ENVIRONMENTAL RESPONSIBILITY

IAG has a relatively minimal impact on the environment, but it is still important that we look at the areas in which we can make a difference.

• paper use;
• fuel use;
• air kilometres travelled;
• electricity use;
• recycled commingled waste; and
• CO²e emissions.

Carbon dioxide equivalent (CO²e) emissions are the most significant performance indicator, as they provide a snapshot of our overall environmental performance. Combining all other environmental indicators (excluding recycled commingled waste) determines our overall CO²e emissions.

Our performance on CO²e emissions is also important because of our strong public position on climate change, and the detrimental impacts that increased CO²e emissions will have on the global economy and society.

IAG's environmental commitment

IAG recognises that economic development needs to be aligned with the health and well being of people, their communities and the environment. We consider that it is fundamentally sound business management for a company to address its social and environmental performance as well as economic performance.

In this context, the pursuit of best environmental practice makes commercial sense. In doing so, we recognise the need to fulfil our ongoing legal requirements relating to environmental protection while actively supporting increased environmental awareness and positive actions. Where possible, we aim to exceed regulatory requirements so we can deliver a standard of excellence in meeting our environmental responsibility wherever we operate.

Environmental issues are a challenge for all companies in all sectors. The insurance industry plays a significant role in managing and reducing environmental risks alongside governments, individuals and organisations.

The people of IAG have skills and techniques in understanding uncertainty, identifying and quantifying risk, and responding to risk. These are core strengths in approaching environmental problems and we aim to deploy them to support society achieve better environmental objectives.

We are committed to sharing our experience in assessing complex risks as a contribution to the accumulation of knowledge and generation of solutions needed for environmental protection.

We have publicly acknowledged this commitment in becoming a signatory to the United Nations Environment Program's Finance Initiative, which requires environmental commitment and stewardship from our Group.

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IAG carbon neutral

In 2006, IAG announced its intention to become carbon neutral across its global operations within five years. A copy of the announcement is available.

Climate change continues to present significant potential risks to the insurance sector and it is for that reason that IAG has been a strong advocate on the need for immediate action on climate change. IAG believes climate change risk extends to the community, with the increase in catastrophic weather related incidents representing a social and financial risk to customers.

In becoming carbon neutral, IAG will calculate the carbon dioxide emitted from our operations in tonnes of CO²e and at the end of the proposed reduction period, purchase the equivalent tonnes of carbon offsets to neutralise the carbon impact.

IAG has already identified the existing emission profile of our Australian and New Zealand operations and an update of our progress is available in 2008 performance.

We continue to look at areas of the business where further emission reductions can be achieved and implement the necessary changes. For example, we are in the process of reviewing and improving the energy efficiency of the major Australian buildings we occupy.

In addition, IAG believes that the social and economic impacts of climate change can be reduced in a society that has greater resilience to changed climate conditions. We therefore consider that adaptation to the changing climate is a crucial component of the response to climate change.

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Managing our impacts

IAG's environmental impacts are managed through divisional targets which reflect the different growth imperatives of IAG's different operations. These allow for divisional differences to be accommodated and for areas of greatest impact and influence to be identified accordingly.

Managers can access monthly reports that illustrate their teams' environmental performance. The reports allow our managers to monitor their teams' environmental performance against targets, and to take specific steps to improve it.

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Offering green products and services

Manufacturing and distributing insurance products results in limited direct environmental impact. However, we can and do have an influence over our customers' behaviour and offer guidance through some of our products and services.

Insurance products

• Fuel efficient saving—discounts on hybrid and fuel efficient vehicles, offered to NRMA Insurance customers in Australia and NZI customers in New Zealand.
• Low kilometre saving—a 10% discount for those who drive less than 5,000 kilometres a year—or 15% if those customers also drive a hybrid or fuel efficient vehicle, offered to NZI customers in New Zealand.
• Green for Old home contents cover—enables customers to replace whitegoods with energy efficient equivalent appliances, offered to NRMA Insurance customers in Australia and NZI customers in New Zealand.
• Green home grants—up to an additional $20,000 cover on building claims to install sustainable features when rebuilding after a total loss, offered to NZI customers in New Zealand.

Services

• Climate help—an online tool that allows Australian customers to offset the greenhouse emissions associated with using their car;
• Green whitegoods profiler—an online tool that helps customers understand which whitegoods will be best for their needs and the planet; and
• Home contents collection service—a program to collect and as much as possible, re use or recycle customers' damaged items that have been replaced through insurance claims. This service is currently offered to NRMA Insurance customers in New South Wales and Queensland in Australia and is being trialled through State Insurance in New Zealand.

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Advocating for the future

The risk of climate change is a significant and growing issue for IAG, and is one of the biggest issues facing our industry. If we help reduce the risk of climate change we can reduce the number of claims. If we keep claims costs down we can also keep premiums affordable, and that means we stay in business.

IAG's climate researchers provide sophisticated risk analysis including climate modeling focused on reducing the risk of climate change for our customers and business. We are able to develop best estimates of today's weather risks using historical weather data and climate modeling simulations.

These computer climate models simulate the climate for many years on a global scale. They have the added benefit of simulating today's climate, where greenhouse gas concentrations are held constant at today's levels; or simulating a possible future climate, where the greenhouse gas concentrations can be slowly adjusted to reflect future emissions projections.

Armed with this research, we aim to educate our customers and the broader public on the risks that climate change poses to our communities.

In 2006, we formed the Australian Business Roundtable on Climate Change with five other Australian businesses and a leading non government organisation (NGO) and published The Business Case for Early Action. This report illustrates that, if action on climate change is delayed, it becomes more expensive for business and the wider Australian economy to reduce greenhouse gas emissions.

The report supplements previous research reports that IAG has released on climate change, including The Impact of Climate Change on Insurance against Catastrophes and Climate Change: Solutions for Australia, which IAG contributed to as part of the Australian Climate Group.

These documents can be found in other reports.

We have also contributed to industry research such as the Emerging Risk Initiative, which is a think tank working to improve risk management. In New Zealand, we sponsor WWF–New Zealand's Climate Change Campaign and have brought climate change and natural disaster seminars to our broker business partners.

We will continue to work with our customers, employees and other stakeholders to raise awareness about climate change and how we can all reduce the risk of its impacts.

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