ESG POLICY

Environmental, Social, and Governance Policy Statement

Introduction

North Hudson Resource Partners LP (the “Firm” or “North Hudson”) believes that our environmental, social, and governance policy (the “ESG policy”) should be an integral part of our decision-making process within our Firm and at new and existing portfolio companies. This policy reflects our commitment to a high standard of integrity in our business conduct, our focus on workplace safety and inclusivity, and our efforts to act as stewards of the environment. The ESG Policy is based on guidelines that are principally consistent with the United Nation’s Principles of Responsible Investment and The American Investment Council Guidelines for Responsible Investment.

Overview of North Hudson

North Hudson is a Houston, Texas based middle market, energy-focused private equity firm. Formed in 2018, the Firm’s investment philosophy is anchored in creating long-term value and to acquire and develop assets in the upstream and midstream sectors in North America in a responsible manner.

Investment Strategy and Approach

North Hudson’s investment strategy is anchored by an underwriting approach that seeks to focus on the intrinsic and fundamental value of the underlying assets of each energy investment and invest alongside responsible partners. The Firm proactively targets opportunities where it believes it can “buy right” and seeks to conduct a thorough review of potential investment risks by assessing the geology, infrastructure, land, cost structure, management team, and exit potential of prospective investments, while incorporating ESG considerations, as North Hudson determines to be appropriate. North Hudson expects ESG considerations to be addressed at each Board Meeting. All ESG discussions are documented in the Board Meeting Minutes.

ESG: Our Commitment

North Hudson understands that environmental, social, and governance related issues can have a meaningful impact on our employees, portfolio companies, and partners.  Therefore, we believe that it is our responsibility to strive to create both an ESG policy and culture that reflects our commitment to safety and stewardship.

Environmental

We believe in taking a precautionary approach to the environmental challenges within the energy industry.  Prior to considering an investment, the Firm seeks to actively consider several factors that address the environment, which may include working with responsible partners who have a track record of adhering to environmental protection practices, laws, rules and regulations as well as reducing their environmental footprint. For example, one of our largest operating partners has cut methane emissions by 33% and safety incidents have dropped 26% from 2019 to 2020. Likewise, the Firm seeks to diligently work with our management teams to reduce job-related injuries and safety violations by implementing safety management programs and training.

Social 

We believe that having the right “Tone at the Top” is a crucial factor in the overall success of any policy.  This includes a focus on our hiring and development practices as well as our policies on privacy and data security, human rights, and anti-corruption at both the Firm and portfolio company level.

As part of the Firm’s social responsibility, we seek to attract the best talent while embracing diverse backgrounds and perspectives.  Moreover, the Firm understands that our employees are at the core of our success.  Therefore, we look to create an environment that respects and values each individual employee’s contribution to the Firm through fair compensation, annual bonuses, and a generous benefits package.

We acknowledge the obligations that we have to the communities in which we operate and realize that safe, reliable, and environmentally compliant operations and supply chains guide our daily work.  North Hudson also understands that it is important to give back to our community and recognizes the impact that its operations could have on local communities.  North Hudson generally focuses its philanthropic efforts along several key themes, including helping underprivileged youth and providing hunger relief in the Houston area.

Governance

North Hudson’s executive team is responsible for the Firm’s ESG policy, reinforcing the “Tone at the Top” approach. The Firm seeks to maintain alignment of interests between the Firm’s management, partners, and other stakeholders through regular communication and transparency.  The Firm has a significant compliance program with quarterly reporting expectations for its employees.  Moreover, North Hudson has detailed financial reporting requirements, including quarterly and annual audited financial statements, that adhere to the Firm’s financial and valuation policies.  Finally, the Firm’s executive team provides levels of oversight that it believes are appropriate in the areas of risk management and potential conflicts of interest, and it regularly monitors its ESG policy for areas of improvement.

Within each investment, the Firm establishes advisory boards (“Board of Directors” or the “Board”) with industry experience as well as an understanding of ESG policies.  The Board of each portfolio company meet regularly to review the company-level performance and ways to improve and/or address ESG issues.  Likewise, employees or management that do not adhere to the Firm’s ESG policy could be subject to disciplinary action, including suspension or termination.