Stonewater sets out new sustainability targets

Stonewater has outlined its plans for all its homes to be rated at least EPC C by 2030 in its Sustainable Finance Framework.
Image 5 - John Bruton - Executive Director - Finance - Stonewater Cropped

The national social housing provider Stonewater has set out its new sustainability targets as it aims to cut carbon emissions across thousands of its homes.

Publishing its Sustainable Finance Framework (SFF) and Second-Party Opinion (SPO) today, the 33,600-home landlord has outlined its plans for all its homes to have an Energy Performance Certificate (EPC) rating of at least C by 2030 and B by 2040, including the removal of fossil fuel heating.

In addition to upgrading 350 homes each year to at least EPC C, Stonewater’s annual targets in its SFF include planting 3,000 trees and installing 200 low-carbon heating systems.

The housing association currently has loans of £125 million where lower funding costs will be applied if it meets its sustainability targets.

The move builds on Stonewater’s recent work with think tank the Institute for Public Policy Research (IPPR) to support the decarbonisation of England’s housing stock.

John Bruton, executive director of finance at Stonewater, said: “This is a very significant moment for us and all our customers. While Stonewater has been working for a number of years now to cut carbon emissions and make our homes more affordable, the Sustainable Finance Framework makes it crystal clear what we will do in these crucial areas and when. It also enables us to measure and monitor progress.

“Investors and customers will be able to see exactly what we are doing and progress against these targets. An additional benefit of this work is that we continue to attract competitive funding at low costs. This will allow us to do more to invest in our existing homes, while continuing to build new, affordable homes where they are most needed.”

Stonewater says its SFF aligns with the United Nations’ Sustainable Development Goals and other internationally recognised environmental, social and governance (ESG) standards.

Other commitments Stonewater has made in its SFF include developing 1,500 new homes every year from 2022/23 and building 6,250 new homes in the five years until March 2024.

It has also commited to develop strategies for sustainable procurement, sustainable waste management and water management, and to reduce both its office and business mileage carbon footprints by 33% by March 2022.

Stonewater’s publication of its SFF follows its announcement earlier this month that it will be moving permanently to a hybrid working model. This will involve closing some of its offices to create three “hubs” in Coventry, Reading and Bournemouth.

Bruton added: “We are an early adopter of the Sustainability Reporting Standards for Social Housing. This is because we clearly see the value to us and our customers of demonstrating our work to investors on how we are making our homes more sustainable and affordable. The publication of our Sustainable Finance Framework is the next step in ensuring our debt products align with our sustainability strategy.

“While we are proud to have led the way at Stonewater on measures such as low-carbon heating through the recent work with the IPPR (Institute for Public Policy Research), there is scope to do much more. When we speak with investors, they are pleased to see how housing providers are already able to help them meet their ESG investment goals, but there is a general plea for greater transparency, disclosure and clarity about what different actions mean.”

NatWest supported Stonewater with the development of its SFF, while ISS Corporate Solutions independently reviewed the SFF and provided a positive Second-Party Opinion.

George Flynn, debt and financing solutions at NatWest, said: “We’re delighted to have supported Stonewater with the structuring of its Sustainable Finance Framework, showcasing its commitment to providing warm, comfortable homes to customers and supporting them to live healthier lifestyles, while minimising the overall impact on the environment.

“This once again evidences the pioneering role the social housing sector plays in the transition to sustainable business practices and demonstrates NatWest’s commitment to the social housing sector, particularly in supporting clients in showcasing their sustainability credentials, and in structuring frameworks in line with industry standards.”

In addition to the SFF and SPO, Stonewater recently had its credit rating of A+ with a stable outlook reaffirmed by rating agency S&P. It also retained its G1/V1 rating from the Regulator of Social Housing following an in-depth assessment.

Stonewater currently has two sustainability-linked loans after it secured a loan of £75 million from Japanese lender SMBC this April. It had previously announced a £50 million revolving credit facility with First Abu Dhabi bank in December 2019.

JImage: John Bruton, executive director of finance at Stonewater. Credit: Stonewater.

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