CORPORATE RESPONSIBILITY REPORT 2017 - Duke Realty

CO R P O R AT E R E S P O N S I B I L I T Y R E P O RT 2 0 1 7

I’m pleased to share with you Duke Realty’s 2017 Corporate Responsibility Report.

Jim Connor | Chairman and Chief Executive Officer

FROM OUR CEOEach year this report serves as reaffirmation of our ongoing commitment to environmental stewardship, the health

and well-being of our associates, the welfare of our communities and ethical corporate governance. We also use this

opportunity to provide you with a summation of new initiatives and progress we have made in each of these areas.

Duke Realty’s approach to corporate responsibility encompasses our entire organization and covers a full spectrum

of processes and deliverables. Due in large part to our unwavering concern for what is best for all of our stakeholders,

in 2017 we successfully completed an aggressive, multi-year transition to a pure-play industrial real estate company.

This, in turn, led to strong financial and operating performance and inclusion in the prestigious S&P 500 Index.

We made important advances on many of our environmental, social and governance (ESG) goals this past year.

However, we believe that there is always room for improvement. We will continue to find ways to be a better corporate

citizen and look forward to sharing with you our ongoing progress.

James B. Connor

Chairman and Chief Executive Officer

1 Catherine Street | Teterboro, NJ

OUR COMPANY

Duke Realty is the leading domestic-only, industrial-focused REIT (Real Estate

Investment Trust) in the United States. At year-end 2017, we owned, managed

or had under development 146 million square feet of industrial assets across

the country with nearly 60 percent of our properties located in the nation’s top

logistics markets. In alignment with our corporate responsibility standards and

goals, we strive to design and build our assets to contribute positively to our

tenants’ operations in terms of efficiency and sustainability.

Duke Realty also is a company that believes in doing the right thing and showing

care and concern for everyone our business touches, including the communities

we serve. Our corporate culture encourages our associates to be the best they

can be, treat others how they would like to be treated and interact with neighbors

within our communities who are in need. We also actively engage our customers

and investors in our ESG programs whenever possible to maximize our efforts.

Working together, our goal is to deliver the best outcomes possible in all areas of

our sustainability platform.

3 4

The impact our properties have on the environment is top-of-mind at Duke Realty. In 2017, we took steps to

gain greater insight into energy use in our portfolio, and implemented changes in our development process to

improve efficiency and increase recycling.

To help us monitor and manage utility usage that we control within our nearly 500

industrial properties across the country, we partnered with Goby, Inc. With this new

energy management platform, our property managers will be able to evaluate their

specific portfolios of properties, establish realistic benchmarks and obtain objective

data to support meaningful sustainability discussions with our tenants. The Goby system

also provides us with a path to populate profiles for each of our assets in Energy Star’s

Portfolio Manager as well as advance our goal of submitting a Global Real Estate

Sustainability Benchmark (GRESB) survey.

In existing properties, lighting retrofits are the most effective way to reduce energy use. To identify retrofit

opportunities, we developed a database of the quantity and type of fixtures in each of our buildings. We have

high-efficiency lighting systems in 80 percent of our existing properties, and retrofits completed in 2017 resulted

in savings to our tenants of approximately 9.3 million kilowatt hours.

PROTECTING THE ENVIRONMENT

Creekside 2120 | Columbus, OH | lighting retrofit

(Continued on page 5)

11600 Alameda Street – Lynwood, California

In 2017, we acquired 8.67 acres in Lynwood, California, for the development of

a new 201,000-square-foot warehouse. The site needed extensive remediation

since it was a heavy-use industrial site for more than 70 years and had both

soil and groundwater contamination. The California Department of Toxic

Substances Control approved our removal action workplan, and we began

work to transform the land into a developable parcel. Among other things, we:

• removed all remaining concrete foundations and slabs and crushed

and used them as engineered structural fill beneath the building pad;

• took nearly 6,500 tons of heavily impacted soil offsite for proper

disposal;

• completed enhanced in-place bioremediation with a large injection of

liquefied substrate and emulsified oil to accelerate natural degradation

of groundwater contaminants; and

• added a vapor barrier and under-slab pressurization system to provide

additional protection against vapor intrusion, along with a vapor

extraction system.

After the transformation was complete, we delivered the

building and executed a lease with a customer

by November of 2017. We will continue

groundwater monitoring of the

natural attenuation process to

verify its effectiveness.

5

CASE STUDIES

When it comes to environmental stewardship, actions speak louder than words.

Provided here are examples of innovative, proactive steps Duke Realty took to

remediate, reuse and recycle in its development projects last year.

We updated our development standards to specify that new building

development projects include LED light fixtures for both exterior and

interior illumination. The new standards also include a requirement to

repurpose crushed concrete from redevelopment sites as a subbase

for paved areas when possible, as we did in the 11600 Alameda Street

project detailed on the next page.

In addition, we continue to leverage the expertise of our 18 LEED®-

accredited in-house construction professionals to guide our efforts in

incorporating sustainable elements in the new building development

process. Because of their diligence, we have two new projects that are

LEED registered and four completed projects for which certifications are

pending. We have delivered 58 total LEED-certified projects since 2008.

15810 Heacock Street | Moreno Valley, CA

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11600 Alameda Street | Lynwood, CA

DUKE REALTY PROJECTS IN EACHLEED CLASSIFICATION

GOLD SILVER CERTIFIED21 18 19

Wellness Honors

Though winning awards isn’t the reason behind Duke Realty’s

wellness initiative, we are appreciative of the recognition we’ve

received for our program and results achieved by our associates.

• 73 total awards from 2010-2017; 8 awards received in 2017

• 2017 Healthiest 100 Workplaces in America – 48th

• American Heart Association Workplace Health Achievement – Gold

WellnessTo help promote greater health among our workforce, we

utilize Vitality, an interactive and personalized wellness

program. Through Vitality, associates and family members

can gain tips on improving their health while earning points

redeemable for rewards. Since implementing the program

in 2013, associate participation has grown to more than

85 percent, with more than 65 associates sharing personal

success stories of improved health.

In 2017, we held a corporate-wide wellness week to engage

associates in all of our markets. Under a theme of “Destination

Wellness,” associates took a week-long journey to improve

their overall health. More than 55 percent of associates

participated in this event.

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240 The Bluffs – Atlanta, Georgia

240 The Bluffs is a redevelopment project involving the

demolition of a vacant, obsolete, 270,000-square-foot office

building. In keeping with our commitment to sustainability, we

took steps to ensure that as much of the materials removed

from the original structure were recycled or repurposed. We

reused more than 13,000 tons of crushed brick and concrete

as clean fill in non-critical areas on-site. We diverted other

materials removed from the former building to salvage

companies for recycling, including 5,900 tons of asphalt;

19,000 pounds of non-ferrous metals, such as copper pipe,

wire, radiators, aluminum and breakers; and 900 tons of steel.

Breaking Chains – Atlanta, Georgia

Whenever we remove chain link fencing from an Atlanta construction

site, our local team offers it to LifeLine Animal Project for its Breaking

Chains program. The shelter creates enclosures from the fence,

providing dogs the opportunity to move freely and safely while

reducing landfill waste.

TONS OF STEEL900

TONS OF ASPHALT5,900

POUNDS OF METALS19,000

TONS OF CRUSHED BRICK13,000

240 The Bluffs | Atlanta, GA | Artist rendering

73TOTAL

AWARDSFROM

2010–2017

8AWARDS

RECEIVEDIN 2017

2013 2014 2015 2016 2017

67% 77% 77% 84% 85%

PARTICIPATION IN VITALITY

58,200 workouts

643,592,200 steps equates to 321,800 miles

LENDING A HELPING HAND

At the heart of our commitment to social responsibility is the

people with whom we interact, both inside and outside of our

company. The value of our internal team is immeasurable, so

we take great care in selecting programs that help improve

the well-being of our associates and promote personal growth

and development. We also focus our social initiatives on

vendors and subcontractors with whom we partner and our

neighbors in the markets in which we operate.

Before demolition After demolition

LEAD

42% of LEAD graduatespromoted since

program inception

CLIMB

24% females5% minorities

EXECUTIVEMENTORING

67% women55% minorities

CLIMB is a year-long leadership training

program for our mid-level managers.

Participants gain better self-awareness and

learn techniques for coaching and conducting

productive discussions with their direct reports

and others within the organization. Of the 37

participants in the 2017 class, 24 percent are

females and five percent are minorities.

For the past two years, we also have had a

formal Executive Mentoring Program focused

on senior to mid-level women and diverse

associates who are paired with a member of our

Executive Committee for a 12-month period.

The mentee receives personal leadership

guidance along with an insider’s look at our

operations and how decisions are made. The

objective is to develop female and minority

associates, thereby improving retention and

advancement of these individuals. In 2017, nine

associates, of which 67 percent are women

and 55 percent minorities, were matched with

an executive mentor.

In 2017, we launched our Women’s Network,

an initiative that supports the development

and growth of women at Duke Realty. Through

corporate-wide quarterly educational and

networking events and periodic local market

activities, associates have the opportunity to

learn more about our business and receive

first-hand advice and best practices from other

women in our industry including members of

our board of directors.

LEAD


program inception

CLIMB


EXECUTIVEMENTORING


9 10

Professional Development

Whether our associates want to hone existing skills, learn new ones or explore career options,

Duke Realty provides opportunities to learn and grow professionally. Throughout the year, we offer

numerous broad-based training and professional development programs to support our culture and

commitment to building a diverse and inclusive workforce.

LEAD (Leadership Excellence at Duke Realty) and CLIMB (Create, Lead, Inspire, Motivate and Build)

are two ongoing, internal professional development programs. Both are integral to our succession

planning, an important component of the governance portion of our corporate responsibility program.

LEAD focuses on providing senior management-level associates with advanced development

training and direct involvement and mentoring from our executive team. Through this intensive

18-month program, participants gain company and industry knowledge and develop leadership

skills to better position themselves for advancement at Duke Realty. Since introducing the program

eight years ago, 42 percent of LEAD graduates have been promoted within our organization.

LEAD


program inception

CLIMB


EXECUTIVEMENTORING


Executive Committee

Ann Dee | Executive Vice President and General Counsel

“Though commercial real estate careers have not historically been top-of-mind for many females

and minorities, Duke Realty has worked diligently to spread the word to these audiences about

opportunities in the field. Once we have diverse associates join our company, our senior leadership

team proactively mentors and sponsors these individuals, through programs like the Executive

Mentoring Program, to help them grow and succeed.”

Denise Dank | Chief Human Resources Officer

“Duke Realty has been a leader when it comes to women holding leadership positions within our

company. Our board of directors includes three women or 25 percent of the total, which exceeds

the average of 15 percent among 165 REITs surveyed by Wells Fargo, as well as the S&P 500 average

of 22 percent. Our executive committee includes two women or 22 percent of the group, which

is higher than many of our peers, but we are targeting a higher ratio and remain committed to

increasing female representation in upper management positions.”

Women at Duke Realty

Females hold a number of positions on Duke Realty’s board of directors and executive committee. Our first

female director Ngaire Cuneo joined our board in 1994 and, at that time, was one of only six women in the

United States on boards of publicly held companies. Since that time, Duke Realty has continued to be a leader

in the diversity and inclusion movement, and today has three board members and two executive committee

members who are women. These important and influential team members share their perspectives on

diversity and inclusion.

Board of Directors

Ngaire E. Cuneo | Partner | Red Associates, LLC

“Duke Realty is a proponent of women on boards of directors. Not only is

the company in the forefront of other publicly traded companies by having

three females on its board, it also advocates board involvement, both with

for-profit and non-profit organizations, by its female associates to increase

their visibility and leadership experience. Increasing the number of women on

boards is important to ensuring different perspectives, better collaboration

and enhanced teamwork, and leading to better business outcomes.”

Melanie Sabelhaus | Senior Principal | Jerold Panas, Linzy & Partners

“Leadership’s commitment to a diverse organization is essential. At Duke Realty,

CEO Jim Connor and others on the management team recognize that diversity

delivers dividends and actively support programs to recruit, mentor, develop

and promote women and minorities within the company. Leadership has seen

how diversity at the board level has led to deeper conversations on many issues

and has implemented programs for workforce diversification and inclusion to

ensure that these thoughtful conversations happen throughout the company.”

Lynn Thurber | Former Non-Executive Chairman

LaSalle Investment Management

“Having diversity at the board level engenders different perspectives on issues,

challenges and opportunities facing the company, plus keeps conversations

about the importance of minority and female talent in the spotlight. Over the

past six to seven years, Duke Realty has focused on increasing the number of

its minority and female associates and has made significant progress. However,

the board and management realize that recruiting, retaining and promoting

the diversity of talent in the organization should never just be a box that is

checked, but rather an ongoing process.”

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Left to right: Lynn Thurber | Ngaire Cuneo | Ann Dee | Denise Dank | Melanie Sabelhaus

UPPERMANAGEMENT

19%

UPPERMANAGEMENT

19%

WOMEN IN UPPER MANAGEMENT

19%WOMEN IN UPPER MANAGEMENT

’14

9%

4.5%

’17

WOMEN INCONSTRUCTION

’14

22%

15%

’17

WOMEN INLEASING

Community Service

We believe the best way to be part of a community is to support it with our time

and talent. Our associates bring this to life by participating in community service

projects to help our neighbors and the communities in which we do business.

Last year, our associates spent 10,800 hours volunteering in our communities.

More than half of this time was over and beyond the paid community service

hours our company provides each associate every year. This statistic speaks

volumes about the generosity of our associates and the value we place on giving

back with no expectation of anything in return.

Our Day of Service is an annual company-wide effort to help make improvements

in our communities. Last year, more than 63 percent of our associates spent

more than 2,000 hours helping 19 different organizations across the country.

In addition to our hands-on involvement, our company supports a number of

causes monetarily. We focused our company-wide giving effort last year on the

United Way, with 81 percent of associates pledging $231,500 to the organization.

For the year, our total company contributions amounted to $514,300 including

$96,400 through “Dollars for Doers,” our program where we match associate

donations dollar-for-dollar.

Workplace Accolades

Recognition by independent, external groups that regularly evaluate initiatives

and programs of companies across the country is appreciated and testimony

that Duke Realty is a great place to work.

• Best Places to work – IL, GA, FL, TX, IN

• Best Adoption-Friendly Workplace by Dave Thomas Foundation for Adoption

• 2020 Women on Boards

• PAX Ellevate Global Women’s Leadership Fund

1413

Diversity and Inclusion

New ideas and different perspectives are invaluable to our success. That is why we continue to focus on

cultivating a culture of diversity and inclusion within our company. We aggressively work to attract and

retain diverse associates and proactively search for diverse vendors with whom we can do business.

Our internal Diversity Council coordinates associate-led roundtable discussions on diversity and inclusion. These

conversations help participants appreciate the value of varying viewpoints and help them better understand

why diversity and inclusion are important to our

business. Participants leave these roundtables

with strategies to be more inclusive in their words

and actions. In 2017, 90 percent of our associates

participated in diversity roundtable discussions, a 4

percent increase from the previous year.

Increasing the diversity of our workforce continues

to be an important goal. We have seen a significant

shift in the variegation of our associates due to

initiatives such as Value in People, which requires

a diverse slate of qualified candidates for job

openings before making a hiring decision. Targeted

networking efforts by our management team

and internal leadership development programs

have also contributed to this shift. Women and

minorities now represent 19 and 4 percent of top-

level positions at our company, respectively, and

the number of female and diverse associates in

entry and middle-level positions increased as well.

Our ongoing focus on diversifying the external

partners with whom we work resulted in $245

million or 35 percent of our eligible spend going to

small businesses and diverse suppliers in 2017. We

also have increased the number of small business

and diverse suppliers we use to 1,492 or 52 percent

of the total suppliers with which we do business.

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SMALL BUSINESS AND DIVERSE SUPPLIER UTILIZATION

SMALL BUSINESS AND DIVERSE SUPPLIER SPEND

CHICAGO

PENNSYLVANIA

MINNEAPOLIS

’15

$198

$245

$147

22%

33% 35%

DIVERSE SUPPLIERS SPEND

INVESTMENT(in millions)

’16 ’17

’15

1,252

1,492

1,239

35%41%

52%

SPEND GOING TO SMALL BUSINESS

SUPPLIERS

’16 ’17

10,800VOLUNTEERINGTOTAL HOURS

CORPORATE

GIVINGOVER $500K

19 ORGANIZATIONS SERVEDCOMPANY-WIDE DAY OF SERVICE

OVER 370 VOLUNTEERS

OPERATING WITH INTEGRITY

Board of Directors

Duke Realty adheres to corporate business practices that engender the highest standards

of ethics and conduct. We believe in maintaining a culture of uncompromising integrity and

advocate for transparent communications in all aspects of our business.

Ninety-two percent of our 12-person board of directors is independent, including our Lead

Director. Each member of our board stands for reelection each year. In alignment with our

commitment to diversity and inclusion, three of our 11 outside directors are female. Our

Chairman and Chief Executive Officer holds the remaining position on our board. To ensure

the board’s autonomy from management and precipitate its ability to provide effective

oversight, our directors hold independent, director-only sessions during each regularly

scheduled meeting. At these sessions, directors participate in four standing committees –

corporate governance, executive compensation, audit and finance.

Throughout 2017, our board of directors was heavily involved in

reviewing corporate governance policies and practices to ensure

that we are operating our business responsibly, with integrity

and in the best interests of our shareholders. Among the most

impactful actions was voting to amend and restate our bylaws to

implement “proxy access,” which allows long-term shareholders

to have their own director nominees included in the company’s

proxy materials. The board also adopted a board diversity policy

to advance the company’s goal of having a diverse and inclusive

board, with directors of different professional backgrounds as well

as of varying race, ethnicity and gender. Other policies the board

reviewed for compliance were stock ownership guidelines and the

company’s incentive compensation claw back features.

Internal Audit

Reporting directly to the board’s audit committee is our internal audit department. This group,

which follows the Institute of Internal Auditors’ International Professional Practice Framework,

reviews and audits the company’s key business, operational, financial and information

technology activities. It ensures associates are compliant with conflict of interest policies,

political contributions and government relations guidelines and procurement principles. The

group also helps prepare enterprise and fraud risk assessments, the results of which it reports

to the board annually.

Code of Conduct

Our Code of Conduct outlines our policies related to ethical behavior. This document is part

of new associate onboarding and, each year, associates are required to complete refresher

training and reaffirm their understanding of the policies. In 2017, 427 associates completed the

training. Members of our board of directors are also required to reaffirm

their understanding of our Code of Conduct. Outside vendors also

receive communications each year reminding them of our

commitment to business integrity.

In the event anyone suspects a Duke Realty associate

is engaged in unethical or illegal behavior, we

have an anonymous and confidential hotline

that individuals can use to report their

concerns. We investigate all submissions in

a timely and discreet manner.

Information Security

We recognize our computer network stores data that could potentially be comprised.

To help detect threats and respond promptly, we instituted a program based on the National

Institute of Standards and Technology’s framework. Each year, we perform a penetration test

to identify vulnerabilities in our system and take necessary steps to correct them.

In addition, we have programs to help ensure our associates are aware of ways our systems

can be jeopardized. All associates are required to complete cyber-security training annually.

We randomly send email phishing tests to determine associates’ level of compliance with best

practices and require associates who do not pass

to complete a training class that corresponds with

the simulated attack. Other steps implemented

were a “Think before You Click” campaign with

messaging on mousepads by each computer

station and alerts on all incoming external emails.

Because of the potential risk a data breach can have

to our company, our board of directors is apprised

each year of our cyber-security policies and the

results of our measures and their effectiveness.

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25% FEMALES

92%INDEPENDENT

BOARDMEMBERS

BUSINESS ETHICS

ADVOCATING FOR ESG PROGRESS

Duke Realty’s Sustainability Council

Duke Realty’s Sustainability Council is composed of a group of associates from diverse disciplines

who meet regularly throughout the year and share a common goal of advancing the company’s ESG

initiatives in three main arenas:

Corporate Culture – fully embed ESG activities into Duke Realty’s culture as part of our

business strategy.

Tenant Engagement – expand tenant engagement to include ESG activities that

positively impact our collective businesses.

Investor Engagement – ensure that investors consider Duke Realty as one of the most

trusted and responsible real estate owners and operators.

Chris Whalen, Chair | Vice President, Financial Analysis

Jenny Bean | Vice President, Human Resources

Greg Czarnik | Vice President, Construction Systems

Jon Finn | Vice President, Real Estate Operations

Saundra Gilbert | Brand Manager

Ron Hubbard | Vice President, Investor Relations

Matt Hyman | Vice President, Leasing

Mary Richards | Senior Business Systems Analyst

Tracy Swearingen | Senior Vice President, Tax

Angela Hsu | Vice President, Legal and Assistant Secretary

Ann Dee, Executive Liaison | Executive Vice President, General Counsel

Duke Realty’s Sustainability Mission Statement

Our sustainability mission is a commitment to corporate practices that balance continuous improvement

in environmental, social and corporate governance initiatives. By doing so, we will enhance stakeholder

value, implement innovative development solutions and make a difference in the communities we serve.

Investment Management

Prudent capital management is essential to Duke Realty’s ongoing success. New investments, including

development projects, acquisitions and dispositions, are supported by carefully prepared financial analysis

packages and must meet our stringent, self-imposed guidelines for risk and exposure. Transactions that

exceed the threshold level of $75 million are submitted to the board’s finance committee for approval.

Governance Performance

ISS, the leading proxy advisory firm, ranked Duke Realty in the top 20 percent of firms in the S&P 500

with a Governance Quality Score of 2. This score is testament to our low governance risk for existing and

potential investors. Companies are evaluated on four criteria to determine rankings:

• Board structure

• Shareholder rights and takeover defenses

• Compensation/remuneration

• Audit and risk oversight

DEVELOPMENT

ACQUISITIONS

DISPOSITIONS

FINANCIAL ANALYSIS

181317

ENVIRONMENTAL

SOCIAL

GOVERNANCE

RANKED TOP 20%OF S&P 500 FIRMS WITH ISS GOVERNANCE

QUALITY SCORE OF 2

CORPORATE RESPONSIBILITY REPORT 2017 - Duke Realty

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