ESG Approach, Impact & Policies

Our Approach

At Hannon Armstrong, we have historically and consistently aspired to be a leader in transparent reporting on financially material and comparable ESG metrics. We continue to hope that our comprehensive reporting on these and many other recommended metrics helps to drive transparency and alignment among companies, investors, and all stakeholders – with the ultimate goal of building a more sustainable and inclusive global economy.

We were the first U.S. public company to report the avoided emissions resulting from our investments (through our propriety CarbonCount® methodology) — a disclosure too many financial service companies and asset managers still neglect to provide. We were also one of the first to commit to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and, importantly, to incorporate TCFD reporting into our SEC filings.

Our Impact

6 Million

Cumulative metric tons of carbon dioxide (CO2) avoided annually through our investments, the equivalent to eliminating emissions from over 700,000 average U.S. homes every year

4.2 Billion

Cumulative gallons of water saved annually from our investments, the equivalent to eliminating the annual water consumption of nearly 40,000 U.S. homes every year

~400,000

Quality jobs created by our investments in 48 states

~400,000

School children supported by our energy efficiency upgrades to educational facilities funded by our investments

~2 Million

Veterans served by hospitals and other facilities that received energy efficiency upgrades funded by our investments

Sustainable Development Goals

The United Nations Sustainable Development Goals (SDGs) represent the biggest and most complex challenges of our time. At Hannon Armstrong, we prioritize the 10 SDGs that are most relevant to our expertise, business objectives and corporate citizenship goals.

Our ESG Journey

  • Invested $1.7b in climate solutions
  • 800k MT of incremental annual reductions in carbon emissions through our closed transactions
  • Raised >$1.5b in CarbonCount-based debt
  • Submitted Scope 1 and 2 emissions targets to SBTi
  • Enhanced DEIJA through expanded public disclosures and reported a majority of new hires as women or people of color
  • Joined Net Zero Asset Managers initiative
  • Amended bylaws to enhance shareholder rights
  • Declared Social Dividend of $1.6m to support Hannon Armstrong Foundation

 

  • Invested $1.9b in climate solutions
  • Recorded highest annual CarbonCount in company history
  • 2m MT of incremental annual reductions in carbon emissions
  • Issued >$900m in green bonds
  • Joined Partnership for Carbon Accounting Financials (PCAF)
  • Enhanced DEU with board appointments, internal management, and expanded SEC filing disclosures
  • Declared Social Dividend of $1m to capitalize newly launched Hannon Armstrong Foundation

 

  • Appointed Teresa M. Brenner Lead Independent Director
  • Inaugural $500m corporate unsecured green bond issuance
  • Joined the UNGC’s Business Ambition for 1.5ºC: Our Only Future Campaign

  • Formalized Board oversight of ESG strategies, activities, policies, and communications
  • Implement TCFD recommendations and integrated into SEC filings
  • Achieved 100% renewable energy procurement target
  • Became a signatory to the UN Global Compact (UNGC)

  • One of first U.S. public companies to commit to Tak Force on Climate-Related Financial Disclosures (TCFD)
  • First U.S. public company to sign the “We Are Still In” declaration in support of climate action to meet the Paris Aggreement

  • Recognized by Climate Bonds Initiative as Green Bonds Pioneer

  • Issued first rated HASI Sustainable Yield Bond (SYB) for real estate assets

  • Published first Sustainability Report Card

  • First U.S. public company focused on climate positive investing
  • Launched CarbonCount scoring tool
  • First HASI SYB issued for energy efficiency assets

2021 Highlights

$1.7b
invested in climate
solutions

Submitted Scope 1 and 2 emissions targets to SBTi3

$1.6m Social Dividend declared to support Hannon Armstrong Foundation

>800k MT1 of incremental
annual reductions in
carbon emissions

Enhanced DEIJA2
disclosures
in public filings

Joined Net Zero Asset Managers initiative

>$1.5b
in CarbonCount-based debt raised

Reported a majority of new hires as women or people of color.

Amended bylaws to enhance shareholder rights

1) Metric Tons
2) Diversity, Equity, Inclusion, Justice, and Anti-Racism
3) Science Based Targets initiative

ESG Ratings

Leader

Top 10th Percentile

Low Risk

B+

Top 10th Percentile

People

Diversity, Equity, Inclusion, Justice, and Anti-Racism (DEIJA)

Mission Statement

Hannon Armstrong’s recognition of the importance of diversity, equity, inclusion, justice, and anti-racism is essential to the success of our business. Our company is more than just the sum of individual roles, skills, and productivities. We are also a team that values the mutually reinforcing empowerment of people of all races, cultures, identities, gender expressions, sexual orientations, and learning and engagement styles. By opening ourselves to the broadest range of talent, we improve both our company performance and our ability to attract and retain talent. We know it is inherently the right way to conduct business.

Strategic Implementation

We institutionalize our efforts through:

  • Informing our management training efforts through the work of the DEIJA Working Group to ensure they include, but are not limited to, a focus on multicultural leadership, understanding bias, and anti-racism
  • Supporting consistent conversations within our team and facilitated by outside experts to better learn from and understand our differing experiences and perspectives
  • Actively expanding the sourcing of our candidate pool to increase the breadth of its diversity
  • Challenging our counterparties to share our DEIJA values and practices
  • Tracking, analyzing, and furthering employee pay equity
  • Ensuring our philanthropic efforts consider all views on how to address the intersection of climate change and equity
  • Regularly reviewing existing company policies and practices and making updates where and as needed in order to align them with our values
  • Consistently engaging at a corporate level on voting rights to support a vibrant democracy

Board Oversight

In accordance with its charter, the Nominating, Governance and Corporate Responsibility Committee (NGCR) of our Board of Directors is responsible for oversight of all matters related to DEIJA, including identifying and vetting Director candidates (when vacancies arise), helping to formulate the company’s DEIJA strategy, and monitoring DEIJA performance metrics.

  • 89% Independent Board Members
  • 33% Women Board Members
  • 11% Racial or Ethnic Minority Board Members

Comprehensive Plan for Multiyear Impact

2021

  1. HR handbook review
  2. Implemented Anti-Bias training throughout company and new hires
  3. Launch of Heritage Month Series
  4. Analyzed and revised interview process through DEIJA lens
  5. Reviewed performance competencies through DEIJA lens
  6. Launched DEIJA-focused onboarding
  7. Launched Pay Equity Audit
  8. Included DEIJA dimensions in employee engagement survey
  9. Increased diversity in new hires
  10. Launched implementation of employee management software to analyze DEIJA-specific data to showcase performance and success
  11. Developed DEIJA statement
  12. Expanded philanthropic focus on equity

2022

  1. Strategic Action Plan
  2. Develop and implement training on updated interview process
  3. Develop DEIJA dashboard
  4. Provide leadership with dashboard updates
  5. Integrate DEIJA into performance evaluation and/or company recognition efforts as part of year-end reporting for 2022
  6. Conduct annual cultural/climate survey
  7. Prepare to publish 2022 DEIJA annual report in 2023
  8. Business Resource Group start-up (including handbook development, training, and launch)
  9. Develop mentoring framework
  10. Create framework for and implement additional DEIJA training

2023

  1. Program Evaluations
  2. Quarterly dashboard updates
  3. Integrate DEIJA in performance evaluation

Climate Justice

In early 2022, we adopted an organizational Climate Justice Statement to affirm our commitment to advancing social justice in tandem with our mission of investing in climate solutions.

Planet

Principles of Governance

Internally managed, the business affairs of our company are conducted by our officers and employees under the direction of our Chairman & CEO with the oversight of our Board. Our Board members – eight of whom are Independent – are elected annually by our stockholders.

We recognize the importance of understanding, evaluating, and monitoring ESG-related opportunities and risks as part of our vision and strategy. The Nominating, Governance, and Corporate Responsibility Committee (NGCR) is responsible for periodically reviewing our strategies, activities, and policies including our Sustainability Investment Policy, Environmental Policies, and Human Rights and Human Capital Management Policies.

Hannon Armstrong Board of Directors

Nominating, Governance, and Corporate Responsibility Committee

Chairman and CEO

ESG Leadership Team

Foundation Team – TCFD Committee – DEIJA Working Group

Prosperity

Increase and Extension of Guidance

Distributable EPS

Dividends Per Share

Guidance
5% – 8%

1) See Hannon Armstrong Form 10-K, Item 7, filed with the SEC on February 22, 2022 for an explanation of Distributable Earnings, Distributable Net Investment Income, Portfolio Yield and Managed Assets, including reconciliations to the relevant GAAP measures, where applicable.
2) Relative to the 2020 baseline.

Giving Back

We created the Hannon Armstrong Foundation in early 2021 to add a long-term strategic lens to our maturing corporate philanthropy efforts targeted at the intersection of climate action and social justice — tied to specific focus areas and committed to impact measurement.

This effort flowed from an organic expression of shared values that fits naturally within our culture of fierce curiosity and rigor about outcomes in climate investing. The foundation is funded by annual Social Dividends declared by the company and tied to the prior year’s profitability. To date, the company has contributed approximately $2.6 million to the foundation.

Vision

We seek to accelerate a just transition toward an equitable, inclusive, and climate positive future.

Focus Areas

Climate Solutions for Disadvantaged Communities

Description

Support for organizations providing direct access to affordable energy efficiency, renewable energy, and health-enhancing products and services to LMI and disadvantaged communities

Current Grantees

Southface, Groundswell, Native Renewables

Climate Solutions Career Pathways

Description

Support for programs targeted
at historically underrepresented communities and communities impacted by climate change and/ or the energy transition that provide education on climate change impacts and training for careers in climate solutions

Current Grantees

Climate Solutions Scholarship Program (Morgan State and Miami Universities), Strategic Energy Innovations (SEI), Rumie

Local Impact

Description

Support for organizations within the D.C., Maryland, and Virginia region that strengthen the social fabric and promote economic and climate resilience

Current Grantees

CBF’s Clagett Farm, ReBUILD Johnston Square, YWCA, Fair Chance

Current Grantees

Southface, Groundswell, Native Renewables

Current Grantees

Climate Solutions Scholarship Program (Morgan State and Miami Universities), Strategic Energy Innovations (SEI), Rumie

Current Grantees

CBF’s Clagett Farm, ReBUILD Johnston Square, YWCA, Fair Chance

Policies & Disclosures

Hannon Armstrong’s ESG policies, principles, and reporting disclosures aspire to the highest ethical standards. For additional information, navigate to the linked documents.