A large Midlands-based housing association has launched a sustainable finance framework that it claims will help measure the impact of up to £1bn in environmental, social and governance (ESG) linked funding over the next decade.
Bromford said that the framework, which is the first in the sector to be accredited by Standard & Poor’s (S&P), sets out a number of existing and new projects linked to its business strategy and considered to have ESG credentials.
These include the delivery of affordable housing, reducing homelessness, promoting diversity, migrating to a greener vehicle fleet and developing sustainably through the use of modern methods of construction.
S&P has said that Bromford’s framework is fully aligned with the ‘green bond principles 2018’, the ‘social bond principles 2020’, the ‘green loan principles 2021’ and the ‘social loan principles 2021’.
S&P’s ‘green, social or sustainability framework alignment opinions’ are not credit ratings, but act as a second opinion on a framework’s alignment with standards put forward by the International Capital Markets Association and the Loan Market Association.
The framework was developed by Bromford’s newly established sustainability group, which includes senior figures from across the organisation.
It comes more than a year after the housing association completed its first green loan with NatWest, which included an agreement that the margin on the loan will lower if Bromford meets pre-agreed targets related to the energy efficiency of its existing homes.
In December last year, Bromford became the first housing association in the sector to agree a loan that will see it pay lower interest rates if it manages to reduce its gender pay gap.
“We led the way on issuing the first sustainability-linked loans in the sector and are now delighted to issue our inaugural framework, which reaffirms our commitment to sustainability in its broadest sense,” said Imran Mubeen, director of treasury at Bromford.
“We see the framework as more than just the delivery of new funding or the recording metrics; it’s a commitment to doing the right thing and building a better world for the communities we serve in an accountable and transparent manner.
“It will then act as the springboard for partnering with investors who share this vision to deliver meaningful change.”
Dan Sparks, director of service delivery and chair of the sustainability group at Bromford, said: “Sustainable homes are directly linked to well-being, they increase comfort and reduce fuel bills, and ultimately contribute to addressing climate change.
“But we see sustainability as more than just offering lower-carbon homes: our neighbourhood coaches continue to be embedded in our communities supporting customers, we have delivered our first tranche of electric repairs vans, and we are working on a number of projects to reduce homelessness, increase diversity across our communities, and create new employment opportunities.
“These projects are already linked to the Bromford strategy and our framework, with its subsequent annual impact reporting, will challenge us to deliver even more and hold us to account on performance in a language that can be appraised by the investor community.”
Anna Liubachyna of S&P said: “Bromford’s sustainable finance framework is aligned with the principles because it commits to use the net proceeds of funding instruments issued under the framework exclusively to fund eligible green and social projects that fit into the categories defined by the principles.”
She added: “In terms of management of proceeds, the issuer commits to depositing net proceeds into a trackable sub-account.
“The issuer manages unallocated funds following its treasury policy. Bromford intends to report on the allocation of proceeds and on the impact of eligible categories until net proceeds are fully disbursed. The issuer will report annually.”
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