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 hope our reporting on many of these and other recommended metrics helps to drive transparency and alignment among companies, investors, and all other 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 – a disclosure most financial service companies and asset managers still neglect to provide – and one of the first to adopt reporting in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and to incorporate TCFD reporting into our SEC filings.

To help reduce fragmentation and accelerate progress toward a generally accepted ESG standard in alignment with the UN Sustainable Development Goals (SDGs), our 2020 Impact Report has been designed around the four pillars of the common metrics for consistent reporting of sustainable value creation as developed by the World Economic Forum’s International Business Council: Principles of Governance, Planet, People, and Prosperity.

Our Impact

5.2 Million

Cumulative metric tons of carbon dioxide (CO2) avoided annually through our investments, the equivalent to eliminating emissions from nearly 600,000 average U.S. homes every year

4 Billion

Cumulative gallons of water saved annually from our investments, the equivalent to eliminating the annual water consumption in 80,000 U.S. homes every year

>200,000

Quality jobs created by our investments in 48 states

>170,000

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

>1.9 Million

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

Sustainable Development Goals

Through this report, our CEO Jeff Eckel reaffirms his support of Hannon Armstrong’s ongoing commitment to these goals of the United Nations Global Compact. In addition, the report constitutes Hannon Armstrong’s “Communication on Progress” (COP1) under the UN Global Compact.

Our ESG Journey

  • 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

2020 Highlights

$1.9b
invested in climate
solutions

Highest recorded
annual CarbonCount
in company history

Joined Partnership
for Carbon Accounting
Financials
(PCAF)

2m MT1 of incremental
annual reductions in
carbon emissions

Expanded DEIJ2
disclosures

in SEC filing

Expanded Board
with appointments of Clay
Armbrister and Nancy Floyd

>$900m
issued in green
bonds

Internal management
realignment enhanced
DEIJ in C-suite

$1m Social Dividend declared
to capitalize newly launched
Hannon Armstrong Foundation

ESG Ratings

Low Risk

Top 6th Percentile in Global Universe


ESG Corporate Rating

A

Top 10th Percentile


B

Top 10th Percentile


R-FACTOR™

Outperformer

Top 10th-30th Percentile

ESG Ratings

Low Risk

Top 6th Percentile in Global Universe

ESG Corporate Rating

A

Top 10th Percentile

B

Top 10th Percentile

R-FACTOR™

Outperformer

Top 10th-30th Percentile

People

Diversity, Equity, Inclusion, and Justice (DEIJ)

Strategy

At Hannon Armstrong, we believe that our company is more than just the sum of individual roles, skills, and productivities. In addition, we recognize that fostering a supportive climate that allows people of all backgrounds to flourish lends itself to the highest levels of company performance and facilitates the attraction and retention of best-in-class talent.

We also believe it is inherently the right way to conduct business. As a result, we take a comprehensive, values-driven approach to diversity, inclusion, equity, and justice.

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 DEIJ, including identifying and vetting Director candidates (when vacancies arise), helping to formulate the company’s DEIJ strategy, and monitoring DEIJ performance metrics.

Comprehensive Plan for Multiyear Impact

In 2020, we engaged an independent DEIJ consultant and convened an internal DEIJ Working Group to identify specific DEIJ challenges facing our organization and develop a multiyear plan for addressing them.

Key components of this plan include the below. We hope to provide more information on our progress on these initiatives in next year’s report.

  • Talent Acquisition
  • Business Resource Groups
  • New Employee Onboarding
  • Training and Professional Development
  • Dashboard Metrics
  • Human Resource Process Amendments
  • 89% Independent Board Members
  • 33% Women Board Members
  • 11% Racial or Ethnic Minority Board Members

Goals and Metrics

Fundamentally, we aspire to the goal that our employees at each level of our organization are representative of the communities in which we operate. To this end, we have begun to track and report internally on key talent metrics including workforce demographics, critical role pipeline and diversity data, and engagement and inclusion indices.

Further, we are committed to identifying and developing the talents of our next generation of leaders and better support our female and underrepresented employees in their onboarding, training, development, and progression within the Company.

We remain committed to “equal pay for equal work” in compliance with applicable state law. To validate our commitment, we have engaged an independent firm to conduct a pay equity audit. We expect to provide additional disclosures around the outcome of this audit upon its conclusion.

Planet

Principles of Governance

Internally managed, the business affairs of our company are conducted by our officers and employees under the direction of our President & 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.

Nominating, Governance and Corporate Responsibility Committee of the Board of Directors

Chairman and CEO

ESG Committee

ESG Staff Committee Leader

Investor Relations and ESG Strategy | Finance | Accounting | Investments | Legal | Human Resources | Communications | Portfolio Management

Prosperity

Financial Performance

Distributable Earnings per Share

Dividends per Share

Dividends per Share

1) See the Non-GAAP Financial Measures section of our 2020 Form 10-K 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) Distributable ROE is calculated using distributable earnings for the period and the average of the ending quarterly equity balances in 2020 and 2019.

Corporate Foundation

We created the Hannon Armstrong Foundation in early 2021 to add a strategic, long-term lens to our maturing corporate philanthropy efforts – tied to specific focus areas and committed to impact measurement. This flowed from an organic expression of shared values that fits naturally within our culture of fierce curiosity and rigor about outcomes in climate investing. In early 2021, we declared an initial “Social Dividend” to the foundation of $1 million.

Vision

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

Focus Areas

Climate Solutions

Innovative organizations and projects that preserve and restore our natural resources and develop new solutions to pressing climate challenges

Equity, Inclusions, and Empowerment

Empowering and creating opportunity for marginalized individuals and communities

Local Impact

Initiatives that strengthen the social fabric and promote economic and climate resilience