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Sustainable Finance Trends
Hear from our Sustainability and ESG Finance experts – Jenny Burrett, David Willock and Katie Arnold.
Read time : 4 mins Added: 21/07/2022
Six months in. How is 2022 shaping up for sustainable finance within Higher Education, the Housebuilder and Consumer sectors?
The first half of 2022 has seen a whirlwind of activity in sustainable finance. COP26 was a tipping point where we saw several ambitious commitments to sustainability put forward. As a result, organisations are now seeking to finance their transitions towards a more sustainable future.
Recent examples of being by the side of corporates in this area include: University of Hull’s £86 million Green Private Placement supporting their ambitious target to have a carbon neutral campus in 2027 and Platform Housing’s £235m sustainability-linked loan helping them develop 4,600 new affordable homes with plans to decarbonise its existing portfolio.
Three members of our expert team in Sustainability and ESG Finance reflect on the trends they’ve seen in 2022 from higher education, housebuilding and consumer goods.
Higher Education has a pivotal role to play in addressing the big challenges & opportunities that society face.
As educators and researchers, higher education institutions are key to developing the capability to deliver a more sustainable future. We are seeing exemplars in the sector who embed climate change as mandatory modules in many of the courses they offer. Increasingly their stakeholders are closely following if they “walk-the-walk” as well as “talk-the-talk” - assessing how higher education institution’s net zero strategies stack up alongside their performance on other pressing societal matters such as diversity, equality, and inclusion.
These institutions must be seen to be acting not only on the content of their teaching, research and the outcomes they create, but also the institutional footprint of delivery by their people, their estate, the wider supply chain and beyond. Examples we are seeing of those leading the way are embedding ESG considerations in the supply chain, building responsible investment strategies and accessing sustainable finance in bond, private placement and loan markets to support these ambitions.
Accelerating sustainability in the Housebuilder sector
Homebuilders are facing increasing stakeholder and policy pressure to deliver homes to higher sustainability standards. The Future Homes Standard will require new homes from 2025 to produce 75-80% lower carbon emissions, while it is now mandatory for the larger listed homebuilders to report on their climate-related financial risks for the first time this year.
Considering the rapidly accelerating momentum behind sustainable housing, we heard from many housebuilders that they want to make bigger strides on sustainability but weren’t sure where to start.
At the beginning of 2021 we joined the Executive Committee of NextGeneration, alongside the UK Green Building Council, Homes England and JLL. NextGeneration have developed a national sustainability benchmark, which supports the UK’s largest housebuilders in achieving the most significant level of sustainability credentials. This wide-ranging benchmark covers a number of areas to promote the higher standards of sustainability in new build homes.
We wanted to make sure that smaller housebuilders were not left behind. As a result, two new standards have been developed by NextGeneration, with our support – NextGeneration Project and NextGeneration Core – both have been created to support small and medium-sized housebuilders to assess their own sustainability performance. This will help them to begin or accelerate their sustainability journey by reducing complexity and focusing on the areas that will make the most difference.
To complement these new sustainability standards for UK housebuilders, we have recently published our own Sustainability Finance Framework which sets out how we will help housebuilders access finance to build more sustainable homes through a variety of propositions.
Sustainability agendas and ambition are really being tested amongst consumer companies
In 2022, consumer goods companies continue to face a plethora of cost and resource challenges. Yet despite this, our clients in this space are still making sustainability a priority. Their customers increasingly want to know where their products are coming from and that they are sourced sustainably.
Consumer goods companies’ greatest sustainability issues and impacts are to be found in their supply chains, such as the vast majority of their greenhouse gas emissions, human rights and workers conditions. The sustainability strategy of their suppliers is therefore critical to their own sustainability strategy and business success. In short, they must engage with their supply chains to help solve these challenges.
We are seeing sustainability credentials being factored into major commercial decisions and trading terms in supply chains. Sustainability is no longer just a matter of reputation or compliance but has rapidly become an economic issue too. We are actively discussing our sustainable supplier finance proposition with many of our clients. This product helps consumer companies because it is an enabler for them to engage and work with their suppliers, allowing them to collaborate and align sustainability agendas.
Gaining momentum in H2
In the second half of 2022 we can expect these themes to continue as we ramp up to COP27 and the delayed COP15 Biodiversity Summit taking place at the end of the year.
Team contributors:
- Jenny Burrett, Associate Director, Sustainability & ESG Finance.
- David Willock, Managing Director, Sustainability & ESG Finance.
- Katie Arnold, Associate Director, Sustainability & ESG Finance.
- Francesca Sharp, Lead Propositions & Partnerships, Sustainability & ESG Finance.
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