How Everyone Benefits From Strong ESG Practices

The financial well-being of residents goes far beyond just their ability to pay their rent on time and the health of their household finances. It has a ripple effect that impacts everything from community stability to employee productivity. This blog will explore the challenges renters face, the importance of strong Environmental, Social, and Governance (ESG) practices in housing, and how innovative solutions like rent reporting and flexible payments can benefit everyone. While many of the facts and figures throughout this article apply specifically to Canadian housing regulations, the information shared remains pertinent to property managers in the US and elsewhere.

Rising Costs and the Squeeze on Renters

Recent reports paint a concerning picture: household budgets are under increasing pressure from inflation, rising credit card debt, and minimum payments. This financial strain isn’t just a personal issue—it has a significant impact on entire communities.

Over half of all renters in Canada dedicate more than 30% of their income to rent, leaving them with little financial wiggle room to navigate the first two weeks of the month and manage unexpected expenses. This stress doesn’t just affect their ability to afford basic necessities, but also contributes to:

• Family Strain: Financial insecurity can lead to anxiety, relationship problems, and difficulty accessing healthcare and education for families.
• Community Issues: When residents struggle to afford rent, it can create tension and impact the overall well-being of the housing community.
• Decreased Productivity at Work: Financial stress among employees can decrease their productivity, lead to absenteeism, and increase employee turnover for businesses.

The Social Pillar of ESG: Building Financial Wellness for Renters

ESG practices are a framework that encourage businesses to consider the environmental, social, and governance impacts of their actions. In the context of housing, focusing on the social pillar means prioritizing the well-being of residents—and in this context specifically, their financial health, which is about creditworthiness and household cash flow.

Here’s some good news: improving renters’ financial health isn’t just good for them, it contributes to strong ESG practices and benefits everyone involved. Here’s how:

• Rent Reporting: Building credit through on-time rent payments provides renters access to better financial products and services. This translates to a lighter financial burden overall. In Canada alone, 7 million people with limited credit history could significantly benefit from rent reporting. According to Equifax, 3 million Canadians do not have a credit history.
• Flexible Rent Payments: Spreading rent payments throughout the month with a financially responsible solution empowers renters to better align their cash flow with their income, reducing stress and improving budgeting while avoiding late fees. This eliminates the dependency on products like credit cards, which can discourage budgeting, ultimately harming financial health.

The Benefits of ESG Flow Through Communities and Businesses

By focusing on the financial wellness of renters, property owners and the broader community can experience significant positive impacts:

• Enhanced Community Engagement: When renters feel financially secure, they’re more likely to be active and engaged members of their communities. This fosters positive relationships with neighbors and landlords, leading to a stronger sense of belonging.
• Increased Productivity and Reduced Costs for Employers: When employees aren’t burdened by financial stress, they’re more focused, productive, and less likely to leave their jobs. With housing security, residents are more likely to keep their jobs, which reduces turnover costs for businesses.
• Reduced Late Payments and Increased NOI: Landlords who offer rent reporting and flexible payment options can attract financially responsible residents and reduce late payments. They can potentially increase rents thanks to healthy turnover, where residents with improved credit could finally qualify for another home, which they haven’t been able to in the past.

The potential return on investment extends beyond just financial gains. By prioritizing resident financial wellness, landlords can make a positive social impact while also improving their bottom line.

A Seamless Solution: Partnering for Success

The good news is that implementing these solutions doesn’t have to be a burden. Companies like Zenbase provide seamless integration with existing property management systems, streamlining the onboarding, rent reporting, and payments processes for both landlords and residents. These solutions are offered completely free of charge to property managers, eliminating any financial barriers to participation. Landlords can expect a high adoption rate and can even track the social impact of their efforts, measuring improvements in credit score and cash flow for their residents. These improvements can eventually be presented as case studies through social impact or ESG reports, helping them strengthen their brand credibility and potentially access financing options thanks to their ESG efforts.

The Time to Act is Now

The Canadian government’s Renters’ Bill of Rights emphasizes the importance of rent reporting for renters’ financial well-being and is signaling a mandate for its availability as an option for residents. This would not only help residents get access to better financial products, but also support them on their path to homeownership. Property managers who embrace these solutions are not only contributing to strong ESG practices and improving their NOI, but they are also positioning themselves well for the future.

Partnering for a Positive Impact

Zenbase is committed to working with landlords who share their mission of improving the financial health of residents. The company offers solutions that create a win-win situation for everyone, with a positive impact on both social well-being and your bottom line. Contact Zenbase today to learn how to integrate their solutions with Rent Manager and make a positive and measurable difference in your community.