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“Socially sustainable real estate increasingly important in terms of financing”

by News Room
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It’s about a lot more than affordability and tenant satisfaction if you want to influence the social real estate sector, emphasize Joan Ronner (CEO of the People area) and Jochem Lubsen (developer of Rabobank’s wholesale sustainable business). “These two aspects only measure the relationship between people and stones, social impact is mostly participation. And it always works both ways: from both the residents and the owner. The real estate industry therefore plays a much bigger role than just as a supplier of bricks.

Although ESG (Environmental) E is already measuring well, this is yet to come for S (Social). Area of ​​​​People has developed a method for this over the past five years. The platform measures social influence based on the feeling of home. “A satisfied resident can be a passive resident and then have little influence on the living environment,” explains Ronner. “If you want to make a social impact, you have to work with participating communities. S is about our society – “Society” – and it must be a pleasant home for everyone. It is a universal language that everyone understands: the investor, the bank and the resident.

Social influence is an important task that Rabobank works on with great passion based on its cooperation background, says Lubsen. “Traditionally, banks have approached this mainly from the point of view of affordability. At first you think that will be the most affected, but the social impact is much wider. We have now developed a definition of S that evolved from ESG, consisting of elements such as affordability, participation and quality of life. Measurability is also important so that we can manage this together with our customers. If we use financial instruments for this, we want them to be clear, transparent and ambitious. That’s why Area of ​​​​People’s measurement methods are so valuable.

Engaged communities
In the last five years, the residents’ area has constantly asked the residents if they feel at home in their house and what determines that feeling of home. This shows that the feeling of home is defined on average by 50% residents, 25% home and 25% service. “Of course, the property owner affects the feeling of the home with good service and regular maintenance,” says Ronner, “but that’s only half of the total. The other half, the social side, still has a lot to gain. For example, the feeling of insecurity is not always eliminated with a new access, but it can often be solved easily , when residents work together to close and take care of the front door. Engaged communities are actually a very cheap and effective way to create social impact. Our platform informs our customers very precisely about the things they can take action to improve social impact.

A property with high social cohesion retains its value more
Lubsen emphasizes that Rabobank knows that social cohesion is important to preserve the value of real estate. Rabobank sees that neighborhoods with high levels of social cohesion are more attractive in the long term. The technical lifespan of a neighborhood is different from its social lifespan. “Socially, it can be over much sooner if you don’t pay attention to it,” explains Ronner. “Neighboring areas can then quickly become impoverished, which leads to a decrease in value. Such negative developments are often only fought reactively, while we can proactively influence society. We see the development of ESG as the fact that real estate is increasingly becoming a means of creating value for society, not only purpose in itself.

This year we start with financial instruments
As a cooperative bank, Rabobank is committed to the local environment and involved in the community. Therefore, the bank wants to play an important supporting role in creating the form and content of ESG’s S. – We constantly discuss this with our customers, share information and challenge each other. In addition, whenever possible, we consider including social impacts in our funding. It can be done in different ways. There are already several loans tied to sustainable development, where the goals of sustainable development and social themes are determined together. You also have social loans, especially for social activities. It can be interpreted broadly, but the feeling of home is definitely part of it. In the long term, you can also consider incentive terms, such as an interest rate reduction. We’re now figuring out how to unlock the Area of ​​People data to further structure these new types of loans and measure whether we’re really achieving social outcomes with our funding. This year we are taking new, concrete steps in this area.

The need for impact reporting is growing rapidly
Lagging behind ESG themes is no longer an option. European legislation and regulations such as the SFDR already impose requirements on financial institutions, and the CSRD requires more and more companies to report on their impact on people and the climate. According to Ronner, this now requires real estate parties to move from stones to people. “Especially large investors now have a clear picture of the actions to be taken in relation to E and are starting to work with S. More and more of our customers are therefore starting to process our real-time data directly in their reports. We often see a similar question from municipalities and housing associations that have a building – or social goals at the regional level, but who do not yet have good data.

A socially sustainable property is easier to finance
Financing of socially sustainable real estate will therefore become more accessible and transparent in the coming years. The fact that goals are set to improve social cohesion benefits both owners and residents. “This requires a committed attitude from the owners, who must work actively with the residents,” Ronner emphasizes. Lubsen adds: “Sustainable and social real estate is more popular on the market. This makes investing in social impact attractive and therefore easier to finance from this point of view. Measurability is essential for fully exploiting social impact opportunities and understanding results. Rabobank plays a proactive role in this, because the connection between business life and social interests produces a positive result for all parties involved. Social impact is the next big step in real estate. For this, it is important to do pre-sorting. We’re happy to take the lead here.

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