How a growing number of social landlords are planning for the climate crisis and risk of extreme weather
Kate Youde finds out how social landlords are increasingly identifying climate change as a key strategic threat – and what they are doing about the risk posed to them and their residents
When Rob Gilham went on a recent estate walkabout with WHG board members in Willenhall, near Walsall, they noticed new cracks on some low-rise blocks. While not serious, this wall damage is a mark of a record-breaking summer.
“It’s a very leafy estate, so [has] lots of trees, which have been great for providing shade to the flats during the summer, but the land was incredibly dry… and of course what happens then [is] you get that little bit of settlement and that starts to affect the property,” says Mr Gilham, corporate director for business strategy and assets at the 21,000-home Midlands landlord.
WHG names the impact of climate change as a strategic risk in its current financial statements, saying: “Climate change and extreme weather present material risks to operations and our homes.”
It is not alone in its concern. “Climate action failure” is the top long-term threat to the world, according to the World Economic Forum’s Global Risks Report 2022.
But what are the dangers housing associations need to consider and what action are they taking to adapt to the changing climate?
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Extreme weather
Against a global backdrop of rising temperatures and extreme weather events, the UK is becoming warmer, sunnier and wetter. Last July, the Met Office issued a red warning for exceptional heat for the first time, when a record-high temperature of 40.3°C was recorded at Coningsby, Lincolnshire. The UK was 1°C warmer and 10% wetter overall in 2012-21 compared with 1961-1990, while the sea level has risen by 16.5cm since the start of the 20th century.
The short-term risks of failing to adequately prepare for climate change include damage to homes caused by increased flooding and storms, adverse weather affecting the delivery of services, and higher insurance premiums, according to housing association Guinness. The longer-term risks it identifies in its financial statements include harm to residents, staff members, contractors and members of the public.
In an effort to stop the UK’s contribution to global warming, the government set a national target in 2019 of reaching net zero greenhouse gas emissions by 2050. It had already set the goal of upgrading the energy performance of all fuel-poor homes to at least an Energy Performance Certificate (EPC) Band C rating by 2030. Much of the sector’s focus and investment is therefore on decarbonisation – retrofitting properties to bring them up to this standard and reduce carbon emissions, thereby also making homes warmer and residents’ energy bills cheaper.
“No matter what we do on the mitigation side around decarbonisation of homes and reducing energy and carbon emissions, we’re still going to have to manage the effects of climate change”
However, some housing associations are also starting to consider climate adaptation strategies.
L&Q is working with real estate advisor JLL to conduct a climate risk review, which focuses on the business but also considers the impact on residents. The research covers surface water, coastal and river flooding, heat stress and extreme weather events, and the knock-on effects of these, including on supply chains.
As well as these physical risks, JLL is also looking at ‘transition risks’ the social landlord will need to start managing and planning for, including increased legislation, regulations and policies, such as the impact of minimum energy efficiency standards and transport decarbonisation, and also opportunities. The review will rate the impact and likelihood of the risks in different climate scenarios.
“We see it as a really important part of the puzzle with our sustainability strategy because we’re at the point where a lot of carbon emissions and changes to climate are already locked in,” says Liz Blackwell, group head of environmental sustainability at L&Q. “No matter what we do on the mitigation side around decarbonisation of homes and reducing energy and carbon emissions, we’re still going to have to manage the effects of climate change that we’re already starting to see.”
L&Q has identified 10 sample sites that are representative of estates and homes across its 105,000-home portfolio, including properties in flood-risk areas, new builds and Victorian conversions, and is working with JLL to investigate the material risk of flooding, subsidence and heat stress in each location.
The finished review will help L&Q formulate a plan to adapt to climate change. It will also feed into an initial climate risk disclosure in the association’s annual sustainability report in September 2023, in line with recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD).
In April this year, the government introduced mandatory TCFD-aligned climate disclosures for registered companies and limited liability partnerships with more than 500 employees and £500m in turnover.
L&Q, a registered society, will disclose the information on a voluntary basis even though the law does not apply to it, but requirements to report on climate-related risks and opportunities may come into force for all housing associations in the coming years.
Back in 2020, when he was chancellor, Rishi Sunak said that the disclosures would be mandatory across the UK economy by 2025. Inside Housing requested, but did not receive, clarification from the Department for Business, Energy and Industrial Strategy on if and when the rules would apply to all housing associations.
Decarbonisation plan
While there is “a lot of overlap with net zero”, and the climate risk review may recommend building on the organisation’s existing decarbonisation plan, Ms Blackwell says they are separate pieces of work.
“Net zero is about avoiding the worst effects of climate change and climate risk is about how do we adapt to stuff that’s already going to hit us, so they’re really essential side by side,” she says. “And there are a lot of organisations that are starting to find that and to put plans in place.”
Wheatley Group has commissioned a climate impact assessment report, with climate change impacts overlaid on the 93,700-home association’s locations. However, the Scottish landlord declined to provide
more details to Inside Housing at this early stage.
Rise in unpredictable events
It was “freak weather conditions” that caused severe flooding in Walsall in May 2018, according to Rob Gilham, corporate director for business strategy and assets at WHG. Heavy rain over a short period of time led to fast surface water in the area, which is not on a floodplain.
This flooded 50 WHG homes and disrupted the business.
“Suddenly you have to think about what are our business continuity arrangements if people can’t get into work, if people can’t get to homes to do repairs at a time when potentially you’ve got some quite serious repairs issues going on,” says Mr Gilham.
“All of those things are a challenge to the business, and then of course we’ve got the impact on our homes and our customers.”
The harm to properties included water damage to plaster and electrics, and tenants’ personal belongings. A handful of residents had to move out for a short time while repairs were made to their homes.
The cost to WHG was £192,000.
Sanctuary named climate change as a new strategic risk in its 2021-22 annual report.
Donna Williams, its group director for sustainability and climate change, says the risks to the organisation include asset investment, the physical risk to buildings, the transition risk of choosing the right mitigation measures and “an increasing reputational risk” for the sector.
“This is an issue that matters to our customers, it matters to our staff, and people who may come and join us as staff and customers in the future, so it’s important that organisations across the sector are taking this increasingly seriously and are able to demonstrate the tangible impact that we’re making,” she says.
Adaptation risk
Sanctuary wants to “get [its] head around” the adaptation risk. “So what is climate going to do to our properties and services anyway, and how are we going to need to adapt our properties and services to cope with those changes to climate?” asks Ms Williams.
With this in mind, the 105,000-home landlord launched a project in November with environmental consultancy RSK. This work, which will produce initial findings by the end of the financial year, analyses data on the increased risk of flooding and overheating, mapping that to properties across Sanctuary’s stock to understand which homes may be more at risk.
Ms Williams says RSK’s research will likely lead to a second phase with a “deeper dive” into areas of increased interest or risk and that the project is the first step in Sanctuary formulating a long-term plan leading to 2050 on the adaptations it might need to make.
WHG will review its flood risk mapping to see if further work is needed. However, Mr Gilham suggests the organisation is more likely to fall foul of unpredictable events (see box above).
“We don’t have lots of homes that are in high-risk areas, it tends to be freak events, so one of the crucial things is: how do we mitigate as a business the potential for the volatility of events?” he says.
“This is an issue that matters to our customers, it matters to our staff, and people who may come and join us as staff and customers in the future”
A key part of this mitigation strategy is not relying on “distant labour”. Mr Gilham says WHG, which cancelled an all-colleague day on the hottest day of the year in July over safety concerns for employees travelling in the extreme heat, has its own home maintenance service team staffed by local people.
He also highlights the association’s investment in ‘fabric-first’ retrofit. “If our homes are well insulated, our customers hopefully will need to draw on less fuel, less carbon is produced and, as a result, we might see [fewer] of these events,” he says.
However, he sounds a note of caution. In future, he says landlords need to consider that when insulating homes and making them comfortable for residents in winter, “what we don’t do is create something that is unmanageable in the summer… It’s going to create extra technical challenges to us as a landlord”.
Ms Williams says it made sense for Sanctuary to start with mitigation through decarbonisation and that adaptation is “almost the extra layer on top”.
“It’s important the sector doesn’t get distracted from the mitigation piece because that not only has great climate benefits, but also in terms of keeping homes warm and cheaper for our customers to heat,” she says.
“That really is the pressing climate issue for the sector. The earlier you can start understanding the adaptation scenarios and what may need to be done, the earlier we can start putting those into our planning cycles and the better chance we’ll have of doing a high-quality job of that in advance of the 2050 net zero target. But it’s also about making sure that our customers feel more comfortable, secure and sustainable in every sense of the word in their homes for decades to come.”
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