Europe

New Roadmap for People-positive Property Investment

Report makes nine key recommendations to “maximise social value” including real estate kitemark. 

New guidelines have been offered to help embed social value into investments made in the UK real estate sector. The guidelines, published in a new report, aim to achieve positive social impact by increasing the availability of affordable and accessible housing for groups include first time buyers, people from deprived areas and victims of domestic abuse.  

The report, developed by international law firm Trowers and Hamlins and public policy think tank Social Market Foundation, makes a number of recommendations for key stakeholders. These look to assist in accelerating the widespread implementation of social value practices in the real estate and investment sectors. These stakeholders include different levels of government, politicians, developers, organisations and sectors as a whole.  

Investors have played a key role in driving the ‘S’ in ESG, seeing it “gaining pace” with the ‘E’, the report said. Additionally, it noted that pursuing social value is increasingly seen as consistent with pursuing profit, especially among investors and developers holding onto real estate with a long-term view. 

Sara Bailey, Trowers and Hamlins’ Senior Partner, said: “A growing appreciation for the importance of social value in real estate has exposed the difficulties felt across the sector in measuring and delivering effective impact for communities. Social Value Roadmap for Real Estate identifies clear pathways to ensure the regeneration and renewal of our towns and cities are focused on positive outcomes for people.” 

The report included expert contributions from firms including Abrdn, Derwent London, Galliford Try, LaSalle Investment Management and Legal & General Capital.

Key recommendations 

One of the report’s main proposals was for the industry to collaborate with central government to develop a ‘social value kitemark’ for the real estate sector. The kitemark would look to provide a “seal of assurance” on the embedding of social value in an organisation. 

The UK government could also develop a ‘social taxonomy’ alongside new Sustainability Disclosure Requirements, to parallel its planned ‘green taxonomy’. A social taxonomy would provide a framework for what constitutes “social value-enhancing activities”, with some companies potentially required to report against it.  

The report also proposes that the Department for Levelling Up, Housing and Communities collaborates with the Department for Business, Energy & Industrial Strategy and the Local Government Association to develop guidance for local government carbon offset funds which specifically focuses on the evaluation and consideration of social benefits within funds.  

The real estate industry may be encouraged to consider the social co-benefits of carbon offsetting activity, the report noted, and develop frameworks to ensure that social impact is given appropriate consideration in decision-making around “appropriate offsets”.  

The report highlighted a new infrastructure levy, which it suggested could contain provisions to ensure that developers promising social value additionality are held to account. It said that the funds gained by local authorities could be used to support the resourcing of local planning teams, with the “potential to instigate a virtuous cycle of negotiating greater developer contributions and securing commitments to, and delivery on, social value outcomes”. 

A further recommendation for large-scale developments was to introduce a social value handbook to ensure that ongoing commitments to social value are not foregone under new site ownership by setting out expected standards. The handbook should be a public domain document, the report said, giving residents and local businesses an opportunity to understand the extent of any shortcomings in social value delivery, and encouraging stakeholders to apply pressure on parties including local government and management companies to deliver on commitments. 

UK social impact investment boom 

According to new data from social investment institution Big Society Capital, social impact investments in the UK have increased nearly ten-fold over the past decade, from £830 million in 2011 to £7.9 billion in 2021. Three in five of these investments were directed into the UK’s most deprived areas, thus “suggest[ing] social impact investment could play an increasing role during the cost-of-living crisis”.  

Big Society Capital said social and affordable housing funds now account for the largest segment of the total market at £3.8 billion, followed by social lending at £3.3 billion. Julia Lenon, Big Society Capital’s Portfolio and Data Manager, said: “We know there is more that can be done to address the regional inequalities that exist. This data suggests that social impact investment has a key role to play in reducing them.”  

Existing initiatives aimed at encouraging investment in social value real estate, include the sustainability reporting standard for social housing (SRS). The SRS was launched in November 2020 by Sustainability for Housing (SfH) and The Good Economy and has so far provided a common reporting framework for more than 100 housing associations, lenders and investors, including requirements for these groups to report on their ESG impact. 

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