SUSTAINABILITY IS CORE BUSINESS

Corporate governance
Internal audit process
An ethical workplace
Code of Conduct
IAG's investment policies

For IAG, sustainability is not a programme or an initiative. We consider it to be good management. It is central to IAG's organisational purpose and if managed well, will mean the business is around for the long term. We are continuing to embed governance around sustainability issues into existing business and management practices.

This means, for instance, looking at how we manage risk for the long term. We are doing this by integrating sustainability into our current risk management strategy and looking at ways to encourage our people to be cognisant of long-term implications when making decisions.

Corporate governance

Responsibility for good management of IAG resides at all levels of our organisation.

IAG's Board committee, the Nomination, Remuneration & Sustainability Committee (NRSC), consists of four members: the Chairman of the Board, the Chairs of the Risk Management & Compliance and Audit committees and the Chief Executive Officer. It advises and supports the Board in such areas as the social, environmental and ethical impacts of our business practices and sets standards for these practices. It monitors how effectively the views of our key stakeholder groups are considered and how IAG complies with its social, environmental and ethical responsibility policies. Committee meetings are held at least four times a year.

Reputation Committee: Our senior management Reputation Committee is chaired by the Chief Executive Officer and comprises members of IAG's Executive team and other key senior management with responsibility for regulator engagement, policy and government relations, sustainability initiatives, investor relations and corporate affairs. It is responsible for formulating IAG board strategies on reputation issues and to report and make recommendations on these. It meets monthly, though additional meetings may be called at the request of any member.

Internal audit process

In line with our core value of transparency, IAG has a centralised audit team - Group Risk Assurance - to act as an independent and objective appraisal body within IAG. Working with IAG's external auditors, it supports management, the audit and risk management committees and the Board in fulfilling their responsibilities towards:

  • regulatory requirements around risk management;
  • the efficiency of our risk management processes;
  • internal controls; and
  • the effectiveness of business processes.

In 2004, the Group Risk Assurance team conducted a review of sustainability at IAG. The review was designed to help and support IAG's management achieve and report on sustainability outcomes, and to work with management to identify and develop joint solutions to address any associated risks. It covered areas of human capital, compliance, process ownership and control, and information and systems security.

The review identified two main issues:

  • Sustainability is becoming a key indicator of corporate performance, and is an important indicator of corporate risk. While the concept does not replace the current methods of considering an organisation's performance, it is becoming part of the assessment of management competence, corporate governance and corporate longevity; and
  • IAG is still in the early stages of a long journey toward creating a sustainable business. We are working to ensure our internal performance reflects the external perception of our organisation's progress.

Since the findings of this review, steps have been taken to establish a more formalised process for sustainability reporting within the company. Monthly updates on sustainability performance are now provided to IAG's Executive team. Updates are also provided to the IAG Board when appropiate.

We are currently working on incorporating a sustainability management system into our corporate risk management framework.

In the 2006 financial year, the Group Risk Assurance reviews will focus on the processes and systems within each division that measures sustainability performance.

An ethical workplace

IAG's values
IAG's values are: teamwork, honesty, transparency, meritocracy and social responsibility. Underpinning these values are corporate commitments to sustainability. These are articulated in public statements covering diversity and flexibility, environmental stewardship, OH&S, employee codes of conduct, continuous disclosure and insider trading. These extend to all employees and are designed to encourage ethical and appropriate behaviour in all aspects of work.

Code of Ethics
We are currently in the process of preparing a Code of Ethics for our business. This code will provide guidance for our people, no matter where they are located, on interpreting our purpose and values and the expectations of behaviour associated with these values.

As we increase our international presence, we believe it is important to clearly articulate our purpose, values and the behaviour we expect from our people, irrespective of location or role. Through these measures, we aim to provide a framework for ethical decision-making and a consistent, replicable template of IAG's culture at a global level.

Code of Conduct

IAG Commitment to Sustainability
IAG Environmental Commitment
Charter for Health Safety and Security
Code of Conduct
Continuous Disclosure and Insider Trading Policy

Business conduct
In addition to the formal requirements of IAG's bi-annual Directors' Questionnaire of Management survey, our employees and authorised representatives are able to report issues via the following avenues:

  • dedicated help line for Human Resources issues (including discrimination, recruitment, staff development);
  • Compliance mailbox, which is an intranet tool used for reporting and managing compliance incidents;
  • Hazard Management Form used to report and help manage workplace health and safety issues;
  • CEO mailbox which allows staff to report issues directly to the IAG CEO;
  • internal communications mailbox; and
  • dedicated help desk for technology issues.

IAG ActionLine
ActionLine is a confidential service for employees wanting to report serious inappropriate behaviour. Launched in October 2004, ActionLine is an extra reporting mechanism. It provides an additional point of escalation if all other management controls have failed, and supports IAG's Code of Conduct.

ActionLine is managed on our behalf by external consultants Deloitte. All reports of serious inappropriate behaviour are investigated and treated with discretion.

IAG's investment policies

IAG's equity portfolios focus is on investments that are expected to generate long-term sustainable earnings. Typically, these investments will have a focus on promoting the environmental and social wellbeing of the wider community.

Our Asset Management team actively engages with the management teams of invested companies to promote sustainable earnings.

For instance, when investing in oil companies which operate in environmentally and socially sensitive areas, we focus on reviewing the safety of employees and look at the businesses' areas of environmental impact.

IAG's Proxy Voting Policy requires IAG to vote on all shareholder resolutions relating to the stocks it holds. We use this voting power to encourage good corporate governance and positive social and environmental behaviour.

If IAG is opposed to a particular proposal being put to shareholders, we communicate to the company's management both our intention to vote against the resolution and our reasons why.

For example, in the past, we voted against one organisation's proposal to grant executive options to various senior executives because, in our view, the performance hurdles were inadequate. We would expect others to apply the same level of scrutiny to our organisation.