UN goals won't be met if affordable housing is a box-ticking exercise
Housing is a key component of Australia’s United Nations sustainable development goals but the chance to become a global leader is slipping through the country's fingers.
What’s the point of complying with environmental, sustainability and governance (ESG) standards if they don’t have any impact?
This is something that needs careful consideration as we approach the deadline for the United Nations’ (UN) Sustainable Development Goals.
In 2015, nations around the world, including Australia, committed to the UN’s 17 Sustainable Development Goals (SDGs), outlining a path to a more sustainable and prosperous world. Fast forward to 2024, and the road has been less than ideal.
A pandemic, ongoing climate crises, and worsening geopolitical tensions have significantly slowed progress.
According to the 2024 Sustainable Development Goals Report, nearly half of the Sustainable Development Goals targets show minimal or moderate advancement, with some even regressing.
Aligning capital with local housing solutions
One of the most pressing challenges to meeting these goals is an annual investment gap of over US$4 trillion, according to the UN. To fill that void, there needs to be a focus on localised solutions that support global goals.
In Australia, one such solution is affordable housing development.
Affordable housing directly addresses several of the UN’s 17 goals, including SDG 11 (Sustainable Cities and Communities), and indirectly supports other areas, such as reducing poverty (SDG 1), improving health and well-being (SDG 3) and promoting economic growth (SDG 8).
By tapping readily available capital, such as the estimated US$2 billion earmarked for Australian residential projects, the country has the chance to turn housing development into a multiplier for SDG progress.
This gives Australia the chance to lead the SDG charge while also addressing the thorny challenge of affordable housing.
Overcoming sustainability challenges
Despite the availability of funds, residential development in Australia continues to face hurdles like spiralling costs and slow productivity. Against this backdrop, the pursuit of meeting the UN’s SDGs may help to tip the feasibility scales back in favour of such projects.
The latest Altus Group Commercial Real Estate Industry Conditions and Sentiment Survey indicates that a shift in mindset is critical in this process.
While larger institutional investors are more likely to incorporate ESG considerations into their decision-making, many smaller investors still see ESG as a compliance obligation rather than a tool for driving change.
This lack of proactive engagement with ESG, particularly in relation to impact, suggests that much of the industry views it as a box-checking exercise, rather than a vehicle for achieving the impact needed to meet the UN’s SDGs.
With that in mind, Australia needs to move towards a data-driven ‘impact mindset’ that goes beyond ticking the boxes and truly focuses on outcomes.
From ESG compliance to impact investment
For Australian developers to fully leverage available capital and meet affordable housing needs, they must embrace the SDGs not as a compliance metric but as a value-adding framework.
This shift from an ESG compliance mindset to impact investment is critical to meeting the SDGs.
Why? Because while ESG criteria are essential for assessing a company’s risks and governance. They are often reactive, focusing on avoiding harm rather than actively driving positive change. Impact investment, by contrast, seeks to solve global challenges head-on, directly aligning capital with outcomes that advance the SDGs.
This difference is important when we consider affordable housing. It’s not enough for developers to meet ESG reporting requirements; they need to actively invest in projects that generate measurable, positive outcomes.
It goes without saying that the alignment of funds and development for social impact requires close collaboration between public and private sectors.
Closing the data gap for real impact
The missing piece in the puzzle to getting this alignment right is data. To truly shift from ESG compliance to an impact-driven approach, we need access to better data that links investment decisions with SDG outcomes. But for affordable housing projects, the data gap is substantial.
Investors can precisely measure how their capital fuels their goals by harnessing advanced data analytics and impact metrics. But we need better metrics to measure outcomes, such as the number of affordable units built or the energy efficiency improvements achieved. Without these metrics, it’s impossible to assess the true impact of our investments on the SDGs.
Innovative tools, like the CSIRO’s RapidRate AI system for estimating energy ratings of homes, are a step in the right direction.
Such solutions enable us to collect actionable data, which in turn allows for more strategic investments in sustainable development. The next step is scaling these solutions to drive broader, more meaningful change across the industry.
Housing data key to meeting global responsibility
The UN’s SDGs offer a unique opportunity for Australia’s property industry to contribute to a more sustainable future, but it requires a fundamental shift in how we approach ESG and impact investment in determining the value of affordable housing.
Affordable housing is not just an economic issue, it’s a critical piece of the puzzle for meeting our SDG commitments.
By aligning capital with impactful solutions and leveraging the power of data, we can create a sustainable, inclusive future. But we need to get the data analysis right so that investment capital leads to truly impactful outcomes.
With the 2030 deadline for the UN’s SDGs fast approaching, now is the time to shift our focus beyond simple ESG box-ticking to data-driven, impact-focused development for a more sustainable world.
