ADVISORY COMMITTEE

IAG's Expert Community Advisory Committee provides IAG's board and executive with independent advice on issues that may impact the Group's standing in the communities in which we operate.

The Expert Community Advisory Committee (ECAC) is comprised of independent experts who make recommendations on the economic, social and environmental impacts of our activities. Committee members have varied expertise in governance, civil society and social capital, crime prevention, climate change, rural and regional concerns, corporate social responsibility and business, and a common commitment to transparency and multi stakeholder engagement.

• advise IAG on economic, social, environmental and cultural issues to influence sustainable development strategy and performance;
• challenge IAG to address difficult issues; and
• provide advice and counsel on the content of the IAG sustainability report.

Terms of reference

• Provide IAG board and executive with advice on economic, social, environmental and cultural issues that may impact IAG's standing within the communities in which it operates. This may include matters that are referred from within IAG for advice or comment or discussions initiated by members of the ECAC;
• advise ways to create a paradigm that simultaneously delivers beneficial outcomes to shareholders and the community at large—an alignment of sustainable development and corporate responsibility;
• advise on new significantly altered social and environmental report content; in particular provide advice and counsel on the draft IAG sustainability report before submission to the IAG executive;
• devise and agree a third party statement from the ECAC for inclusion in IAG's sustainability report;
• assist IAG to shape key performance indicators and targets with respect to sustainability while recognising the constraints of short term imperatives; and
• make sure IAG does not avoid difficult or uncomfortable issues while acknowledging that trade off will sometimes be necessary in the light of conflicts and competing interests.

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Membership

The committee comprises seven external members, with Nola Watson (Head of Government & International Relations), managing the secretariat functions.

Members of IAG's Group executive attend meetings determined by the topics to be considered by ECAC.

Community based members were not selected to represent specific stakeholder groups but bring a range of community interests and professional experience and expertise to the committee. While invitations were not extended to specifically ensure a complete geographical coverage, there is a mix of geographical areas represented.

The external members are:

Yvonne Grant—Chair, IAG ECAC

Ms Grant is a distinguished lawyer who has expertise in company law, corporate finance and public interest matters. She has acted as a magistrate and has served on the New South Wales Fair Trading Tribunal, the Victims Compensation Tribunal, as a Member of the Operations Review Committee, The Independent Commission Against Corruption (ICAC), and as a judicial member of Administrative Decisions Tribunal of New South Wales. For almost a decade, Ms Grant served as a member of numerous professional health boards. Ms Grant has an outstanding background across a wide range of community concerns including in a number of voluntary capacities. In addition, Ms Grant is a graduate of AICD Company Directors Course.

Peter Grabosky

Professor Grabosky is a Professor in the Regulatory Institutions Network (REGNET), The Research School of Pacific and Asian Studies, at the Australian National University. He was previously Deputy Director, The Australian Institute of Criminology, where he worked from 1983 to 2001. Professor Grabosky holds a PhD in Political Science from Northwestern University, and has written extensively on criminal justice, regulation, and public policy.

Hayden Raysmith

Mr Raysmith is an expert on civil society and social capital concerns, and is the founding chairman of Australia's first independent community foundation, the Melbourne Community Foundation and chairs the board, The Abbotsford Convent Arts and Cultural precinct. Professor Raysmith was the first director, Youth Affairs for the Victorian Government followed by a five year stint as the director, Public Health in Victoria. Professor Raysmith is also a former director, The Victorian Council of Social Service (VCOSS) and is currently involved in the development of social, economic, environmental, cultural and governance indicators.

Simon Divecha

Mr Divecha is Director, GreenMode, former Chief Executive Officer South Australian Conservation Council, and former senior campaigner with Greenpeace Australia. Mr Divecha is a well respected environmentalist known for his ability to liaise with all sectors of society in producing powerful outcomes. His current work focuses on building environmental businesses, such as through the recently announced Solar City project in South Australia. Mr Divecha is an elected member of the Council of the Australian Conservation Foundation.

Lyn Mayes

Ms Mayes is a Director, Mad World Ltd which is a supply chain and issues management consultancy of which the primary focus is sustainable development. Clients include the New Zealand Business Council for Sustainable Development; Packaging Council New Zealand; local and national government departments; small and medium sized companies as well as multinational corporations. Ms Mayes has over 20 years' industry experience across supply chain management, mergers and acquisitions and public affairs and is committed to sustainability reporting both as a writer, commentator and judge. Ms Mayes has a MA in modern languages from Trinity College, Oxford.

Sharon Moore and Warren Mundine served on the Committee until August 2008. We acknowledge their considerable input and commitment to the Committee and wish to record IAG's thanks for their hard work and valued input.

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Sitting fees, allowances and expenses

Committee members have agreed that to preserve the integrity of process nominal fees only should be paid. Members have accepted a sitting fee consistent with the Federal Government's Remuneration and Allowances for Office Holders—Category 1 Committees.

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IAG stewardship

Nola Watson, Head of Government & International Relations will work with the chair to manage the committee's program.

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2008 IAG ECAC statement

Our role as a Committee is to encourage, counsel and challenge IAG by providing an independent perspective on IAG's corporate responsibility and sustainable development. Our purpose is to:
• advise IAG on economic, social, environmental and cultural issues through the lens of independent scrutiny;
• encourage IAG to address difficult issues; and
• provide advice and counsel on the content of the IAG sustainability report particularly with respect to assessing whether it covers key materiality issues.

In the past year (July 2007–June 2008) the Committee has met four times, with the sustainability team present at all meetings and at least one executive present at three meetings. These formal meetings have been supplemented by ad hoc ECAC member meetings and conference calls.

Members of the Committee are experts on developing social and environmental indicators; understanding local and central government expectations and analysing and judging sustainability reports. The Committee's expertise assists IAG in developing its reporting framework and drive to improve performance.

The committee thanks IAG for its openness and willingness to discuss often challenging issues during a particularly turbulent year for the company in terms of internal change and external pressures.

Highlights

ECAC considers that IAG's sustainability framework is at the heart of the company's ability to continue to have a high employee engagement performance and minimal effect on overall staff turnover despite the potentially negative impact caused by significant turnover in its senior management over the past twelve months. At a time of global economic turmoil particularly for the financial sector, we believe that IAG's long term investment in sustainability will hold it in good stead.

We particularly note the achievements in IAG's key focus areas which reflect our challenges for improvement in previous years:
• Products—IAG has continued to develop and launch products that deliver broader sustainability outcomes for customers including: insurance for cancer sufferers, and end of life management for damaged goods (e.g. home contents collection service);
• Supplier initiatives—Working with smash repairs to develop stronger environmental standards and performance; measuring major suppliers and reporting the numbers of suppliers that they measure; supporting training programs and developing a government business partnership to better achieve outcomes;
• Investment—In the past year IAG became a signatory to the UN Principles for Responsible Investing (UNPRI) and invested in a sustainable investment fund focusing on clean technologies; and
• Climate—The Committee acknowledges the significant achievement to be one of only 25 companies included in the Australia and NZ Climate Disclosure Leadership Index (Carbon Disclosure Project).

Challenges

This year has been a period of considerable internal change coupled with external economic market instability which is set to continue. The challenge is to be able to continue to adhere to the company's core values and principles which have to date provided the overarching framework for the business. In addition we recognise the following key challenges:

Investment

• The need to translate the value that sustainability has delivered for IAG so that it is more widely understood by the broader investment community;
• Continue to review their investment of funds based on the company policy around where they will and will not invest and its implementation of the UNPRI.

Communities

• Develop key performance indicators that accurately reflect the positive impacts that IAG and its products can have on the communities where it operates; and
• Continue to address affordability of insurance and under insurance.

Climate change

• Continue to develop its product offering so that it helps drive increased uptake of products and services which incentivise behavioural change to reduce the carbon footprint; and
• Quantify the impact of its sustainability products and initiatives in the context of IAG's wider business offerings and practices.

Accountability and risk management

• Ensure consistency between statistical data and the sustainability narrative in IAG's reports; and
• Consider how the company might invest in health promotion and management to address local and global issues such as obesity, stress and the risk of pandemics.

Members of ECAC committee have brought their personal expertise to each meeting with specific presentations to the executive and fellow members on a diverse range of topics including:
• ensuring the Group's expansion into the Asian markets is conducted with regard to sustainability principles;
• developing social indicators for business which will continue to deliver value for company, in alignment with community interests;
• the impact of environmental legislation in IAG's markets and understanding its economic ramifications; and
• how the service sector can influence suppliers and customers and hence have a significant impact on a country's carbon footprint.

ECAC has also been consulted by the executive on the potential implications of future business decisions and global sustainability trends particularly relating to supply chain. The committee has appreciated the opportunity of working with IAG throughout 2007–2008 to further its sustainability goals.

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