Can Sustainable Investors Help the Homeless?

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    Stockholm (NordSIP) – As sustainable investing evolves, the assets and goals in focus have changed. Starting from governance, before shifting to environmental issues, investors are increasingly more interested in social issues. While traditionally, this has taken the form of scrutiny regarding controversial employment practices, more and more, sustainable investors are looking to have a more active role in addressing social issues.

    For investors inspired by last week’s social bond from Swedbank, this week saw the presentation of FEANTSA’s 8th Overview of Housing Exclusion in Europe 2023, the latest edition of its annual report on homelessness in Europe. FEANTSA is the European Federation of National Organisations Working with the Homeless, organised as a network of 130 independent national organisation from across 29 countries, including Stadsmissionen in Sweden, Vva ry and Y-Säätiö in Finland, and Projekt Udenfor in Denmark.

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    The report estimates that as many as 896,430 people experience homelessness of some kind in Europe in 2022, more than the populations of Oslo, Copenhagen and Helsinki, and almost the same as the population of Stockholm (978,770), the largest city in the Nordics. The figures across Europe show a complex and varying landscape of national experiences. Even in the Nordics, there is no consistent trend. While Denmark and Finland have made strides in decreasing homelessness, the trend in Sweden has been in the opposite direction.

    NordSIP reached out to a number of local organisations and to a local Nordic bank to better understand the multitude of experiences and approaches surrounding this problem.

    Defining Homelessness

    One of the issues most prominently discussed in the report revolves around the definition of homelessness. There are 6 levels of homelessness, according to the European Typology of Homelessness and housing exclusion (ETHOS), a European categorisation effort that emerged out of the need to coordinate the multitude of national approaches prevailing across the continent. ETHOS categories** attempt to cover all living situations which amount to forms of homelessness across Europe:

    1. People living rough
    2. People in emergency accommodation
    3. People living in accommodation for the homeless
    4. People living in institutions
    5. People living in nonconventional dwellings due to lack of housing
    6. Homeless people living temporarily in conventional housing with family and friends (due to lack of housing)

    This nuance is important to understand the parallel experiences of the USA and Europe, Freek Spinnewijn, Director at FEANTSA and one of the co-authors of the report tells NordSIP. “All in all, if we consider both the unsheltered and sheltered homeless population, the figures are more or less the same in Europe and in the USA. The main difference is that the USA has a lot more people sleeping rough, so it is much more visible than in Europe where homelessness involves more cases of people in temporary accommodation.”

    Homelessness in the Nordics

    Although the Nordics is one of the regions least affected by homelessness, the issue remains a problematic one that requires Of the headline figure, 18,237 homeless people lived in the Nordics. Of these, Denmark, Finland and Sweden contributed 3,378, 794 and 14,065 people, equivalent to 0.064%, 0.014% and 0.141% of their national populations*. While much hides behind these number, the headline figure is representative of most trends across the region. Sweden fares much worse on this issue than its neighbours.

    While Sweden’s homeless population is on an upward trend, Finland is a success case, having reduced the number of homeless by 78% since the 1990s.

    Denmark has also seen an improvement. According to the report the number of people experiencing homelessness fell by 10% between 2019 and 2022, likely due to a change in approach.

    The report highlights the importance of a number of related variables to developments in homelessness and housing quality, including material and social deprivation, residential property prices, the burden of housing costs, rent or mortgage arrears, household debt and arrears in energy bills.  Outside of the Nordics, Greece tends to have the most problems.

    Trends and Approaches to Homelessness

    Homelessness is correlated to a number of other issues. Addiction, disability, mental health, domestic violence, poverty and many other forms of familial and social disaffection are crucial drivers of homelessness.

    Traditional approaches to fighting homelessness have focused on finding housing for those most ‘deserving’, that is those individuals deemed to be most likely to be turn their life around. The idea was that people had to deal with other problems first and only when they had created stability in the rest of their life, would they be in a position to be considered ‘reliable’ and given accommodation.

    However, a new ‘housing first’ approach appears to have taken root. In this case, housing is not seen as the prize to be received for solving other problems, but rather as the foundation upon which the stability necessary for solving those problems can be built. This approach has become a hallmark of European approaches to homelessness and was recurrently mentioned as a cause of the successes in Finland and Denmark, when accompanied by public funding.

    “We find that housing is such a fundamental basis for a stable life that once that problem is dealt with, people are in a stronger position to address the other problems holding them back from enjoying a fulfilling life. The housing first approach is being tested and brought to scale in several countries, but Finland and Denmark have the most impressive results to date,” FEANTSA’s Spinnewijn says.

    What Role for Sustainable Investors?

    To understand what role sustainable investors can play, NordSIP reached out to Fredrik Nilzén, Head of Group Sustainability at Swedbank, the first Nordic bank to issue social bonds.

    “For us, social bonds are an important tool for banks to promote social lending, building on the experience in the green bond market. By emitting social bonds, banks are able to channel social loans to real estate companies who build and manage properties in socioeconomically challenged areas. Homeless people are a vulnerable group that should be considered as a target group for affordable housing. Banks may also channel the proceeds to affordable mortgages and affordable tenancy solutions (a detailed description is available in the Appendix of our Sustainable Funding Framework),” Nilzén explains.

    “Both investors and customers have received this positively. Customers are proud to have qualified and received social financing and want to showcase their projects. The interest from the European investor community was strong (the order book was two times subscribed) and the majority of investors were dedicated or strongly committed ESG investors,” Nilzén concludes.

    Need for More Discussion

    At a time of raising interested rates and increasing rent and mortgage arrears, the issue of homelessness and housing affordability should be on the forefront of sustainable investors who want to make an impact.

    As this issue comes increasingly in focus, investors should reach out to professionals working to alleviate this problem to learn about best practices and better understand how to facilitate the change that is needed.



    * Whilst figures for Denmark and Finland correspond to 2022, those for Sweden are only for 2017.

    ** Some discrepancies between headline figures and detailed figures for Finland and Denmark for example are due to the fact that detailed figures include a wider definition of homelessness, whereas the headline figures only includes categories ETHOS 1,2 and 3.


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