Positive impact : Xior Student Housing
About the positive impacts series
To accelerate a just and inclusive global transition to meet the Sustainable Development Goals by 2030, companies can no longer focus solely on reducing their negative impacts but must explore ways in which their business model can contribute positively to the planet and society. An impact should be understood as a change in an outcome caused by an organization. This can be positive or negative, intentional or unintentional. Today, there are different paths to positive impact:
Strategy 1: Through the creation of new products and services (integrated into the business model and generating revenue) by the company, which can also allow other actors in the value chain to mitigate their negative impacts;
Strategy 2: Through its practices, the company can use its value chain as a lever for impact. Whether it is through its relationship with its suppliers, its customers, its employees, or its innovation practices, the company takes advantage of its business relationships to generate a positive impact. This impact goes beyond mitigation measures to reduce negative impacts, is integrated into the value chain, and does not directly contribute to revenue generation.
🏦 Context: The Student Housing Crisis
The lack of affordable housing is a global concern, particularly in nations with substantial income inequality. Among the groups most impacted by it, an often-overlooked demographic is university students. Yet, they must face housing challenges at the start of each academic year due to soaring prices, unregulated investor activity in real estate, and short-sighted government policies. This situation has made the headlines again earlier this fall, and mirrors the broader housing crisis. Although the influx of international students contributes to rising costs, we must hold those with more political and economic influence accountable for their actions and sometimes, inaction.
This article of our Feel Good series spotlights a unique player in the real estate industry striving to offer affordable student accommodation across Europe: Xior Student Housing. The company’s business aligns with SDG target 11.1, which aims to enhance access to decent, safe, and affordable housing. According to our recent Stoxx 600 SDG Alignment Case Study, SDG 11 is one of the most neglected goals, thus it is refreshing to see a company like Xior making a positive contribution to it.
The Targeted Sustainable Development Goals
Xior Student Housing NV (hereinafter: Xior) is a public real estate investment trust (REIT) specializing in student housing, and is the largest student housing REIT in Continental Europe. Its operations span across Belgium (where it is headquartered), Sweden, Denmark, Germany, Poland, the Netherlands, Spain and Portugal. At the end of 2022, it employed 180 employees and housed over 18,000 students. Its services include: professional student service front desk and back office, local presence and 24/7 accessibility, student-adapted living and studying environment, and online platforms to facilitate community exchanges between students and campus integration. Xior contributes positively to SDG 11.1 by acquiring, owning and developing student housing in cities with a market need for student accommodations. This represented 91% of its portfolio based on its Fair Value for the fiscal year 2022.
Areas for improvement
Upon taking a closer look at the reporting of the Sustainable Finance Framework of Xior and analyzing it against the impact methodology, we took note of a few shortcomings.
Despite existing indicators, Xior does not yet measure the change in the experience of the stakeholders since the implementation of the criterion on affordable housing. This type of consultation is however an important element in the impact methodology, which is why we recommend conducting a specific impact assessment to understand if and how students are affected since the start of this activity. Moreover, Xior did not mention any student consultation for the construction of the criterion on social housing. Also, the people that approve the inclusion of social housing assets are only company executives, which could indicate that students’ interests are not represented at the highest level of the organisation on decisions that directly affect them.
Our analysis still concluded that Xior is a “Z”: May Cause Harm company despite this positive impact. This is because the company does not yet report having conducted a climate scenario analysis and devising an adaptation plan to climate risks, or a screening criteria that includes climate risks for the purchase of assets, which are all common practices in the real estate sector.
Rewrote Proposition Areas for improvement
Analyzing Xior’s Sustainable Finance Framework report against the impact methodology, we identified some shortcomings.
Despite existing indicators, Xior does not yet measure the change in stakeholders’ experience since implementating the criterion on affordable housing. Consultation with stakeholders is however an important element in the impact methodology, which is why we recommend conducting an impact assessment to understand how students are affected since the start of this activity. Additionally, Xior did not mention any student consultation when deciding on social housing criteria construction.
Also, only top company executives approve social housing assets. This might mean that students’ voices aren’t represented at the highest level of the organisation when making decisions that impact them directly.
Our analysis labels Xior as a “Z: May Cause Harm” due to lack of a climate scenario analysis report, adaptation plan to climate risks, or a screening criteria that includes climate risks for the purchase of assets, which are common practices in the real estate sector.
The Sustainable Finance Framework
In early 2023, Xior announced that it has updated its ‘Green Finance Framework’ to a ‘Sustainable Finance Framework’ in light of rising prices and concerns about more affordable student housing. This framework is compliant with the GBP-Green Bond Principles and Social Bond Principles, supported by the International Capital Market Association (ICMA). In addition to existing environmental criteria, the new framework now includes social criteria based on affordability and social pricing. As such, Xior can raise funds through this framework to finance projects and assets related to green buildings and affordable housing.
On the latter, one of the selection criteria requires that rental costs must match the locally applicable requirements, set by the governments of the Netherlands and Germany. Though the exclusion of other countries is not explained, Xior discloses that, as at the end of December 2022, this portfolio consisted of 37 green buildings, for a total value of EUR 1.3 billion, as well as 6,134 affordable units, for a total value of EUR 82 million. The share of social assets is projected to grow as measured by the % social assets. Meanwhile, the impact of this new initiative will be measured by the following impact indicators: Number and share of affordable student housing units, and the number of beneficiaries.
On an annual basis, a list of potential eligible projects and assets is established and evaluated by the ESG Taskforce of the company. This committee includes the CEO, the energy manager, the manager responsible for ESG and a representative from the Finance department.
Xior’s decision to champion affordable student housing is welcome, and a sensible choice given its target market. Although lacking in climate scenario analysis and adaptation plans, Xior stands out from from the majority of real estate players for its positive contribution to SDG 11. Approximately 30% of STOXX 600 real estate companies do not implaement any mitigation maesured related to this SDG, often often overlooking physical accessibility and reasonable pricing.
Regardless of economic circumstances, prioritizing stakeholders in real estate services is crucial for achieving the SDGs. As we approach the final decade for meeting the 2030 Agenda for Sustainable Development amidst global crises in public health, climate, and the economy, making affordable housing for vulnerable population has never been more critical.