The new carbon: The case for affordability reporting

Ten years ago, the real estate industry enthusiastically took up the cause of cutting carbon. With homes at risk of becoming uninsurable through climate and regulatory change, developers responded seriously to the threat of stranded assets, with low-carbon housing projects and the introduction of emission metrics into corporate reporting.

Today, in a post-COVID, high-inflation environment and amidst a European housing crisis, a new metric is under the spotlight: Affordability. 

Faced with the risk of global recession, growing public pressure and evolving government policy to address the housing crisis, developers need to start prioritising housing affordability - starting with incorporating new metrics into portfolio reporting.

The housing crisis is hitting record levels. Almost one in ten Europeans now spend more than 40% of their disposable income on housing, and some member states are experiencing house price rises of over 200%. 

This is a system 50 years in the making. In many countries, housing was historically led by the state with large-scale public housing programmes. But, particularly since the 2008 global financial crisis, public investment into housing has collapsed, with responsibility shifting more onto the private sector. 

But real estate investment across Europe has too often concentrated in speculative models - with negative consequences for both the environment and affordability. And, when everyday essentials like housing become unaffordable, social inequality, political polarisation and market volatility follow.

Despite this, the ‘crowding-in’ of private finance to build and manage housing remains a key pillar of most government strategies, including the flagship European Affordable Housing Plan. In the UK, all governments since 2010 have lent on private finance to support housing targets.

Meanwhile, much of the real estate sector remains remarkably opaque and lacks scrutiny. Residents rarely know who has built or financed a building; renters are unaware of the investors owning their rental property. The result: a sector that too often views negative social impacts of housing unaffordability as unfortunate or inevitable ‘externalities’. But this is beginning to change.

Pressure from the public and policymakers on the issue of housing affordability is building - and increasingly represents a significant financial and business risk for the real estate industry. 

In countries and cities around the world, you can find examples of real estate profits being impacted by affordability policies and movements. In 2023, Copenhagen introduced the “Blackstone Law” to curb short-term speculation. Cities are banning Airbnb, the UK is limiting rental increases, and in Barcelona, rent strikes are leading to stranded assets. In the US, there are moves to limit institutional investors from buying single-family homes. 

Combined with the proven risk of social instability and market volatility that results from an unaffordable housing market - with clear knock-on impacts for all businesses - these developments should be a serious wake-up call for the industry.

Real estate businesses can - and should - aim to make housing more affordable as part of their risk management strategies. And they should start by incorporating affordability into portfolio reporting.

This is an emerging trend. While most real estate ESG frameworks continue to have a narrow definition of ‘social’ - often focusing solely on workforce diversity or on-site safety - some are starting to look at the critical social impact of housing affordability. 

For example, in 2024 the World Benchmarking Alliance’s Urban Benchmark assessed the 126 most influential construction and real estate companies globally. It highlighted that 75% of those (rising to 90% in the Global South) did not have strategies or actions in place to address affordability.

In the UK, the Sustainability Reporting Standards for Social Housing require disclosures on rent comparisons against local earnings and the security of tenure for residents. In Europe, INREV, the European Association for Investors in Non-Listed Real Estate, has a Standard Data Delivery Sheet that now includes metrics on the percentage of units affordable to those earning less than the local median income.

And since 2025, the RES4 and RES5 indicators in the GRESB (Global Real Estate Sustainability Benchmark) specifically ask whether a company has an affordability policy and if they own affordable housing properties in their standing portfolios.

These are still relatively small changes and, much like the early days of carbon reporting, the vast majority of businesses are still treating increasing housing costs as an inevitable externality of their business model. But this approach would be short-sighted, driving political polarisation and economic and policy volatility that will affect the entire sector. 

Given the systemic level of the risk, real estate businesses should proactively work with governments to help shape future policy that levels the playing field, aligning private investment with affordability targets. 

There are successful models around the world that offer valuable lessons. One example is Austria’s Limited-Profit model, which leverages private capital to deliver affordable housing but caps the profits. This circular fund approach - ensuring surplus profits be reinvested into new housing pilots - is gaining widespread appeal across Europe. In return, housing associations and real estate developers that provide affordable housing often receive tax reductions. 

If the housing crisis continues to worsen across Europe and the UK, the future will likely bring more public disquiet and polarised governments. Investors and developers who embrace all elements of the human right to adequate housing - starting by embracing affordability metrics in portfolio reporting – will be best placed for long-term success. Those that don’t, may find their assets stranded by the very communities they intended to serve.

Giulio Ferrini leads IHRB’s Built Environment Programme, which works with businesses, civil society organisations and policymakers in the built environment sector to advance business practice, shape policy and strengthen accountability. 

Affordable housing: Making it happen: Join the conversation about affordable housing at the Festival of Place on 10 June – an expert panel will be digging into current challenges and approaches to grant and funding in a conversation chaired by Sarah Williams, Editor of Social Housing with Shaun Holdcroft, Head of Affordable Homes, Legal & General; Ed Crockett, Fund Manager, Thriving’s key worker housing platform, New Avenue Livings; Anna Clarke, The Housing Forum and Shahi Islam, Director of Affordable Housing, Homes England. Tickets on sale now