Mainstreaming Environmental, Social and Governance in Family Homes Funds Limited

September 14, 2023

Drawing Inspiration from our Mandate

Executing developmental projects are increasingly becoming complex because of the unintended negative externalities associated with them and the far-reaching impacts they have on the environment, people, and their health. Every now and then, the media reports about communities where developments are happening and their deteriorating state because of ongoing air, land, and water pollution, biodiversity loss, depletion of natural resources, and indiscriminate disposal of waste and hazardous materials. Meanwhile, these are also communities that experience prevailing socioeconomic challenges such as poverty, health issues, unemployment, inequality, insecurity, and injustice—further worsening the situation. This situation has demanded responsiveness and accountability from every business institution to act for the good of all—making profits whilst transforming their societies.

Correspondingly, a people and planet-centred approach to business is now mainstream as the concept of sustainability and its related themes continue to gain traction. Today businesses are no longer relevant only by their products or services but by their social impacts—their response and contribution solving to salient societal issues. Consequently, to achieve long-term success, businesses need to have a strong relationship with their stakeholders by identifying the needs and expectations of each stakeholder and integrating these needs into their corporate strategy. This stakeholder-focused business approach is the principle underlying the mega trend topic of Environmental Social and Governance (ESG). ESG is a reference to different environmental, social and governance factors that are relevant to an organization, and how the organization creates opportunities to engage these factors; or manage risks while bearing in mind the relationship it has with its stakeholders.

At Family Homes Funds Limited, we believe in promoting sustainable and inclusive growth that transcends just financing housing development. We see our purpose as strategically interconnected with the United Nations’ 17 Sustainable Goals.  By way of our business mandate, our mission is addressing two pressing challenges in Nigeria—housing deficits and unemployment—which is a disheartening situation premised on prevailing statistics. It is therefore important that whilst committed to our mission we are mindful and deliberate in creating meaningful impacts for the people that matter to us—our employees and target groups, and other stakeholders who are directly or indirectly affected by the things we do. Similarly, “life is full of risks”, we are mindful of this too. Hence, shielding our portfolio from significant risks that pose risks to us and the people and communities where we have financial footprints is how ESG is our guiding light, our target group, and the wider community.

What ESG means for FHFL

ESG for FHFL implies staying true to our very essence which bears light in our mission statement—providing affordable homes and creating jobs… for marginalized populations of Nigerians—and doing this through mindful of other groups in our process chain—our employees, partners, investors, clients, regulators, and the communities that host our financed projects. Our approach to ESG is strongly rooted in the United Nations 17 Sustainable Develop Goals (SDGs)—the universal call-to-action for developments that recognizes the socioeconomic needs of people and protection of the environment for the shared prosperity of all. The SDGs are holistic in scope and coherently capture salient societal issues such as poverty, hunger, social inequality, and sustainable and efficient use of natural resources. FHFL is committed to achieving these goals through its mandate.

The housing construction industry is a significant sector in the economy that contributes to the Gross Domestic Product (GDP), particularly in developing nations. According to the National Bureau of Statistics (NBS), the construction and real estate sector contributes significantly to Nigeria’s GDP (10.6% in the last quarter of 2022). However, throughout its entire value chain, the sector is characterized by serious environmental and social risks of global importance. It is recognized that the global real estate sector contributes up to 20% to Greenhouse Gas (GHG) emissions, 40% to energy use, 30% to raw material depletion, and 25-40% to solid waste generation, including biodiversity loss and pollution of water, air and land resources (World Economic Forum and Financial Nigeria International).  As an institution that finances housing development projects in Nigeria, we are not oblivious to these risks and the implication to our reputation. Hence, ESG makes a strong business case for us and is a medium for us to create and apply high environmental and social standards in the sector.

As a social housing company, our mandate directly addresses two major goals of the SDGs, Goal 11- sustainable cities and communities and Goal 8- Decent work and economic growth. Access to safe, secure, habitable, and affordable housing is a fundamental human right that corroborates with the UN-Habitat Agenda of providing adequate housing for all. According to UN-Habitat, housing transcends beyond “bricks and mortar”, it is a precondition for addressing critical social issues such as employment, poverty, health, education, and inequality. It is therefore expedient for us as a company that our mandate has a strong interaction with the SDGS and its targets.
The Centre for Affordable Housing Financing (CAHF) estimates that as of 2022, the housing deficit in Nigeria was up to 28 million houses. This situation is further worsened by the fact a large population of Nigerians are multidimensional poor (63%; NBS, 2022), and are also constrained by low income. Consequently, our mandate has a strong emphasis on affordable housing and closing the social gap in unemployment and improving the financial inclusion of a diverse marginalized fragment of Nigerians, one project per time. This in turn leads to job creation for different skill levels and gender.

So far, we have helped finance the development of over 14,000 housing units through our range of housing programmes that have improved life for various low-income families. Consequently, jobs for skilled and semi-skilled labour have been created through different housing projects spread across different parts of the country. We also have a pipeline youth entrepreneurship and empowerment project that will create more than 10,000 jobs for men and women with housing construction-related skills. All of the above reflects our contribution to the following SDG targets: 1.4 for social protection systems and measures for the poor and the vulnerable; 8.3 decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services; 10.1 progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average.

We take seriously the environmental footprints of the projects we finance by ensuring that those we finance have a clear stance of our commitment to shrouding our projects from negative externalities. Hence, through our Environmental and Social Management System (ESMS) policy, our customers are compelled to adhere to extant national and international environmental standards. Understanding the peculiarity of the sector of the projects we finance, we have a strong disposition for biodiversity conservation and waste and hazardous material handling and disposal, and their impact on water and land resources. This helps to extend our contribution to other themes of the SDGs on responsible consumption and production (Goal 12), water (Goal 14) and land resource (15).
In addition to improving our environmental footprint, we are conscious about being a socially responsible organization. We are actively improving our capacity to engage our employees, contractors, independent project managers and other stakeholders relevant to us. FHFL has undertaken initiatives to engage and train project managers on national and international environmental and social safeguards to improve the awareness and compliance of our projects to trending social topics such as labour rights, child labour, gender and social inequality, community health and safety, grievance redress mechanism, involuntary resettlement. We also have pipeline initiatives focused on women’s housing and empowerment. An example of this is the Adahse Women Housing Scheme in Kaduna State.

The global community is in an era of diminishing reservoirs of natural resources to meet up with the increasing demand for materials for urbanization. Climate change, resources and water scarcity are challenges altering the supply chain for products and services The housing sector is notable for its high consumption of resources such as water, energy, and a major source of hazardous waste generation.  In recognition of the impact this has on the local and global economic landscape, FHFL has already begun the initiation of green buildings through the design for greater efficiency (EDGE) concept. Processes are on the way to have some of our legacy project’s EDGE certified by the International Finance Corporation (IFC) of the World Bank Group.

We believe that to achieve our ESG targets and make a far-reaching impact, partnerships and alignment with other institutions are fundamental. First, to achieve this, it is important that we position ourselves as an attractive institution to potential partners and investors. Accordingly, we are constantly ensuring that we are improving our methods, processes, and structure for a sustainable entity. It is also important that we create an honest and transparent engagement about our brand and services with our diverse stakeholders. This is evident in our corporate strategy and environmental and social policy displayed on our website accessible to the public. FHFL has a friendly relationship with prominent development financial institutions (DFIs) such as the African Development Bank, Agence Française de Développement (AFD), European Investment Bank (EIB) and other DFIs. This partnership also extends to carrying along relevant Ministry Agencies and Departments in our business activities.  

FHFL now has a specialized ESG role to support and oversee and document all our environmental, social, and corporate governance policies and procedures. The ESG personnel is contributing to our delivery of environmental and social training and alignment for our internal team and external stakeholders, including our borrowers.  Consequently, the capacity of our other departmental functions is being strengthened to align our services to clients and our commitments to investors, sponsors, and partners towards ESG goals. This is the same for our current range of products and services—we are striving to ensure that they are devoid of negative environmental and social risks that can impact our brand and the people that we serve.

In conclusion, ESG is a journey for us and not a destination that we are aiming to reach and take a break. We are passionate about incremental growth and continuous improvements of our institutional capacity—the competence of our staff and the improvement of our processes and outputs. Hence, our mistakes and failures are important to us; we embrace them, learn from them, and grow from them.