When community wins, capital gains

COMMENT I’m not a believer in horoscopes, but in a speech earlier this year I predicted that 2023 was going to be the year of the S in ESG taking prominence across the real estate industry. This gained a lot of traction. In the 19 years since the term “ESG” was first used in a 2004 United Nations report entitled Who Cares Wins, the E environmental objectives have been the ones in the spotlight. The broader principles of sustainability and responsible investment have obviously been around for far longer, but those E factors have been the easiest to measure and apply metrics to – whether around the use of sustainable materials and renewable energy or driving for emissions reductions, better waste management and improved air quality. Out of the E’s shadow As ESG reporting has become a top priority for governments, regulators and institutional investors, the vast majority of ESG certifications for the real estate industry have centred on environmental metrics. However, so far in 2023 I have seen six new social value in UK real estate benchmarks launched by various entities and a huge uptick in conversations around a range of S factors, with particular interest from investors. This proliferation of new tools doesn’t do anything to tackle the exasperating lack of common definitions or standardised reporting, but Big Society Capital’s annual research on the social impact market confirmed this increased enthusiasm for all things social. BSC’s report revealed that the total value of the UK social impact investment market in 2022 was £9.4bn, an 18% increase on 2021 and an 11-fold increase in 11 years, up from £830m in 2011. Many experts question whether this intense focus on measurement and “monetisation” of social value is beneficial or actually a form of tokenistic box-ticking. Again, Big Society Capital has warned against “social-washing” in the rush for investors to find a demonstrable set of S examples to put into their annual reports. In our business we are not claiming that we have all the answers or that everything we have delivered so far within our developments meets the standards we would like, but we believe that setting out our aspiration is important. Thriving in the future Just as critical is our identity. The PfP Capital business has come a long way since it was launched in 2017 as the first and only fully authorised FCA fund manager to be wholly owned by a social enterprise. However, my colleagues and I have spent too long explaining the PfP abbreviation and the “separate but connected” relationship with our parent company, Places for People. In particular, that our contributions to S extend to more than a tick-box link to PfP’s status as a registered provider of social housing. At our core, we are a fund manager with a social conscience and a distinct purpose – to turn capital wins into community gains. Therefore, we are changing our company name to reflect that more clearly. So today (3 October) we are announcing that PfP Capital will now become Thriving Investments – powered by Places for People, a name that better reflects this philosophy and marks an exciting new chapter in our evolution. The new name is more closely aligned with our track record, and ambitions, of creating thriving communities and delivering large-scale regeneration projects, with sustainable, high-quality homes at their centre, via a range of investment platforms and tenures. Deep impact Thriving Investments also captures the zeitgeist of the wider sector – since 2020, both we and our wholly owned developer arm igloo Regeneration have been supporters of The Good Economy, the Impact Investing Institute and Pensions for Purpose around defining and promoting place-based impact investing in real estate. JLL’s recent Responsible Real Estate: Social Value survey asked respondents to comment on seven key areas of social value through health and wellbeing, community engagement, diversity, equity and inclusion, employment and skills, responsible procurement, nature and biodiversity, and net-zero-carbon goals. Only 10% of JLL’s respondents had specific plans in place to address all seven of these areas, so we are not alone in wanting and needing to do more on the specifics of these S factors. But this is a challenge that the newly crowned Thriving Investments team are ready and eager to embrace – because it is also true that when community wins, capital gains. Alex Notay is placemaking and investment director at Thriving Investments Photo courtesy of FTI Consulting