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Item 1. Business

2024-02-16 compared with 2023-02-21 · 141 added, 145 removed, 190 unchanged (60% of the section changed)

We invest in climate solutions developed or sponsored by leading companies in the energy efficiency, renewable energy and other sustainable infrastructure markets.

We believe that we were one of the first U.S.

public companies solely dedicated to climate solutions.

Our goal is to generate attractive returns from a diversified portfolio of project company investments with long-term, predictable cash flows from proven technologies that reduce carbon emissions or increase resilience to climate change.

Our vision is that every investment improves our climate future.

In executing this vision, we focus on a wide variety of climate solutions including:

• Building Energy Efficiency

• LED Building Lighting

• Energy Efficient Heating, Cooling and Ventilation

• Building Controls and Sensors

• Combined Heat and Power Systems

• Electric Distribution Systems

• LED Street Lighting

• Distributed Commercial and Industrial Solar

• Community Solar

• Residential Solar

HASI is a climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition.

With more than $12 billion in managed assets, our vision is that every investment improves our climate future.

We invest in a variety of asset classes across our three primary climate solutions markets:

Behind the Meter

Grid-Connected

Fuels, Transport, and Nature

• Residential Solar & Storage

• Utility-scale Solar

• Utility Scale Wind

• Water and Stream Distribution Systems

• Clean Fleet Transportation

• Nature Based Solutions and Environmental Credits

• Storm Water Management

• Renewable Natural Gas

• Other Climate Related Technologies

We are internally managed, and our management team has extensive relevant industry knowledge and experience.

We have long-standing relationships with the leading energy service companies (“ESCOs”), manufacturers, project developers, utilities, owners and operators that provide recurring, programmatic investment and fee-generating opportunities.

Additionally, we have relationships with leading commercial and investment banks and institutional investors from which we are referred additional investment and fee-generating opportunities.

• Community Solar and Commercial & Industrial Solar

• Onshore wind

• Fleet Decarbonization

• Energy Efficiency

• Battery Energy Storage Systems

• Ecological Restoration

We are internally managed by a management team that has extensive relevant industry knowledge and experience, and a team of over 130 climate finance professionals.

We have long-standing relationships with some of the leading clean energy project developers, owners and operators, utilities, and energy service companies (“ESCOs”), that provide recurring, programmatic investment and fee-generating opportunities.

We measure and report the efficiency with which all HASI investments avoid carbon emissions using CarbonCount®, producing a quantitative impact score of the avoided CO 2 equivalent .

Our programmatic client partnership, flexible capital and aligned goals enable repeat business and operational efficiencies.

Through our specialized platform, we offer stockholders access to attractive risk adjusted returns from direct asset investing in diverse energy transition end markets.

Our investments take many forms, including equity, joint ventures, real estate, commercial and government receivables or securities, and other financing transactions.

While we participate in diverse end markets, we generally intend for all our investments to share common attributes such as being climate-positive investments with top-tier clients in real assets using proven commercial technologies, and which benefit from contracted cash flows and high quality, incented offtakers.

We completed approximately $2.3 billion of transactions during 2023, compared to approximately $1.8 billion during 2022.

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When we combine these assets with our Portfolio, as of December 31, 2023, we manage approximately $12.3 billion of assets, which we refer to as our “Managed Assets.”

Our investments take many forms, including equity, joint ventures, land ownership, loans, and other financing transactions.

We also generate ongoing fees via off-balance sheet securitization transactions, advisory services, and asset management.

We use borrowings as part of our strategy to fund our investments in climate solutions and have available to us a broad range of financing sources including short-term commercial paper issuances, revolving credit facilities, non-recourse or recourse debt, equity, and off-balance sheet securitization structures.

We calculate the estimated carbon emission savings using CarbonCount ® , a proprietary tool which measures the efficiency with which our investments reduce carbon emissions, and generally provide the associated CarbonCount metrics for our debt issuances.

We have a dual revenue strategy, through which generate both net investment income from our portfolio, and Gain-on-Sale and ongoing fees via off-balance sheet securitization transactions, advisory services, and asset management.

We fund our investments in climate solutions using a broad range of financing sources including corporate unsecured bonds, convertible bonds, non-recourse or recourse debt from banks and financial institutions, equity, syndications and off-balance sheet securitization structures.

We manage our short-term liquidity needs through short-term commercial paper issuances and revolving credit facilities.

We generally provide the associated CarbonCount metrics for our debt issuances.

In addition, certain of our debt issuances meet the environmental eligibility criteria for green bonds as defined by the International Capital Markets Association’s Green Bond Principles, which we believe makes our debt more attractive for many investors compared to such offerings that do not qualify under these principles.

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We have a large and active pipeline of potential new opportunities that are in various stages of our underwriting process.

We believe the Inflation Reduction Act signed into law on August 16, 2022, that incentivizes the construction of and

investment in climate solutions will result in additional investment opportunities in the markets in which we invest over the next several years, which may result in increases in our pipeline in the future.

We refer to potential opportunities as being part of our pipeline if we have determined that the project fits within our climate solutions investment strategy and exhibits the appropriate risk and reward characteristics through an initial credit analysis, including a quantitative and qualitative assessment of the opportunity, as well as research on the relevant market and sponsor.

We believe the Inflation Reduction Act signed into law on August 16, 2022, which incentivizes the construction of and investment in climate solutions will result in additional investment opportunities in the markets in which we invest over the next several years, and therefore may result in increases in our pipeline in the future.

We refer to potential opportunities as being part of our pipeline if we have determined that the project fits within our investment strategy and exhibits the appropriate risk and reward characteristics through an initial credit analysis, including a quantitative and qualitative assessment of the opportunity, as well as research on the relevant market and sponsor.

Our pipeline of transactions that could potentially close in the next 12 months consists of opportunities in which we will be the lead originator as well as opportunities in which we may participate with other institutional investors.

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There can, however, be no assurance with regard to any specific terms of such pipeline transactions or that any or all of the transactions in our pipeline will be completed.

We are committed to leadership in transparent disclosure on environmental, social, and governance (“ESG”) matters.

Beginning in 2013, we became one of the first capital providers to evaluate the carbon efficiency of our Portfolio by utilizing CarbonCount.

We are committed to leadership in transparent disclosure on sustainability, impact, and governance matters.

Beginning in 2013, we became one of the first capital providers to evaluate the climate impact of our Portfolio by utilizing CarbonCount.

In 2017, we believe we were the first U.S-based public company to commit to the Climate Disclosure Standards Board led initiative on implementing the recommendations of the Financial Stability Board’s Task Force for Climate-related Financial Disclosures (“TCFD”) and provide the recommended disclosures in our Form 10-K.

In 2020, we joined the Partnership for Carbon Accounting Financials (“PCAF”), a global financial industry-led partnership to implement a consistent and transparent disclosure framework to report carbon emissions and avoided emissions resulting from financed assets.

We began to report in accordance with PCAF in 2022.

For further information on our ESG disclosures, see the discussion in the sections titled “Investment Strategy” and “Environmental and Social Responsibility and Corporate Governance” herein.

We are committed to providing transparent disclosures on our human capital management, which can be found herein in the section titled “Human Capital Strategy.” In 2021, we founded the Hannon Armstrong Foundation, which provides monetary and non-monetary support to programs that align with our philanthropic priorities of ensuring equal access to climate solutions, empowering and creating opportunity for marginalized individuals and communities, and creating a local impact.

We elected to be taxed as a REIT for U.S.

federal income tax purposes commencing with our taxable year ended December 31, 2013, and operate our business in a manner that permits us to maintain our exemption from registration as an investment company under the 1940 Act.

We are a member of the Partnership for Carbon Accounting Financials (“PCAF”), a global financial industry-led partnership to implement a consistent and transparent disclosure framework to report carbon emissions and avoided emissions resulting from financed assets, and report our financed and avoided emissions under that framework.

For further information on our disclosures, see the discussion in the sections titled “Investment Strategy” and “Sustainability, Impact and Corporate Governance” herein.

We are committed to providing transparent disclosures on our human capital management, which can be found herein in the section titled “Human Capital Strategy.” Through the HASI Foundation, we provide monetary and non-monetary support to programs that align with our philanthropic priorities of ensuring equal access to climate solutions, empowering and creating opportunity for marginalized individuals and communities, and creating a positive local impact in the communities where our business operates.

We elected and qualified to be taxed as a REIT for U.S.

federal income tax purposes, commencing with our taxable year ended December 31, 2013 through our taxable year ended December 31, 2023.

In December 2023, our board of directors approved our revocation of our REIT status effective January 1, 2024, and we will be taxed as a C Corporation beginning with tax year 2024.

We operate our business in a manner that permits us to maintain our exemption from registration as an investment company under the 1940 Act.

INVESTMENT STRATEGY

With scientific consensus that global-warming trends are linked to human activities and result in various extreme weather events, we believe our firm is well-positioned to generate attractive risk-adjusted returns by investing in, and managing a portfolio of, assets that address climate-changing greenhouse gas emissions.

Further, with increasing weather-related disasters, we see similar investment opportunities in infrastructure assets that mitigate the impact of, and increase the resiliency to, these weather events and other adverse impacts of climate change.

Our vision is that every investment improves our climate future and thus the carbon impact of an investment is at the core of our business model.

We believe that climate positive investments will produce attractive risk adjusted returns and we require investments to be neutral to negative on incremental carbon emissions or have some other tangible environmental benefit such as reducing water consumption or increasing resilience to climate change influenced weather events.

With scientific consensus that global-warming trends are linked to human activities and result in various extreme weather events, we believe our firm is well-positioned to generate attractive risk-adjusted returns by investing in, and managing a portfolio of, real assets that mitigate greenhouse gas emissions.

Further, with increasing weather-related disasters, we see similar investment opportunities in infrastructure assets that increase the resiliency to these weather events and other adverse impacts of climate change.

Our vision is that every investment improves our climate future and our purpose is to make climate positive investments that produce superior risk-adjusted returns.

Sustainability is at the core of our business model and influences every investment decision which is why we require all HASI investments to be neutral to negative on incremental carbon emissions or have some other tangible environmental benefit such as reducing water consumption or increasing resilience to extreme events.

Our climate-positive investment thesis is based on the following theories:

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• investing in assets aligned with scientific consensus and broadly held societal values will reduce potential regulatory and social costs through more internalization of externalities;

• assets that reduce carbon emissions represent an embedded option that may increase in value if regulatory authorities were to set a price on carbon emissions.

• assets that reduce or avoid carbon emissions represent an embedded option that may increase in value if regulatory authorities were to set a price on carbon emissions.

We believe combining this investment thesis with our multi-decade experience in investing in our markets through multiple interest rate and business cycles, intermittent governmental support for reducing carbon emissions and several cycles of business expansions in renewable and other sustainable infrastructure markets, allows us to earn attractive risk-adjusted returns on the assets in which we invest.

We also believe there is a very large potential market opportunity as the legacy technologies for generating and using energy and the systems that produce carbon emissions are retired and replaced by low-to-no carbon emission systems.

no carbon emission systems.

Mitigation and resiliency investments continue to grow to address severe weather events and other climate change impacts.

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• Behind-the-Meter (“BTM”) :

distributed building or facility projects, which reduce energy usage or cost through the use of solar generation and energy storage or energy efficiency improvements including heating, ventilation and air conditioning systems (“HVAC”), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems;

distributed energy projects which reduce energy usage or cost through solar power generation, electric storage, or energy efficiency improvements such as heating, ventilation, and air conditioning systems (HVAC), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems;

• Grid-Connected (“GC”) :

renewable energy projects that deploy cleaner energy sources, such as solar, solar-plus-storage, and wind, to generate power production where the off-taker or counterparty may be part of the wholesale electric power markets;

• Sustainable Infrastructure (“SI”):

upgraded transmission and distribution systems, water and storm water infrastructure, transportation fleet enhancements, renewable natural gas plants, and other projects that improve water or energy efficiency, increase resiliency, positively impact the environment or more efficiently use natural resources.

Of our pipeline, 42% is related to BTM assets and 45% is related to GC assets, with the remainder related to SI.

• Fuels, Transport, and Nature (“FTN”):

a range of real assets spanning high-emitting economic sectors other than the power grid such as transportation and fuels in the United States, including renewable natural gas (RNG) plants, transportation fleet enhancements, and ecological restoration projects, among others.

Of our pipeline, 52% is related to BTM assets and 30% is related to GC assets, with the remainder related to FTN, an area of increased focus for us beginning in 2023.

We prefer investments in which the assets use proven technology and have a long-term, creditworthy off-taker or counterparties.

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We make our investments utilizing a variety of structures, including:

• equity investments in either preferred or common structures in unconsolidated entities which own renewable energy or energy efficiency projects;

• commercial and government receivables or securities, such as loans for renewable energy and energy efficiency projects;

• real estate, such as land or other assets leased for use by GC projects typically under long term leases.

• equity investments in either preferred or common structures in unconsolidated entities;

• commercial and government receivables or securities, and

• real estate.

Our equity investments in climate solutions projects are operated by various renewable energy companies or by joint ventures in which we participate.

These transactions allow us to participate in the cash flows associated with these projects, typically on a priority basis.

Our energy efficiency debt investments are usually assigned the payment stream from the project savings and other contractual rights, often using our pre-existing master purchase agreements with the ESCOs.

Our debt investments in various renewable energy or other sustainable infrastructure projects or portfolios of projects are generally secured by the installed improvements, or other real estate rights.

We also own, directly or through equity investments, land that is leased under long-term agreements to renewable energy projects where our investment returns are typically senior to most project costs, debt, and equity.

We also own, both directly and through equity investments, land that is leased under long-term agreements to renewable energy projects where our investment returns are typically senior to most project costs, debt, and equity.

We often make investments where we hold a preferred or mezzanine position in a project company where we are subordinated to project debt and/or preferred forms of equity.

Investing greater than 10% of our assets in any individual project company requires the approval of a majority of our independent directors.

We may adjust the mix and duration of our assets over time in order to allow us to manage various aspects of our Portfolio, including expected risk-adjusted returns, macroeconomic conditions, liquidity, availability of adequate financing for our assets, and the maintenance of our REIT qualification and our exemption from registration as an investment company under the 1940 Act.

As of December 31, 2022, our Portfolio consisted of over 340 investments, with approximately 56% of our Portfolio invested in BTM assets and approximately 40% invested in GC assets, which include our land holdings.

Investing greater than 10% of our assets in any investment requires the approval of a majority of our independent directors.

We may adjust the mix and duration of our assets over time in order to allow us to manage various aspects of our Portfolio, including expected risk-adjusted returns, macroeconomic conditions, liquidity, availability of adequate financing for our assets, and our exemption from registration as an investment company under the 1940 Act.

As of December 31, 2023, our Portfolio consisted of over 520 investments, with approximately 48% of our Portfolio invested in BTM assets, approximately 37% invested in GC assets, and approximately 15% invested in FTN investments.

The mix of our Portfolio is expected to vary over time, as we seek to manage the diversity of our Portfolio by, among other factors, project type, project operator, type of investment, type of technology, transaction size, geography, obligor, and maturity.

As part of our investment process, we calculate the ratio of the estimated first year of metric tons of carbon emissions avoided by our investments divided by the capital invested to quantify the carbon impact of our investments.

In this calculation, which we refer to as CarbonCount, we use emissions factor data, expressed on a CO 2 equivalent basis, from the U.S.

Government or the International Energy Administration to an estimate of a project’s energy production or savings to compute an estimate of metric tons of carbon emissions avoided.

We estimate that our investments originated in 2022 will reduce annual carbon emissions by over 600 thousand metric tons, equating to a CarbonCount of 0.35.

In addition to carbon, we also consider other environmental attributes, such as water use reduction, stormwater remediation benefits and stream restoration benefits.

In this calculation, which we refer to as CarbonCount, we use emissions factor data, expressed on a CO 2 equivalent basis, representing the locational marginal emissions associated with a project to determine an estimate of a project’s energy production or savings to compute an estimate of metric tons of carbon emissions avoided.

We estimate that our investments originated in 2023 will avoid annual carbon emissions by over 760 thousand metric tons, equating to a CarbonCount of 0.33.

In addition to carbon emissions avoidance, we also consider other environmental attributes, such as water use reduction, stormwater remediation benefits and stream restoration benefits.

We believe that our long history of climate solutions investing, the experience, expertise and relationships of our management team, the anticipated credit strength of the obligors or investees involved in our investments and the size and growth potential of our market, position us well to capitalize on our strategy.

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FINANCING STRATEGY

We believe we have available a broad range of financing sources as part of our strategy to fund our investments in climate solutions.

We may finance our investments through the use of non-recourse debt, recourse debt or equity and may also finance such transactions through the use of off-balance sheet securitizations or syndication structures.

We believe we have available a broad range of financing sources as part of our strategy to fund our investments.

We may finance our investments through the use of cash on hand, debt which may be either recourse or non-recourse and either fixed-rate or floating-rate, or equity, and may also finance such transactions through the use of off-balance sheet securitizations or syndication structures.

When issuing debt, we generally provide the estimated carbon emission savings using CarbonCount.

In addition, certain of our debt issuances meet the environmental eligibility criteria for green bonds as defined by the International Capital Markets Association’s Green Bond Principles, which we believe makes our debt more attractive for certain investors compared to such offerings that do not qualify under these principles.

We plan to raise additional equity capital and continue to use fixed and floating rate borrowings, which may be in the form of short-term commercial paper issuances, revolving credit facilities, term loans, repurchase agreements, and public and private debt issuances, including convertible debt and off-balance sheet securitization structures, as a means of financing our business.

We may also consider the use of special purpose entities or funds in which outside investors participate to allow us to expand the investments that we make or to manage our Portfolio diversification.

The decision on how we finance our business is largely driven by market conditions including the overall interest rate environment, prevailing credit spreads and the terms of available financing.

The decision on how we finance our business is largely driven by our target capital structure, and by market conditions including the overall interest rate environment, prevailing credit spreads and the terms of available financing.

During periods of market disruption, certain sources of financing may be less accessible than others which may impact our financing decisions.

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HUMAN CAPITAL STRATEGY

An emphasis on a durable social fabric, including diverse, engaged, and fairly compensated staff, is an important factor in our financial success.

Our culture is focused on hiring and retaining highly talented employees with diverse backgrounds and empowering them to create value for our stockholders, and our success is dependent on employee understanding of and investment in their role in that value creation.

An emphasis on a durable social fabric, including engaged, collaborative, and fairly compensated staff, is an important factor in our financial success.

Our culture is focused on hiring and retaining highly talented employees with diverse perspectives and empowering them to create value for our stockholders, and our success is dependent on employee understanding of and investment in their role in that value creation.

Our employees are responsible for upholding our vision, purpose, and values.

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We acknowledge that learning is highly individualized and needs to be offered in a way that is most conducive to a specific learner’s needs.

We run a periodic education series that includes internal and external speakers presenting topics of interest that are relevant to our

run a periodic education series that includes internal and external speakers presenting topics of interest that are relevant to our employees.

We provide multiple learning solutions that cover a wide range of areas such as diversity, equity, and inclusion training, leadership skills, financial knowledge, technology training, and presentation skills.

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Therefore, employees typically receive a portion of their compensation in the form of annual bonuses as well as equity grants which are both tied in part to the Company’s financial performance.

We encourage our employees to contribute their time to support various community and charitable activities and contribute to local community organizations with a primary focus on organizations addressing issues around environmental and social justice.

In addition to competitive base salaries, cash bonuses, and equity participation for most employees, we are committed to continuously evaluating and ensuring the competitiveness of our benefits offerings so that we meet the various needs of our employees and their families.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations – Human Capital Metrics” for discussion of metrics related to our Human Capital Strategy.

ENVIRONMENTAL AND SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE

SUSTAINABILITY, IMPACT AND CORPORATE GOVERNANCE

We own and invest in a diversified portfolio of climate solutions projects focused on reducing or mitigating the impacts of climate change.

Under the direction of our chief executive officer and the Board, we are focused on achieving a high level of environmental and social responsibility and strong corporate governance.

The Nominating, Governance and Corporate Responsibility Committee of our Board is responsible for our ESG oversight, including related policies and communications.

Additionally, we have a committee of employees from across our organization that is focused on implementing ESG strategies and policies and reports directly to our chief executive officer.

The Nominating, Governance and Corporate Responsibility Committee of our Board is responsible for our oversight of sustainability, impact, and governance matters, including related policies and communications.

Additionally, we have a committee of employees from across our organization that is focused on implementing sustainability and impact strategies and policies and reports directly to our chief executive officer.

Annually we publish a report that illustrates our progress on these matters.

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As described under “Investment Strategy”, we quantify the carbon impact of each of our investments.

In addition, we operate our business in a manner intended to reduce our own environmental impact, including by purchasing carbon-free renewable energy for our office, encouraging recycling and composting, and offering clean transportation employee incentives for electric and hybrid vehicles.

In addition, we operate our business in a manner intended to reduce our own environmental impact, including by purchasing carbon offsets to mitigate the impact of our office operations, encouraging recycling and composting, and offering clean transportation employee incentives for electric and hybrid vehicles.

We have also adopted policies focused on minimizing the environmental impact of our operations.

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In 2021, we established targets for our transition to net-zero carbon emissions by 2050 using the foundational framework developed by the Science Based Targets Initiative.

We have since validated a net-zero target with the Net Zero Asset Managers Alliance, which commits us to achieving net zero carbon intensity for our financed emissions by 2050.

We are a signatory to the United Nations Global Compact, an initiative focused on responsible business practices related to human rights, labor, the environment and anti-corruption.

We participate in a number of initiatives and coalitions that share our commitment to climate action, corporate sustainability, climate-risk disclosure and reporting, and the expansion of clean energy including the United Nations-supported Principles for Responsible Investment, the United Nations Global Compact campaign entitled Business Ambition for 1.5°, Climate Action 100+, and the reporting framework established by an international consortium of business and environmental NGOs referred to as the Climate Disclosure Standards Board.

We participate in a number of initiatives and coalitions that share our commitment to climate action, corporate sustainability, climate-risk disclosure and reporting, and the expansion of clean energy including the United Nations-supported Principles for Responsible Investment, the United Nations Global Compact campaign entitled Business Ambition for 1.5°, and the reporting framework established by an international consortium of business and environmental NGOs referred to as the Climate Disclosure Standards Board.

Social Responsibility.

We recognize that the effects of pollution, environmental degradation, increased climate-fueled extreme weather events, and the economic transition away from fossil fuels fall most heavily on marginalized communities in our society, especially communities of color.

We know that the effects of climate change are already disproportionately impacting disadvantaged communities, and these adverse outcomes will be exacerbated if we do not eliminate harmful greenhouse gas emissions.

Equally so, we acknowledge the legacy of discriminatory policies in creating and perpetuating this imbalance.

We believe in every person’s inherent worth and dignity and that we should all have access to clean water, clean air, healthy food, resilient and reliable shelter and energy, and good paying jobs.

We believe these disparities must be addressed while society works to accelerate the transition to a net-zero economy, both here in the United States and across the globe, a concept we refer to as “climate justice”.

We are determined to incorporate climate justice ideals and actions across our entire business, including in our process for underwriting investments, our engagement with business partners, our human capital strategy, philanthropy, and policy advocacy efforts.

In 2021, we established the Hannon Armstrong Foundation, that provides cash and in-kind support to programs which provide climate solutions investments and career opportunities for those from historically underrepresented communities, as well as organizations across our local region that seek to strengthen the social fabric and promote economic and climate resiliency.

We believe these disparities must be addressed while society works to accelerate the transition to a net-zero economy, both here in the United States and across the globe.

We are determined to incorporate these ideals and actions across our entire business, including in our process for underwriting investments, our engagement with business partners, our human capital strategy, philanthropy, and policy advocacy efforts.

We established the HASI Foundation to provide cash and in-kind support to programs which provide climate solutions investments and career opportunities for those from historically underrepresented communities, as well as organizations across our local region that seek to strengthen the social fabric and promote economic and climate resiliency.

Corporate Governance.

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• our Board is not staggered, with each of our directors subject to re-election annually;

• our Board has determined that eight of our nine directors are independent for purposes of the New York Stock Exchange (“NYSE”) corporate governance listing standards and Rule 10A-3 under the Exchange Act;

• our Board has determined that nine of our eleven directors are independent for purposes of the New York Stock Exchange (“NYSE”) corporate governance listing standards and Rule 10A-3 under the Exchange Act;

• we have a lead independent director of the Board that convenes and chairs executive sessions of the independent directors to discuss certain matters without management or the chairman present;

• effective March 1, 2023, we have separated the executive chairman and chief executive officer roles as discussed in Item 9B of this Form 10-K;

• we have separated the executive chairman and chief executive officer roles as discussed in Item 9B of this Form 10-K;

• three of our directors qualify as an “audit committee financial expert” as defined by the Securities and Exchange Commission (the “SEC”);

• three of our directors (including our lead independent director) are women and one of our directors is a person of color constituting 33% and 11% respectively, of our Board in furtherance of our board diversity policy;

• four of our directors (including our lead independent director) are women and two of our directors are people of underrepresented ethnicity constituting 36% and 18% respectively, of our Board in furtherance of our board diversity policy;

• a target retirement age of 75 has been established for our directors;

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• we have opted out of the control share acquisition statute in the Maryland General Corporations Law (the “MGCL”);

• stockholders have the ability to amend the Company’s bylaws by the affirmative vote of the holders of a majority of the outstanding shares of common stock of the Company pursuant to a binding proposal submitted by a stockholder;

• stockholders have the ability to amend the Company’s bylaws by the affirmative vote of the holders of a majority of the outstanding shares of our common stock pursuant to a binding proposal submitted by a stockholder;

• we have exempted from the business combinations statute in the MGCL transactions that are approved by our Board (including a majority of our directors who are not affiliates or associates of the acquiring person).

• we do not have a stockholder rights plan (i.e., no poison pill).

In order to foster the highest standards of ethics and conduct in all business relationships, we have adopted a Code of Business Conduct and Ethics policy (the “Code of Conduct”).

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Our directors stay informed about our business by attending meetings of our Board and its committees and through supplemental reports and communications.

OUR FOCUS ON TRANSPARENT ESG REPORTING

We believe in transparent reporting relating to ESG matters because we believe such reporting improves the understanding of our financial results.

We believe in transparent reporting relating to sustainability and impact matters because we believe such reporting improves the understanding of our financial results.

As discussed in the “Investment Strategy” section above, we quantify the environmental impact of every transaction we execute through the application of CarbonCount.

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We may at times compete and at other times partner or work as a participant with alternative financing sources.

The continued low yields in alternative investment opportunities and increasing investor acceptance of the climate solutions market has increased the level of competition we experience.

The opportunities in alternative investment and increasing investor acceptance of the climate solutions market has increased the level of competition we experience.

We may also encounter competition in the form of potential customers or our origination partners electing to use their own capital rather than engaging us as an outside capital provider.

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Our executive officers and other leadership team personnel and their biographies are provided below.

On February 16, 2023, we announced that Jeffrey W.

Eckel will become executive chair of our Board, Jeffrey A.

Lipson will become president and chief executive officer, and Marc T.

Pangburn will become executive vice president and chief financial officer, each effective as of March 1, 2023.

Eckel , 64, has served as our president, chief executive officer, and chairman of our Board since 2013 and was with the predecessor of our company as president and chief executive officer since 2000 and prior to that from 1985 to 1989 as a senior vice president.

Eckel is on the board of trustees of The Nature Conservancy of Maryland and DC.

Eckel was appointed by the governor of Maryland to the board of the Maryland Clean Energy Center in 2011 where Mr.

Eckel served until 2016 while also serving as its chairman from 2012 to 2014.

Eckel has over 35 years of experience in financing, owning and operating infrastructure and energy assets.

Eckel received a Bachelor of Arts degree from Miami University in 1980 and a Master of Public Administration degree from Syracuse University, Maxwell School of Citizenship and Public Affairs, in 1981.

He holds Series 24, 63 and 79 securities licenses.

Lipson , 55, has served as an executive vice president and our chief operating officer since 2021 and as our chief financial officer since 2019.

Lipson , 56, has served as president and our chief executive officer since 2023.

Prior to becoming chief executive officer, Mr.

Lipson served as an executive vice president and our chief operating officer since 2021 and as our chief financial officer since 2019.

Previously, Mr.

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and its subsidiary CapitalSource Bank and a senior vice president, Corporate Treasury, at Bank of America and its predecessor FleetBoston Financial.

Lipson received a Bachelor of Science degree in Economics from Pennsylvania State University in 1989 and a Masters in Business Administration in Finance from New York University’s Leonard N.

Lipson received a Bachelor of Science degree in Economics from Pennsylvania State University in 1989 and a Master of Business Administration in Finance from New York University’s Leonard N.

Stern School of Business in 1993.

Lipson serves on the board of directors of the Jewish Council for the Aging of Greater Washington.

Nickey , 62, has served as an executive vice president and our chief client officer since January 2021 and is responsible for leading business development and managing client relationships.

Pangburn , 38, has served as an executive vice president and our chief financial officer since 2023, and prior to that served as a co-chief investment officer from 2021 to 2023.

Pangburn joined the Company in 2013 and previously served as a managing director until 2021.

Prior to joining the Company, Mr.

Pangburn worked at MP2 Capital, a solar development and financing company, where he was responsible for structuring the firm’s transactions, and worked in the private capital group at New York Life Investments, focusing on utilities, energy and infrastructure debt and equity investments.

Pangburn is a member of the President’s Council at Ceres, a non-profit sustainability advocacy organization.

Pangburn received his Bachelor of Arts degree in economics from Drew University.

Nickey , 63, has served as an executive vice president and our chief client officer since 2021.

Nickey previously served as a managing director from 2014 to 2021.

Nickey currently serves as chair-elect on the board of directors of the American Clean Power Association and is a member of the President’s Council at Ceres, a non-profit sustainability advocacy organization.

Nickey is responsible for leading business development and managing client relationships.

Nickey currently serves as chair on the board of directors of the American Clean Power Association.

Previously, she founded and served as CEO of Threshold Power.

Nickey received a Bachelor in Business Administration from the University of Notre Dame in 1983 and a Master’s of Science in Foreign Service from Georgetown University in 1986.

Chuslo , 65, has served as an executive vice president and our general counsel and secretary since 2013 and the chief legal officer since January 2021.

Previously, Mr.

Chuslo has served with the predecessor of our company as general counsel and secretary since 2008.

Chuslo is responsible for governance support to the Board and management and oversees the company’s legal resources in the investment and portfolio management activities.

Chuslo has more than 30 years of experience in the fields of securities, commercial and project finance, energy project development, and U.S.

federal regulation.

Chuslo received a Bachelor of Arts degree in History from the University of Massachusetts/Amherst and a Juris Doctorate from the Georgetown University Law Center.

Rose , CFA, 45, has served as executive vice president since 2015 and a co-chief investment officer beginning in 2021.

Nickey received a Bachelor of Business Administration from the University of Notre Dame and a Master of Science in Foreign Service from Georgetown University.

Rose , CFA, 46, has served as executive vice president since 2015 and as a chief investment officer beginning in 2017 and also from 2013 to 2015.

Previously, Mr.

Rose served as our chief operating officer from 2015 to 2017, our chief investment officer from 2013 to 2015 and 2017 to 2020 and has been with the Company and its predecessor since 2000.

Rose served as our chief operating officer from 2015 to 2017 and has been with the Company and its predecessor since 2000.

Rose has been involved with a vast majority of our transactions since 2000.

Rose earned a joint Bachelor of Science and Bachelor of Arts degree from the University of Richmond in 2000, a Master of Business Administration degree from the Darden School of

Business Administration at the University of Virginia in 2009, is a CFA charter holder and has passed the CPA examination.

Rose received a joint Bachelor of Science and Bachelor of Arts degree from the University of Richmond in 2000 and a Master of Business Administration degree from the Darden School of Business Administration at the University of Virginia in 2009.

Rose is a CFA charter holder and has passed the CPA examination.

He holds a Series 63 and 79 securities licenses.

McMahon , CFA, 51, has served us as an executive vice president since 2015 and is the co-head of our portfolio management group and the head of our syndication group.

He has been with the Company and its predecessor since 2000 in a variety of roles, including as a senior vice president from 2007 to 2015.

He has played a role in analyzing, negotiating, structuring, and managing several billion dollars of transactions.

McMahon received his Bachelor of Arts degree from the University of California, San Diego in 1993, and is a CFA charter holder.

He holds Series 24, 63 and 79 securities licenses.

Pangburn , 37, has served as an executive vice president and a co-chief investment officer since January 2021.

Pangburn joined the Company in 2013 and previously served as a managing director until 2021, and is jointly responsible for the Company’s investing activities.

Previously, Mr.

Pangburn received his Bachelor of Arts degree in economics from Drew University.

Santoroski , 58, has served as executive vice president and co-head of portfolio management since October 2021, previously serving as chief analytics officer since January 2021 after joining the company in 2020 as a managing director.

Santoroski , 59, has served as executive vice president and a head of portfolio management since October 2021, previously serving as chief analytics officer since January 2021 after joining the Company in 2020 as a managing director.

Santoroski is responsible for integrating analytics across portfolio, investment, and risk-related decisions.

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Prior to joining AES, he worked for several years at New York State Electric and Gas as an engineer and energy trader.

Santoroski holds a Bachelor of Science degree in electrical engineering from Pennsylvania State University as well as a Master of Science degree in electrical engineering and a Master of Business Administration degree from Syracuse University.

Santoroski received a Bachelor of Science degree in electrical engineering from Pennsylvania State University as

well as a Master of Science degree in electrical engineering and a Master of Business Administration degree from Syracuse University.

Chuslo , 66, has served as an executive vice president and our general counsel and secretary since 2013 and our chief legal officer since 2021.

Previously, Mr.

Chuslo has served with the predecessor of the Company as general counsel and secretary since 2008.

Chuslo is responsible for governance support to the Board and management and oversees the Company’s legal resources in its investment and portfolio management activities.

Chuslo has more than 30 years of experience in the fields of securities, commercial and project finance, energy project development, and U.S.

federal regulation.

Chuslo received a Bachelor of Arts degree in History from the University of Massachusetts/Amherst and a Juris Doctorate from the Georgetown University Law Center.

Katherine McGregor Dent , 51, has served as our senior vice president and chief human resources officer since April 2020, focusing on culture, strategy, and organizational development.

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Dent served as vice president, deputy general counsel, and assistant secretary from 2003 to 2020, where she played a key role in structuring, developing, negotiating, and closing billions of dollars of transactions for the Company.

Dent received a Bachelor of Arts in English from Niagara University in 1993 and a Juris Doctor from the University at Buffalo School of Law in 1996.

Dent serves on the board of trustees for St.

Anne’s School of Annapolis, for which she served as Chair from 2020 to 2022.

Amanuel Haile-Mariam , 43, has served as a managing director since joining the Company in 2021 and is responsible for the company’s structured investments in Grid-Connected renewable energy markets.

Prior to joining the Company, Mr.

Haile-Mariam worked at GE Energy Financial Services for 15 years leading the execution, asset management, capital raise and divestment of energy infrastructure projects.

Prior to joining GE Energy Financial Services, he worked at GE Corporate Audit Staff, conducting financial audits, leading simplification and operational excellence projects.

Haile-Mariam received his Bachelor of Science degree in accounting and Master of Business Administration in finance from the University of Connecticut.

Dent received a Bachelor of Arts in English from Niagara University and a Juris Doctor from the University at Buffalo School of Law.

Dent serves on the board of directors for the YWCA of Annapolis and Anne Arundel County.

McMahon , CFA, 52, has served us as an executive vice president since 2015 and is the head of our syndication group.

He has been with the Company and its predecessor since 2000 in a variety of roles, including as a senior vice president from 2007 to 2015.

He has played a role in analyzing, negotiating, structuring, and managing several billion dollars of transactions.

McMahon received a Bachelor of Arts degree from the University of California, San Diego in 1993, and is a CFA charter holder.

He holds Series 24, 63 and 79 securities licenses.

Melko , CPA, 43, has served as a senior vice president and our chief accounting officer since 2017 and as our treasurer since January 2021.

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In his treasurer role, he is involved in the Company’s cash management and related capital markets activities.

Previously, he served in a number of roles at PricewaterhouseCoopers LLP since 2005, including as a Senior Manager in the National Professional Services Group where he focused on complex financial instruments accounting issues for energy clients.

Melko received a Bachelor of Science degree in Accountancy in 2002, a Master of Business Administration degree in 2005 and a Master of Science degree in Accountancy from Wheeling Jesuit University in 2005.

He holds a CPA license in West Virginia and Maryland and is also a Certified Treasury Professional (CTP).

Previously, Mr.

Melko served in a number of roles at PricewaterhouseCoopers LLP, including as a senior manager in the National Professional Services Group where he focused on complex financial instruments accounting issues for energy clients.

Melko received a Bachelor of Science degree in Accountancy, a Master of Business Administration degree and a Master of Science degree in Accountancy from Wheeling Jesuit University.

Melko holds a CPA license in West Virginia and Maryland and is also a Certified Treasury Professional (CTP).

Amanuel Haile-Mariam , 44, has served as a managing director since joining the Company in 2021 and is responsible for the Company’s structured investments in Grid-Connected renewable energy markets.

Prior to joining the Company, Mr.

Haile-Mariam worked at GE Energy Financial Services for 15 years, most recently as Managing Director - Head of Capital Advisory and Portolio, Americas leading the execution, asset management, capital raise and divestment of energy infrastructure projects.

Prior to joining GE Energy Financial Services, Mr.

Haile-Mariam worked at GE Corporate Audit Staff, conducting financial audits, leading simplification and operational excellence projects.

Haile-Mariam received his Bachelor of Science degree in accounting and Master of Business Administration in finance from the University of Connecticut.

Annmarie Reynolds , 54, has served as a managing director since joining the Company in 2022 and is responsible for building and growing the Company’s investment in markets beyond current asset classes.

Prior to joining the Company, Ms.

Reynolds worked at The AES Corporation for 22 years serving in several senior roles including chief customer officer, chief commercial officer – US and Eurasia, chief risk officer and managing director climate solutions.

Prior to joining The AES Corporation, she worked several years at New York State Electric and Gas as an energy trader and engineer.

Reynolds worked at The AES Corporation for 22 years serving in several senior roles including chief customer officer from 2019 to 2022, chief commercial officer – US and Eurasia from 2018 to 2019, and prior to that as chief risk officer and managing director climate solutions.

Prior to joining The AES Corporation, Ms.

Reynolds worked several years at New York State Electric and Gas as an energy trader and engineer.

Reynolds received her Bachelor of Science degree in Mechanical Engineering from Rutgers University, The State University of New Jersey.

Daniela Shapiro , 49, joined the Company as managing director in 2022 and is responsible for growing the Company’s investments in Behind-the-Meter opportunities and expanding solutions for broader onsite and as-a-service offerings.

Daniela has over 20 years of energy industry experience.

Shapiro has over 20 years of energy industry experience.

Prior to joining the Company, Ms.

Shapiro was the CFO for Guzman Energy

and held various other executive positions, including at SoCore/ ENGIE.

Shapiro was the chief financial officer for Guzman Energy and held various other executive positions, including at SoCore/ ENGIE.

Prior to this, Ms.

Shapiro worked in the banking industry for 10 years, where she was responsible for deploying capital in energy and infrastructure assets, including tax equity investments in renewable energy projects.

Shapiro received her Bachelor of Science degree in Electrical Engineering from UNIFEI in Brazil, and her MBA from Northwestern University’s Kellogg School of Management.

Shapiro received her Bachelor of Science degree in Electrical Engineering from UNIFEI in Brazil, and her Master of Business Administration degree from Northwestern University’s Kellogg School of Management.

Viral Amin, 52, joined the Company as a senior vice president in 2023, and leads the on-balance sheet portfolio management group.

Prior to joining the Company, Mr.

Amin served in a number of roles at DTE Energy, including its vice president of business development, strategy, and mergers and acquisitions of the unregulated portfolio company from 2018 to 2023.

While at DTE, Mr.

Amin held multiple commercial and strategic roles in the utility and non-utility businesses, and

ultimately became responsible for the unregulated company’s investment activities overseeing its growth through sourcing, diligence, and execution of new projects in renewable and industrial energy.

Prior to joining DTE, Mr.

Amin worked for several years at Ford Motor Co.

and Visteon Corporation as an engineer.

Amin holds a Bachelor of Science degree and a Master of Science degree in electrical engineering from the University of Michigan, as well as a Master of Business Administration degree from the University of Michigan’s Ross School of Business.

AVAILABLE INFORMATION

We maintain a website at www.hannonarmstrong.com.

We maintain a website at www.hasi.com.

Information on our website is not incorporated by reference in this Form 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business