Towards a Just Climate Future? Urban sustainability, financialization, and the global housing crisis

Project Information

JUCLFUT

Grant agreement ID: 101033614

DOI

10.3030/101033614

Project terminated on 31 December 2023

EC signature date 19 March 2021

Start date 11 March 2022

End date 10 March 2024

Funded under

• EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions

Total cost

€ 224 933,76

EU contribution

€ 224 933,76

Coordinated by

DE MONTFORT UNIVERSITY
United Kingdom

Periodic Reporting for period 1 - JUCLFUT (Towards a Just Climate Future? Urban sustainability, financialization, and the global housing crisis)

Reporting period: 2022-03-11 to 2024-03-10

Summary of the context and overall objectives of the project

The financialization of housing is recognized as a driver of the global housing crisis which impedes the human right to safe, adequate, and affordable shelter. Financialization describes the process of treating housing as a financial asset, valued primarily as a profit-generating investment, at the expense of its role as a key infrastructure supporting daily life and social reproduction.

While finance has long been involved in the development of housing and housing systems, the term financialization describes structural changes in capitalism since roughly the 1970s, particularly concerning how, where, and by whom profits are realized through economic activity. As local and national governments across the Global North have divested themselves from building and maintaining social and public housing, private investment has taken increased prominence in countries like the UK which once had vibrant state-supported housing sectors. Thus, the provision and financing of housing infrastructure involves a complex array of actors including asset management firms, real estate investment trusts (REITs), pension and sovereign wealth funds, and insurance companies among others.

Recognizing that different kinds of financial entities have different social and legal bases of action, the specific objectives of the JUCLFUT project were to (1) understand the relationship between pension fund investing and urban sustainability issues, through an investigation of the social effects of specific green housing projects financed by pension capital; (2) assess the extent to which these investments are addressing climate objectives in a manner which also respects the internationally recognized human right to safe, adequate and affordable housing. The research concludes that the social effects of green housing projects are significant, complex, and require further research.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

This project consisted of six work packages (WPs). For WP1, Training and Mentorship, the fellow met regularly with the supervisor for career planning and management of the action. The fellow was also involved in two-way knowledge transfer and mentorship. Staff at the host institution mentored the Fellow to deepen her existing research skills and supported her to earn an Associate Level Teaching Certificate from Advance HE. The Fellow also organized reading groups with colleagues at the host institution and met with graduate students to facilitate knowledge exchange and develop her own mentorship skills and experiences.

The next set of work packages (WPs 2-4) focused on data collection. For WP2, Literature Review and Data Collection Part 1, the fellow focused on secondary literature identification and review, review and analysis of relevant policy documents, such as annual reports and governance documents related to climate finance, ESG investing, and fiduciary duty. This research was written up and published in an international peer-reviewed scientific journal. Work for WP3, Data Collection Part 2, included secondary analysis of demographic data, targeted site visits to current and planned urban housing developments in London, participant observation and in-depth interviews with a cross-section of experts in the fields of pensions, ESG, real asset investing, and housing justice. WP4, Data Collection Part 3, included site visits to cities in the North of the UK as well as further secondary literature review and document analysis.

The final two WPs (WPs 5 & 6) focused on analysis, writing, and dissemination of results. For WP5, Analysis and Dissemination Part 1, the fellow wrote two scientific papers. The first was presented at two different workshops, where the fellow received extensive feedback, before being submitted to an international peer-reviewed scientific journal. The second paper is in progress and a preliminary draft was presented to colleagues at an international conference in August 2023. The Fellow plans to present this and integrate feedback one further time before submitting it to a leading scientific journal in the field. The activities in WP6, Analysis and Dissemination Part 2, included participation at three international workshops, and five international conferences where she gave paper presentations. The fellow also held six different chair and discussant roles at these and other events. Finally, the Fellow collaborated with two other MSCA fellows to put together a research symposium, held in April 2023, and is the co-organizer of a double panel on ESG and social finance at the Urban Affairs Association conference in New York in April 2024.

The main results are that the project developed an in-depth case study of one of the UK’s largest “green” build-to-rent (BtR) housing providers, and documents the intersection of BtR housing development and ESG strategy, with a focus on how social value and risk are defined and operationalized.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The project advances the state of the art in three interconnected ways:
(1) Deepening understanding of connections between green finance and environmental gentrification. Urban studies scholars have been at the forefront of investigating the social effects of green cities and green urban development initiatives. However, this work has not always been attentive to the broader dynamics of green finance. Likewise, literature on financialization often prioritizes wider processes with less attention paid to how these processes touch down in specific places. The case study pursued here brings these strengths together to make specific people and places visible in wider processes of financializaton.
(2) Tracing new and evolving dynamics in the financialization of housing. Much of the research on the financialization of rental housing has tended to focus on the acquisition of existing homes by institutional owners such as private equity, pension funds and Real Estate Investment Trusts (REITS). BtR represents a newer phenomenon whereby rental units are developed by institutional investors as first and foremost an asset class. This project contributes to understanding how these processes unfold across local and transnational scales and processes.
(3) Questioning how the social is defined and operationalized in responsible investing practices. As housing has been reformatted as an investment product, it has likewise become enmeshed in the logics, norms, and standards of investment performance including those of responsible investing and environmental, social, and governance (ESG) factor integration. Yet, ESG as a form of “sustainable” or “green” finance remains a highly contested field of theory and practice. A crucial unresolved issue is whether the fundamental goal of ESG should be to better identify and manage investment risk, or if it should be used as a tool to reduce negative social and environmental consequences of development. Moreover, established understandings of the “social” in this context tend to focus on labour and supply chain issues, with less consideration given to housing rights in general and affordability in particular. As investor-backed BtR becomes more common, it is therefore crucial to understand the ESG practices and disclosures of housing providers around questions of social risk and social value. These practices do not merely reflect existing realities and norms. Instead, they actively reconfigure the relationship between the social and the financial.

Manchester "Resisting Gentrification" Photo by Jessica Parish, PhD