What are iStar’s ESG reporting standards?
We published our inaugural ESG/Sustainability Report (in April 2020 for year-end 2019) after conducting significant internal and external due diligence. A cross-functional group of stakeholders compiled a master matrix of priority topics based on a wide-ranging analysis of internal practices and programs (many of which had previously not been publicly disclosed), conducted peer analysis and studied various external reporting frameworks (including GRI and SASB). We’re planning to publish an expanded, second annual ESG report in 2Q 2021, which will highlight our efforts in greater detail across all three pillars (E, S, and G), in addition to providing a materiality matrix to help contextualize the relevance of various topics for our business.
How are iStar’s ESG efforts structured?
Our ESG efforts are led by senior management and reviewed quarterly by the Board of Directors. In addition, in 2020, iStar formed both an ESG Advisory Council – to guide the company on all ESG-related matters – and a Cultural Equity Council – with an explicit focus on Diversity, Equity and Inclusion. The two work both independently and together to evaluate best practices and formulate new/expanded initiatives for the firm, all of which are reported to the Board of Directors each quarter.
We actively assess environmental risk as part of every investment decision we make, including the increasing necessity to manage the impact of climate change, including flooding, sea level rise, drought and major storms. When applicable to our role in the ongoing management of assets, we also consider issues like water quality and scarcity, biodiversity, alternative transportation, and energy efficiency.
For Safehold, a public company we founded and externally manage, we consider a 99-year time horizon in the normal course of running the business and making investment decisions. Before we launched Safehold, we commissioned an independent market analysis that included climate change impact and market longevity as key factors to help us better understand risks that could ultimately impact the portfolio (e.g. rising temperatures, associated sea level rise, and the resulting prevalence of natural disasters). Our investment process also places a keen focus on the unique property level attributes of each new opportunity. Safehold’s standard ground lease contains a provision that requires tenants to follow all applicable environmental laws and we regularly visit to ensure compliance.
We seek to have a positive environmental impact to the extent possible based on our degree of involvement in specific development projects. Much of our portfolio consists of finance and net lease assets, which limits our own ability to make asset level improvements – as these are the responsibility of building owners and long-term tenants. That being said, we actively monitor global climate trends and are dedicated to building climate-resilient infrastructure and communities whenever the opportunity allows. For instance, pages 3-5 of our inaugural ESG report detail efforts we’re making to “future proof” our three flagship development communities. The report also details environmental policies within our company offices.
iStar provides company-wide training and development on Diversity, Equity & Inclusion (DEI), and surveys employees twice each year for their views/experiences/feedback in this particular area. Feedback scores are then shared—unfiltered—within the organization to foster transparency and spark discussion. iStar created a Cultural Equity Council in 2020, which includes employees at all levels (including two C-Suite members and our Head of People, Talent & Inclusion). The Council meets twice monthly, communicates with the company regularly, and serves as the central group of individuals setting and measuring DEI goals for 2021 and beyond.
iStar partners with recruiting firms that specialize in diverse recruiting, and requires a diverse candidate slate by race and gender for all roles, at all levels within the firm. iStar engages in Early Talent Recruiting at HBCUs. iStar recently partnered with Affirmity to conduct a deep dive into our workforce composition and diversity detail so we can better understand and promote diversity to the fullest extent.
iStar provides a wide range of non-statutory benefits to all employees, including (i) medical/dental/vision insurance coverage (including zero-cost options), (ii) supplemental on-demand 24/7 medical care via OneMedical, (iii) wellness and mental health services via FEI, (iv) flexible spending account options, (v) commuter benefits, (vi) short- and long-term disability insurance, (vii) basic life insurance, (viii) 401K matching, (ix) continuing education tuition assistance, (x) between 2-4 weeks paid leave annually in addition to personal and sick days, (xi) family medical/maternity/paternity leave, and (xii) matching donations for charitable gift giving.
We currently don’t have a specific set of social requirements that companies must meet to earn our business. We’ve identified this area as one for improvement and are currently in the process of gathering information for all our suppliers such that we can (i) better understand the diversity of our relationships and (ii) ultimately support more women, minority, and veteran-owned businesses.
iStar provides continuing education benefits to all permanent employees (97% of personnel). The benefit can be utilized towards (i) earning or renewing certifications, (ii) completing an undergraduate degree, or (iii) the pursuit of an advanced degree.
In addition to support for degree programs and certifications, iStar provides employees access to LinkedIn Learning. This platform includes 16,000+ online courses that can be completed at any time, including a combination of curated courses for each department and many others catering to a wide range of individual interests.
iStar conducts employee engagement surveys multiple times each year (3x annually for employee engagement, 2x annually related to Diversity, Equity & Inclusion). iStar began partnering with Emplify in early 2019 to provide continuing and measurable feedback from our employees, and we’ve since conducted a total of six firmwide surveys in the time since (96% average participation rate;). iStar has earned a Highly Engaged score on all six surveys.
Aside from iStar’s owned assets, iStar’s externally offered product is its financing solutions to third-party real estate owners. For this product, our Investments Committee meets each Monday to review and discuss new business opportunities, with the following two goals in mind:
1) Make certain each product offering is presented back to our customers as simply and clearly as possible. Considering that a combination of new and repeat business is the lifeblood of our company, we’re keenly focused on continuing to improve the customer experience and ultimately earn as much repeat business as possible.
2) Make certain all levels of the organization are actively involved in accurately assessing product risk (and consequently protecting both our customers and shareholder value). The risk assessment experience we gained in prior downturns played a big role in the formulation and development of our current product offerings.
Beyond our core finance solution offerings, we’ve made a concerted effort for positive social and economic impact in the three communities we’re actively developing ourselves. While pages 3-5 of our ESG report detail our green efforts/practices at each, our impact goes far beyond just the environment.
For instance, in Asbury Park, NJ—iStar’s largest master development with over $300 million invested to date—our anchor development in the community has produced clear trends of much-needed economic growth and has been a major factor in attracting consistently more visitors to the community over the past decade. Since 2010, the city’s annual beach and parking revenue are up 3.5x and 15x, respectively, which consequently (i) decreased the city’s transitional aid from nearly $12 million in 2010 to $0 by 2018 and (ii) allowed the city to more competitively decrease its tax rates from nearly 2.2% in 2014 to 1.65% in 2019. A more complete overview of iStar’s impact in Asbury Park can be found at www.asburyparkwaterfront.com.
Separately, we consistently make charitable contributions in each of our development communities and we recently provided more than $200K in financial assistance to a number of businesses we work with that are struggling to stay afloat throughout the ongoing pandemic.
iStar currently does not – and has never – restricted employees’ ability to associate and/or organize.
Our approach to governance is guided by our investment, financing and corporate governance policies—including conflicts of interest policies—that are managed under the ultimate supervision of our Board of Directors. We intend to stay in alignment with corporate best practices, and are actively engaged with our diverse group of stakeholders. Our Board has three standing committees—Audit, Compensation, and Nominating & Governance—made up entirely of independent directors. Our full Board of Directors is responsible for overseeing ESG factors as part of its overall responsibility around risk management and strategic business planning.
Our compensation philosophy reflects a pay-for-performance culture by ensuring we balance emphasis on near-term and long-term performance. The Compensation Committee allocates pay among base salary, short-term incentives, and long-term incentives to emphasize performance-based, variable compensation. This mix ensures the appropriate alignment of executive compensation with financial performance and shareholder value creation.
Whistleblowers: We’re partnered with NAVEX Global to provide their EthicsPoint service to all employees. EthicsPoint is an independent and confidential 24/7 hotline created by NAVEX Global to assist management and employees in working together to address fraud, abuse, and other misconduct in the workplace, all while cultivating a positive work environment. This resource is noted on our internal HR site and is further emailed around multiples times each year as an additional reminder. See page 20 of our Proxy for the exact language of our Whistleblower Policy.
Bribery and corruption: iStar’s Code of Conduct details that directors, officers and employees who deal with iStar’s borrowers, tenants, suppliers or other third parties are placed in a special position of trust and must exercise great care to preserve their independence. As a general rule, no director, officer or employee should ever receive a payment or anything of value in exchange for a decision involving iStar’s business. Similarly, no director, officer or employee of iStar should ever offer anything of value to government officials or others to obtain a particular result for iStar. Bribery, kickbacks or other improper payments have no place in iStar’s business and are not tolerated.
Women comprise 29% of iStar’s directors, while 43% are gender or ethnically diverse. Our Board tenure is relatively evenly split by length, with 57% having served <5 years and 43% having served >5 years.
Six of iStar’s seven total directors are independent (~86%). iStar’s Board has a separate 3-member Audit Committee (all independent). A full list of iStar’s board members and committees can be found in the Investor Relations section of our website.
Yes, Deloitte has offered an auditor statement on internal control in 2018 and 2019. PWC did so for all years prior. All opinions from both auditors reflect effective internal control. See page 49 of our most recent Proxy for Deloitte’s latest control opinion.