Expert Community Advisory Committee commentary

Commentary
Additional information for the online report
Background information on the Expert Community Advisory Committee members

Commentary

We are pleased to include the independent commentary from IAG’s newly formed Expert Community Advisory Committee in this year’s report. The Committee is comprised of independent experts who make recommendations to us on the economic, social and environmental impacts of our activities.

As a committee we 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. Accordingly, we are supportive of corporations that invite independent guidance to address challenging issues to improve their performance. We have agreed to serve on this committee to:

• 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

In this statement, we comment on our role as a committee since our inaugural meeting in February 2006 and provide our opinion on IAG’s Sustainability Report. During the first six months, we have met twice and have had additional input outside of these meetings. In the course of these meetings we have agreed terms of reference discussed with IAG’s Executive the Group’s approach to sustainability and the issues which impact the business; and advised on improvements which we believe might be made to the Sustainability Report this year and in future years. One of our early tasks is to understand the means by which the company’s key performance indicators are determined and the numbers behind them interpreted.

We thank IAG’s Executive members for informing and openly engaging with the Advisory Committee in relation to strategy, stakeholder engagement, risks, opportunities and reporting. Our meetings have been conducted with respect for differing opinions, frankness and constructive criticism.

Report Assessment

Highlights

While the report seeks to address the concerns of all of IAG’s stakeholders, we support the choice of employees as the focal point for this year’s report. The Committee considers the reporting highlights to include the Group’s:

• immediate and ongoing support for communities devastated by natural disasters;
• advocacy in the business community for action to address climate change with policies and the development of climate models to inform this;
• innovative product development to enable customers to reduce their environmental impact e.g. Climate Help online product to allow people to offset their emissions, and the risk radars for farms and offices;
• learning through its experience with Care & Repair that IAG can have a major impact on the livelihood of their suppliers and responding to the responsibility which this places on them;
• decision to develop a code of ethics to address issues which may result from expansion into Asia and IAG’s five year plan to generate 40% of its premium offshore;
• approach to research and testing to develop new and safer products for homes and roads; and
• commitment to improving the work-life balance of its employees.

Challenges

We will challenge and work with the Executive to develop stronger frameworks and/or commitments to:

• further address stakeholder concerns (using existing research and databases) through developing a suite of innovative insurance products that create financial and other incentives for customers to reduce their environmental impacts;
• develop a global strategy around supply chain and sustainability that initially is building on recent experience managing supplier relationships in Asia;
• investigate the qualitative and quantitative information behind the key performance indicators to better understand, for example, employee satisfaction;
• investigate further linking of sustainability targets to individual and group outcomes eg. consider ways in which staff can be motivated to support IAG's sustainability goals;
• further improve IAG's employees’ understanding and appreciation of the company's values and purpose so that they can better integrate them in their day-to-day work. To the extent possible report the expected beneficial impacts on staff retention;
• develop a policy around investment which addresses where the company will or will not invest;
• take demonstrable actions to make insurance affordable;
• reduce the level of non-insurance, or under insurance, which are likely to be exacerbated by climate change impacts and other issues; and
• develop ways in which supply chains and procurement policy can be used to achieve improved outcomes.

We value the opportunity to collaborate on this report and with IAG’s Executive on this advisory committee and recommend the process to other corporations.

Submitted by

IAG’s Expert Community Advisory Committee

 

Additional information for the online report

This is an accompanying document to ECAC’s Third Party Statement which is included in the IAG Sustainability Report.

1. Opportunity to take a leadership role in sustainability in developing markets such as South East Asia

ECAC recognizes the importance of the challenge confronting IAG as it pursues its corporate vision of diversification and internationalization.

We encourage IAG to crystallize its Code of Ethical Business Conduct and see this as part of its contribution to recent international acquisitions in countries such as China, Malaysia, Thailand and Singapore which are endeavouring to balance development with sustainability.

An associated challenge for IAG in the context of its internationalization is the development of a corporate brand and accompanying ethos. The values implicit in the Code of Ethical Business Conduct need to underpin the whole of IAG inclusive of all retail brands in Australia and New Zealand as well as international acquisitions. ECAC sees this as a leadership opportunity for IAG as it pursues its stated goal of building a strong position in the world's fastest growing insurance markets.

2. Learnings from Care and Repair

ECAC would encourage IAG to more effectively utilize its capacity to identify industry changes taking place within their suppliers and what short and long term impacts this may have on the way IAG interacts with its suppliers. In so doing IAG would be better placed to adjust gradually into different areas as the environment changes in these industries e.g. the impact of projected climate changes on the building industry.

3. Performance Indicators

IAG has based its sustainable performance measures and reporting on the Global Reporting Initiative.

In 2002 the Global Reporting Initiative recognized lack of comparability of data as a weakness in the Global Reporting Indicators. This was, in part, attributed to the fact that indicators lacked methodologies and largely were focused on qualitative rather quantitative information. This has been the focus for the reassessment of guidelines in 2006.

IAG is also assessed against the benchmark set by the Dow Jones Sustainability Index for the insurance industry sector. We congratulate IAG on its inclusion as one of thirteen global insurance companies listed in this index.

Performance indicators are closely related to measures of progress and wellbeing. The Australian Bureau of Statistics (ABS) is part of an international collaboration titled “Measuring the Progress of Societies” under the auspices of the OECD with the EU, UN and World Bank as partners. A working group made up of Canada, Sweden, Norway, Bhutan, New Zealand and Australia will develop indicators across five domains (social, environmental, economic, cultural and governance) for consideration at a world forum in Istanbul in June 2007. When fully developed these indicators will influence the collection of data, international comparisons and measures used by government, corporations and civil society.

ECAC’s Terms of Reference anticipate the Committee will “assist IAG to shape Key Performance Indicators and Targets with respect to sustainability reporting while recognizing the constraints of short term imperatives” and “provide advice on new and significantly altered social and environmental report content” and ”provide advice and counsel on the draft IAG Sustainability Report before submission to the IAG Executive.”

The view of ECAC was that it had insufficient information to fully understand the basis of selection of IAG’s GRI (Key Performance Indicators) for this year’s report and undertakes to address this before properly evaluating them. The Committee felt that an enhanced appreciation of the relevant materiality of the indicators would enable the Committee to more effectively draw comparisons with IAG’s peers in the Financial Services Markets. Such comparisons would assist IAG in its emerging role as a global player.

4. Sustaining the Supply Chain

IAG has an important leadership role in selecting and preferring suppliers which meet the standards it has set out in its Supplier Selection Guidelines.

Organisations seeking to improve the sustainability of their procurement practices are placing a percentage value on social and environmental performance in their tendering / selection process.

ECAC encourages IAG to report on the value it places on criteria additional to the standard cost and service considerations such as eco-labels, energy ratings or take-back schemes. Suppliers need to know what is important to IAG and that only those suppliers that can deliver this will be awarded contracts.

ECAC also believes that IAG can take a leadership role in terms of its “product stewardship” by encouraging its suppliers of replacement products and parts for its household and vehicle insurance customers to adopt a whole of life approach to product design, manufacture, use and its ultimate disposal.

Supply chain responsibilities are illustrated by IAG, and other insurance companies’, corporate responses to the Carbon Disclosure Project (CDP) .

IAG states to the CDP (in response to the supply chain question) that it:

does not currently estimate the emissions associated with our supply chain. However, we do require potential suppliers who are tendering for IAG work to detail their environmental policy and strategy. This is factored into the tender selection process.

In general other insurance companies, for example those documented by the CDP FT 500 report, participate in the overall CDP project but also do not estimate supply chain emissions. As a result, potentially significant greenhouse gas emission reductions and efficiencies, through this engagement with suppliers, are still to be fully realised.

The supply chain consequently provides IAG with an exceptional opportunity to make a difference in all of its markets of operation.

 

Background information on the Expert Community Advisory Committee members

Yvonne Grant – Chair, IAG Expert Community Advisory Committee

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 NSW Fair Trading Tribunal, the Victims Compensation Tribunal and as a Member of the Operations Review Committee of the Independent Commission Against Corruption (ICAC). 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.

Sharon Moore is a Professor of Sustainable Business Studies, Sydney Graduate School of Management (SGSM), University of Western Sydney. Sharon is a n international leader in Triple Bottom Line approaches, a Sustainable Business, strategist, academic and researcher. Professor Moore’s 25 year career spans public affairs and business development to corporate social responsibility, in Chief Executive and Board Directorship roles.

Professor Moore has authored 90 publications on sustainable business, globalisation and business strategy, government relations and public affairs, and new sustainability and stakeholder approaches.

Warren Mundine is Chief Executive Officer of NSW Native Title Services Ltd., National President of the Australian Labor Party, the Chair of NSW Labor's Indigenous Policy Committee and a Board member of the National Aboriginal Islander Skills Development Association (NAISDA) College. Mr Mundine is a former Deputy Mayor of Dubbo, Commissioner of the NSW Local Government Grants Commission and State Board member of the NSW Police & Community Youth Clubs (PCYC). He has been awarded the Centenary Medal for services to the community and Local Government as well as Honorary Life Membership of the NSW Local Government Aboriginal Network.

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

Hayden Raysmith, expert on civil society and social capital concerns, is the founding chairman of Australia’s first independent community foundation, the Melbourne Community Foundation. Professor Raysmith was the first Director of Youth Affairs for the Victorian Government followed by a five-year stint as the Director of Public Health in Victoria. Professor Raysmith is also a former Director of the Victorian Council of Social Service (VCOSS).

In 2000 he was appointed chair of the combined Social Science and Planning School course advisory committee at RMIT.

Simon Divecha is Director - GreenMode, former CEO South Australian Conservation Council, 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 is a co-director of Mad World Ltd which is a supply chain and issues management consultancy of which the primary focus is sustainable development. Ms Mayes’ clients include the New Zealand Business Council for Sustainable Development, Packaging Council NZ, local and national government departments and a wide range of businesses from SMEs to multi-national corporations. Ms Mayes has 20 years of experience in industry, most recently as Director of Corporate Communications for Kimberly-Clark Europe Middle East & Africa where she was responsible for corporate communications and introducing sustainability as a key performance indicator at Board level.

Ms Mayes also has experience within the public sector, being seconded to the UK's Department of Trade & Industry and the EC's Transport Directorate working on supply chain and inter-modal transport projects.

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