New Developments: Celebrating Good Governance

4 min read

Environmental, Social and Governance (ESG) investing and lending is one of the hottest and most cutting-edge topics in the world of affordable housing finance. Equity syndicators and lenders are beginning to embrace ESG because that’s where the capital is.

The “G” category is primarily focused on the ethical and equitable standards for running a company. When ESG investors look at international investments, particularly in emerging markets that may not have strong governmental institutions or the consistent application of the rule-of-law, they naturally want to validate that their investments are not being used to support corruption, unjust wars or even genocide. Take a look at how the international economy has responded to Russia’s invasion of Ukraine and how global investors are willing to write off billion-plus dollar investments in Russia to see how the “G” is driving investment decisions. Fortunately, in the United States, and in the affordable housing community, specifically, this is an area where we receive high marks.

Governance is not just about conducting business transparently and above board with other ethical parties – it also considers how organizations prioritize equity and diversity. Over the past two years, this is an area where many National Housing & Rehabilitation Association members have invested and there are many strategies firms can use to demonstrate progress.

Most HR departments have formal anti-discrimination policies and have leaned into training on topics, like implicit bias. Some have adopted blind application processes to ensure implicit bias does not play into applicant screening. Others have adopted formal diversity goals organization-wide, including on their boards of directors, management committees and in “top earner” positions.

Many NH&RA members have partnered with organizations that build capacity for real estate professionals of color. NH&RA (and many of our members) partner with Capital Impact Partners and its Equitable Development Initiative (EDI) to provide mentoring, education and capital for emerging developers of color in Detroit; Washington, DC; and soon in additional markets. (A thank you and shout out to NH&RA’s Vice-Chair Milt Pratt of the Michaels Organization who introduced EDI and serves as a mentor.)

Other members have formalized partnerships with Project Destined, which focuses on empowering and teaching real estate fundamentals to urban high school and college students. And Project REAP’s Open Access Program, which focuses on increasing the representation of diverse professionals at all levels in the New Markets Tax Credit industry through training and fellowships.

Organizations can also be thoughtful about how they source diverse vendors and contractors. Having protocols in place to ensure that Minority- and Women-Owned Business Enterprise vendors can compete for your business can be incredibly impactful. Protocols to encourage hiring from within the communities in which we are working can also be impactful, and many Department of Housing and Urban Development developers are already doing so through the Department’s Section 3 requirements.

Good governance, particularly, equity and diversity, are moral and legal imperatives and that should be reason enough to pursue them. There is also a strong business case to be made, and that is a major part of why ESG investors are at the table to begin with. We are an industry of creative problem solvers facing intractable challenges – we need more solutions and, as it turns out, a team with diverse perspectives is better equipped to find new solutions. Furthermore, in a labor market that is increasingly tight, and where talent is at a premium, diverse and equitable business practices help organizations retain and deepen their talent pool.

Change doesn’t happen overnight, it evolves. It is not the expectation of ESG investors to restrict themselves to firms that have already achieved perfect governance. But as we move forward and the ESG space expands, investors are going to want to see that an organization has set benchmarks and that there is a plan in place to adapt better practices over time.

Thom joined National Housing & Rehabilitation Association (NH&RA) in 2004 and currently serves as its as Executive Vice-President and Executive Director. NH&RA is a national trade association and peer-network for affordable housing and tax credit developers and related professionals including: investors, lenders, public agencies and professional advisers. Thom directs the association’s day-to-day operations including legislative and regulatory advocacy, committee activities, conferences and events, publications, financial management and strategic planning. Thom also serves as the Executive Director of the Tennessee Developers Council, a state-wide trade association for affordable housing developers and professionals active in Tennessee. In 2013 he spearheaded the launch of NH&RA's Preservation through Energy Efficiency Project, a major educational initiative supported by the John D. and Catherine T. MacArthur Foundation. Thom also serves on the Board of Directors for International Center for Appropriate & Sustainable Technology (iCAST) as well as the Advisory Board for its ResourceSmart program, a turn-key, cost-effective, green rehab provider for multifamily affordable and market-rate housing communities and nonprofit facilities. Thom is a frequent speaker at affordable housing, sustainable development and tax credit industry events and has been published in a variety of industry journals including Tax Credit Advisor, Independent Banker, and the Novogradac Journal of Tax Credit Housing. Thom also serves as the Associate Publisher of Tax Credit Advisor, a monthly magazine for tax credit and affordable housing professionals and is an Executive Vice-President at Dworbell Inc., a boutique association management and communications firm in Washington, DC. Thom was previously employed at a national lobbying firm focusing on financial services and technology issues. Prior to moving to Washington, Thom worked in media relations in the New York State Assembly and as a research assistant for New Hampshire Governor Jeanne Shaheen. Thom graduated Magna Cum Laude from Tufts University with a double major in Political Science and History.