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External assessment of publicly released ESG reports by housing providers does address the growing need for demonstrating verifiable ESG data, particularly from a lender’s perspective. An external assessment does anticipate non-financial reporting requirements, Sustainability Disclosure Requirements (SDR) in the UK and the Corporate Sustainability Reporting Directive (CSRD) in the EU.
Lenders and investors must meet climate related disclosures that demonstrate their ESG performance. To maintain and strengthen their position as an investment grade risk-adjusted asset class, housing providers must produce and demonstrate high quality verifiable data. As a result, housing providers must switch from marketing ESG to evidence ESG performance.
During the 2nd annual review of the UK Sustainability Reporting Standard (SRS), lenders and investors stated that they want to challenge housing providers to raise the quality of their reporting. Self-certification will no longer be sufficient. With the external assessment of the publicly released ESG report by housing providers, RITTERWALD aims to meet the growing need for demonstrating verifiable ESG data.
The external assessment will provide a baseline to improve the quality and subsequently the credibility of ESG reports of housing providers. This is not only relevant towards acceptance by lenders and investors but also to the wider stakeholder community.
RITTERWALD estimates that an external assessment of the ESG Report takes approx. 2.5 days on average. This service requires minimal resources from housing providers and is thus addressing the control of administrative cost in the social housing sector.
In the external assessment, RITTERWALD has selected 14 SRS criteria both quantitative and qualitative in nature, that show a relation to climate risk, social impact, and good governance. Most of these criteria are also part of the Certified Sustainable Housing Label, the externally verified ESG accreditation for housing providers, issued by RITTERWALD. This has resulted in the well-informed selection of 6 environmental, 4 social and 4 governance criteria as the evaluation overview shows.
Each criterion is expressed in the proper measurement unit. The assessment distinguishes 4 levels of evaluation: insufficient, sufficient, good, and great, the thresholds of which are shown in the evaluation overview. RITTERWALD only assesses the publicly available version of the ESG report.
The external assessment also includes a total ranking of the ESG report with three ranking levels: poor (less than 40% of the criteria is ranked as good or great), satisfactory (between 40% - 65% of the criteria is ranked as good or great) and exemplary (more than 65% of the criteria is ranked as good or great and no criterion is ranked as insufficient).
The evaluation of the individual criteria and the ranking of the total assessment are explained in the Assessment Statement issued by RITTERWALD to the housing provider. This statement also provides recommendations to the housing provider on how to improve the quality of the ESG report.
