putting the EDI into ESG

Day four of our National Housing Conference rounded off with a discussion led by Lorna Davis and Ewan Stafford, with guests Liz MacKinnon from Blackwood and Chris Mathieson from Grampian Housing Association.

Lorna kicked off the discussion with the quote “Equality and inclusivity make the world more exciting. A multitude of voices is better than just one, don’t you think?”

The conversation context was set by Lorna outlining an employment lawyer’s perspective of ESG, including the social factors which relate to human rights, working conditions, health and safety measures, employee relations, gender and diversity – which all contribute to strong governance.

Our two guests outlined how ESG principles were integrated into their respective organisations, including factors such as their funding arrangements and people strategies.

The discussion touched on how organisations could encourage diversity at board level, and how barriers and challenges could be overcome, as well as how ESG is used within recruitment plans.  The use of technology within the ESG process was discussed, and how increased use of data in a highly-regulated environment, could make improvements for both landlord and tenant.

Conclusion

The world of ESG is a natural fit for RSLs on many levels and the housing sector has a significant role to play in contributing to net zero carbon emissions.

However, as outlined in the Scottish Government’s Housing to 2040 strategy, there is still a long way to go, which requires significant investment, innovation and collaboration.

At the same time, goals are already being achieved and new targets are being set against the backdrop of emerging challenges for both tenant and landlord – rising costs.

What is abundantly clear is that it is a challenge in itself for boards and management teams to prioritise one issue over another, when all are equally important.