Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Responsible Investments
• Corporate Philanthropy
• Human Capital
• Diversity and Inclusion
• Environmental Sustainability

Environmental Achievements

• Reduced GHG emissions intensity by 5% year-over-year (960 kgCO2e/FTE in 2019 vs 1011 kgCO2e/FTE in 2018)
• Increased recycling bins throughout headquarters
• Implemented energy enhancements (sleep mode for TVs, motion-sense lighting)
• Established an Environmental Sustainability Policy

Social Achievements

• Launched Women’s Interactive Network (WIN)
• Joined National Assoc. of Corporate Directors & Council of Institutional Investors
• Enhanced parental leave policy
• Added two new Independent Directors (45% of Directors are women)
• Appointed a Head of Inclusion
• Supported community organizations providing food, housing, and workforce development
• Announced inaugural joint venture with Capital Impact Partners for social impact investing
• Improved employee engagement survey scores across all 12 focus areas since 2015
• Increased paid time off for parental leave

Governance Achievements

• Separated Chair of the Board and CEO role
• Amended bylaws to declassify the Board over three-year period
• Adopted Board refreshment policy
• Adopted enhanced Board evaluation process
• Expanded Compensation Committee responsibilities to include human capital management (renamed MDC Committee)
• Amended Corporate Governance Guidelines to prioritize diverse board candidates
• Provided greater transparency and disclosure around executive compensation

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and resulting economic and market upheaval
• Systemic social justice issues

Mitigation Strategies

• Successful transition to 100% remote work
• Supporting community organizations
• Appointing a Head of Inclusion
• Maintaining strong risk management and governance practices
• Establishing safety protocols for return to office

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, SASB

Certifications: LEED Gold Certification (Headquarters building)

Awards & Recognition

• Bloomberg Gender-Equality Index (2018, 2019, 2020)
• 2020 Women on Boards “Winning” Company

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Human Capital
• Responsible Investments
• Risk Management
• Environment

Environmental Achievements

• 100% offset of greenhouse gas emissions for corporate headquarters

Social Achievements

• Appointed a Head of Inclusion and conducted firmwide unconscious bias trainings
• Developed and taught a course on fixed income and mortgage markets to City University of New York students
• Launched Women’s Interactive Network, an internal affinity group

Governance Achievements

• Amended Corporate Governance Guidelines and Nominating/Corporate Governance Committee Charter to formalize Board’s commitment to seeking out highly qualified candidates of diverse gender and race/ethnicity
• Disclosed gender and racial/ethnic composition of our Board of Directors
• Internalized management resulting in incremental cost control and greater transparency and disclosures around executive compensation

Climate Goals & Targets

Environmental Challenges

• Navigating volatile markets
• COVID-19 pandemic and its impact on employees and operations

Mitigation Strategies

• Robust risk management and control environment
• Prioritized employee health and well-being; provided flexibility and resources
• Invested in technology infrastructure to enhance resiliency and efficiency during remote work

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SASB, GRI

Certifications: LEED Gold Certification

Awards & Recognition

• Bloomberg Gender-Equality Index (2018-2021)
• FTSE4Good Index (2019-2020)

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Human Capital
• Responsible Investment
• Environment

Environmental Achievements

• Offsetting 100% of Scope 2 GHG emissions

Social Achievements

• Successfully adopting a hybrid work approach
• Expanding to seven employee-sponsored affinity groups and further nurturing an inclusive workplace through diversity, equity, and inclusion initiatives, as well as enhanced parental leave and expanded fertility benefits

Governance Achievements

• Integrating ESG oversight across the Board of Directors and its Committees
• Introducing enhancements to the Company’s executive compensation program, including equity incentives, performance-based awards, and the use of a quantitative corporate performance scorecard that reflects financial and nonfinancial objectives

Climate Goals & Targets

Environmental Challenges

• Climate events that could impact home prices and/or disrupt borrowers’ ability to pay their mortgage/loan
• Increased severity and frequency of climate events

Mitigation Strategies

• Well-established Business Continuity Plan to ensure continued, effective operations through a variety of scenarios including natural disasters and pandemics
• Analysis to assess climate change risks and opportunities to our business

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Climate events impacting home prices and borrower ability to pay
• Increased severity and frequency of climate events

Transition Risks

• Enhanced environmental reporting obligations
• Regulatory and/or Governmental Policy Change

Opportunities

• Enhanced reputational benefits
• Increased investment opportunities

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: LEED Gold, Energy Star

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Human Capital
• Responsible Investment
• Environment

Environmental Achievements

• Offsetting 100% of Scope 1 and Scope 2 GHG emissions with Renewable Energy Certificates
• Tracked and measured total GHG emissions and energy consumption at headquarters and Dallas office
• Published climate-related disclosures following TCFD guidance

Social Achievements

• Supported seven employee-led networks, leading over 20 DEI activities
• Included black-, women-, and veteran-owned broker dealers on equity offerings
• Taught fixed income and secondary mortgage market course to underrepresented college students
• Conducted extensive stakeholder outreach, including to 100% of top 100 institutional shareholders
• 10% voluntary turnover in 2022 (half the financial services sector average)
• Enhanced parental leave policy

Governance Achievements

• Added a minimum performance threshold for executive incentive payouts and increased relative performance metrics
• Amended bylaws to lower the threshold for shareholders to call special meetings
• Published a statement on human rights
• Formalized areas of ESG oversight for the Board and its Committees

Climate Goals & Targets

Environmental Challenges

• Climate events that could impact home prices and/or disrupt borrowers’ ability to pay mortgages
• Increased severity and frequency of climate events
• Increased environmental reporting obligations
• Increased instances of business interruption

Mitigation Strategies

• Diversified investment strategy and products
• Geographically dispersed housing exposure
• Borrowers have considerable equity and are required to have property insurance
• Well-established Business Continuity Plan

Supply Chain Management

Responsible Procurement

• Inclusion of black-, women-, and veteran-owned broker dealers on equity offerings

Climate-Related Risks & Opportunities

Physical Risks

• Climate events impacting home prices and borrower payments
• Increased severity and frequency of climate events
• Business interruption

Transition Risks

• Repricing of assets
• Increased environmental reporting obligations
• Changes to borrower prepayment likelihood

Opportunities

• Increased investment opportunities
• Enhanced reputational benefits
• Enhanced risk mitigation
• More differentiated value in investment products

Reporting Standards

Frameworks Used: GRI Standards, SASB Standards, TCFD framework

Certifications: LEED Gold Certification (Headquarters and Dallas office), Energy Star designation (Headquarters and Dallas office)

Awards & Recognition

• 2022 Bronze SHARP award from Freddie Mac
• Inclusion in Bloomberg Gender-Equality Index (6 consecutive years)
• Inclusion in FTSE4Good Index (4 consecutive years)
• MSCI ESG rating upgrade to A

Environmental Metrics

ESG Focus Areas

• Climate Change
• Governance
• Social

Environmental Achievements

• Offset Scope 1 and 2 GHG emissions with Renewable Energy Certificates

Social Achievements

• Employee engagement survey response rate and engagement score well above the U.S. Diversified Financials average
• Total voluntary turnover in 2023 representing less than a quarter of the financial services sector average
• American homes financed

Governance Achievements

• Published a Political Engagement and Contributions Policy
• Continued to provide climate-related disclosures following TCFD guidance
• Added 3 new highly-qualified Independent Directors to our Board
• Continued to Provide ESG disclosures based on SASB recommendations
• Provided disclosure on pay equity analysis
• Supported seven employee-led networks

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD, SASB

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity, Equity & Inclusion (DEI)
• Governance

Environmental Achievements

• 100% of Scope 1 and 2 GHG emissions offset with Renewable Energy Certificates

Social Achievements

• Published fourth ESG Report, titled '25 Years of Purposeful Housing Finance Leadership'
• 53% of employees identify as women or racially/ethnically diverse
• 10% voluntary turnover in 2022, representing less than half of the financial services sector average
• Enhanced parental leave policy and introduced fertility reimbursement benefits
• Supported seven employee-led networks, which collectively led over 20 DEI activities
• Included black-, women- and veteran-owned broker dealers on equity offerings

Governance Achievements

• Continued to provide climate-related disclosures following TCFD guidance
• Introduced ESG disclosures based on SASB recommendations in securitization private placement memorandums
• Provided disclosure on pay equity analysis

Climate Goals & Targets

Environmental Challenges

• Continued volatility in the market
• Interest rate volatility
• Uncertainty around central bank rate hikes
• FDIC sales of regional bank holdings
• Debt ceiling negotiations

Mitigation Strategies

• Proactively decreased its Agency portfolio early in the second quarter ahead of anticipated supply and uncertainty
• Opportunistically reduced the Agency portfolio to prepare for impact of volatility
• Actively managed yield curve exposure
• Maintained a conservative hedge position

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD, SASB