In 2003, IAG developed a sustainability strategy. This was communicated broadly to key stakeholders through meetings, presentations and on the company's website (www.iag.com.au).

Responsibility for sustainability resides at all levels of the organisation. During 2003/04 the Board's Nomination, Remuneration & Corporate Governance Committee had responsibility to "ensure the issues of social responsibility, IAG's commitments around safety, environment, and community, stakeholder views and corporate reputation of IAG are considered". This committee receives regular updates outlining the company's sustainability performance and management. Board confirmation of management recommendations are provided to IAG's executive team who in turn ensure that IAG people are informed of new directions or concerns.

Underpinning the corporate governance of sustainability performance is a series of policies and commitment statements which detail IAG's consideration of human rights, child labour, employee safety and fraudulent behaviour. For more details please see:

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

To acknowledge IAG employees who excel in sustainability practices, individual and team achievements are rewarded and recognised through the rewardhelp program. The 530 recipients in 2003/04 have included the coordinator of the helphouse websites, employees who have excelled in involvement with community groups and employees who have identified new systems to assist customers more readily access information.

Beyond sharing research about climate change and the environment with decision-makers outside the organisation, IAG has focused on educating employees about the connection between the Group's core business and the environment. The message has resonated strongly within the organisation. In an employee survey in 2003, 98% of respondents believed IAG should be involved in environmental risk reduction initiatives.

IAG recognises there are tangible and intangible business benefits in understanding and managing sustainability. The diagram below illustrates the business benefits the company's programs are delivering. Various tools are used to measure these. Qualitative measurement includes employee surveys, stakeholder surveys (to be conducted in 2004/05), customer satisfaction and external rating systems (such as RepuTex, the Corporate Responsibility Index, and the Dow Jones Global Sustainability Index, completed in 2003/04). Quantitative measurement systems include sales figures, claims figures and profit. This sustainability report, in conjunction with the annual report, details the Group's performance using some of these measurement systems.

Program		Desired Outcome
Stakeholder engagement and advocacy		Stronger brands and improved reputation Ability to act more responsively to community concerns Increased sales Increased employee retention Reduced regulatory intervention Access to lower cost of capital		Shareholder Value
Climate change research		Improved reputation Increased community education in benefits of reducing CO2 emissions Long-term reduction in claims
Workplace health and safety (including work-life balance, employee engagement, OH&S programs)		Superior work environment Increased employee engagement Improved employee retention Reduced costs
Supply chain		Reduced claim size Improved customer satisfaction Reduced claims cost through improved operating cost
Product development		Market differentiation Increased sales
Community initiatives		Stronger brand Educate, engage, reduce claim size and frequency

indicates that KPMG has provided assurance on the figures. For more information please see the Assurance statement.

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