Providing homebuilders with the tools for sustainability

Over the past year, we have witnessed a seismic shift in the prioritisation of sustainability issues. Globally, 35 percent of investors now require private real estate firms to implement ESG (Envrionmental, Social & Governance) initiatives.

In the UK the government has committed to decarbonisation targets and over 250 councils across the country have declared a climate emergency. With almost three quarters of UK banks treating climate risks like other financial risks, it is evident real estate professionals, policy makers and investors are coming to terms with the risks climate change poses on their buildings and businesses.

Future-focused homebuilders should address these issues head-on. By taking a proactive approach to mitigating the risks climate change poses and by anticipating future policy changes, homebuilders can place themselves in a strong position to succeed.

Where might homebuilders begin? The NextGeneration benchmark is a third-party independent benchmark that can help homebuilders tackle key sustainability issues and provide a holistic framework for them to understand their performance across environmental, social and economic criteria.

Benchmarks allow companies to compare performance against a recognised external standard. Initiatives such as NextGeneration, mean companies can compare their performance against their peers, enabling them to better understand their current performance, set improvement targets and share best practices for mutual advantage.

Each year, NextGeneration, assesses the sustainability performance of the top 25 homebuilders in the UK, by annual turnover. It encourages companies to report against a wide range of sustainability criteria, categorised into 15 focus areas.  These criteria are evaluated and updated on a three-year rolling period, allowing the benchmark to reflect the ever-evolving sustainability sector and enabling homebuilders to review their progress over time. Essentially, the criteria are a one-stop shop that homebuilders can use to identify how they can improve their sustainability performance.

The NextGeneration assessment is primarily based on publicly available information and is carried out in two phases. In the first, publicly available information is reviewed and in the second phase, members can improve their score by providing evidence of activities that are not discussed in the public domain.

NextGeneration has been a key driver of greater transparency and accountability within the homebuilding sector. By showcasing leading firms, NextGeneration aims to create healthy competition amongst homebuilders and ultimately encourages them to deliver more sustainable homes and communities. By publicly evaluating homebuilders, NextGeneration enables Government, registered providers, investors, employees and other stakeholders to understand the sustainability of homebuilders’ operations and the homes that they build.

Beyond benchmarking, NextGeneration provides its members with market intelligence briefings and detailed advice supporting best practices. It also facilitates knowledge-sharing to impart experience and best practices to the wider industry.

Jones Lang Lasalle is the Secretariat for the NextGeneration Benchmark and the Executive Committee consists of Homes England and the UKGBC. The Executive Committee provides core funding to the initiative and comprises its main governance body. This committee’s role is to ensure the integrity and transparency of the initiative.

Contact: Diana McHugh