Core Focus on Sustainability
EXPERIENCE EXCELLENCE
Our dedication to sustainability
Hudson is dedicated to investing in sustainability and has a pragmatic, scientific, and results-oriented approach to putting its sustainability, the simple philosophy into action. We believe it’s in our past and our future that we need to collaborate with fossil fuel-oriented companies to move the world into a gradual but consistent sustainable focus. The global energy system is going through a transition that started decades ago and is accelerating but will take several more decades. In order to transition the world to sustainable energy, we must collaborate with the fossil fuel sector in achieving an effective and smooth transition. We bring our sustainable credentials to the table when we interact with companies that are in various sectors of our economy, and we look to add value to facilitating that smooth transition.
EXPERIENCE EXCELLENCE
What we believe
Hudson believes that companies that operate with sustainability in mind or incorporate ESG factors are in many instances better positioned for higher growth, building more employee talent and intellectual capital, accessing more investor capital, and often involve less risk than comparable companies whose business models do not incorporate such principles.
Hudson integrates its focus on sustainability characteristics through multiple stages of its investment process, due diligence, and portfolio management. Hudson believes that sustainability is fundamentally cultural to the firm and seeks to continuously improve its practices through iterative feedback with the market and industry participants.
Investment Screening and Due Diligence
Hudson has reviewed thousands of investment opportunities since inception. Investments made by Hudson must undergo a rigorous screening and due diligence process where sustainability characteristics or ESG issues are taken into consideration. Specific sustainability characteristics are considered at the fund level depending on the focus of the fund. Deal team members will take these characteristics into account when deciding to pursue an investment.
For example, a major criterion of Hudson’s first fund is that in order for a company to be considered by Hudson, its technology, products (including inputs into and components thereof) or processes must reduce the environmental impact of energy production, delivery or consumption in a more efficient or rational manner. This criterion, initially evaluated by Hudson’s Investment Opportunities Team, helps to determine whether an investment opportunity will advance to preliminary due diligence, during which an investment professional will look to determine whether the opportunity meets appropriate social and governance standards. Hudson also reviews any relevant consultant recommendations along this basis before investment.
Investment Engagement
Through its active management oversight, Hudson regularly monitors portfolio company activities, which allows the firm to influence corporate governance if the implementation of ESG principles could be improved upon. Most of Hudson’s investments involve positions on the board, and Hudson actively works with the management team to implement its philosophy on sustainability, including working with the company to demonstrate industry leadership when necessary.
Investor Reporting
Hudson reports on sustainability progress and objectives to its investors. Specific metrics for the reports are determined at the fund level by the Investment Committee. Hudson is broadly focused on reporting quantifiable environmental factors, particularly carbon emission reductions or levels of renewable generation constructed by Hudson portfolio companies.
Sustained Improvement
Hudson reports on sustainability progress and objectives to its investors. Specific metrics for the reports are determined at the fund level by the Investment Committee. Hudson is broadly focused on reporting quantifiable environmental factors, particularly carbon emission reductions or levels of renewable generation constructed by Hudson portfolio companies.
Hudson’s Green Finance Framework: Green Bonds and Loans
As a firm focused on investing in companies and assets promoting the sustainability of the physical and social environment consistent with the United Nations Sustainable Development Goals, we have published our inaugural Green Finance Framework (the “Framework”) based on the Green Bond Principles 2018 and the Green Loan Principles 2020, a voluntary set of guidelines that aim to promote integrity in green bond and loan market. Hudson has developed the Framework under which it intends to issue green bond(s) and loan(s) and use the proceeds to finance projects which support its mandate of investing in companies and projects that promote low carbon energy sources, resource efficiency, efficient production methods, sustainable transportation, infrastructure resiliency and human development and safety.
Continuing our ongoing commitments in support of our mission towards positive environmental, social and governance impact, these investments will contribute to the advancement of the UN Sustainable Development Goals. Additionally, a Second-Party Opinion on the environmental benefits of Hudson’s Green Finance Framework and alignment with the Green Bond Principles 2018 and the Green Loan Principles 2020 has been issued by Sustainalytics, a leading provider of ESG research and ratings. Sustainalytics considers that investing in renewable energy, as well as energy efficiency, water efficiency, and biomass generation projects, will provide positive environmental impact. To view additional details on Hudson’s sustainable bond and loan issuance strategy, please download the Framework and Second-Party Opinion.