20 October 2017
In a week dominated by the Federal Government’s capitulation to the coal lobby in its latest instalment of energy policy failure, it was an opportune time for Australia’s largest general insurer – IAG – to call out the need for tougher action on climate change at their annual general meeting (AGM). Yet once again, the corporate giant squibbed it.
By all accounts, IAG had a great year, revenue was up, profits were up, and shareholders were delighted. Yet for the tenth time in eleven years, natural disasters cost the company more than it had provisioned. Sure, it didn’t have a substantial impact on its bottom line, but it’s an unenviable record, and is the best indicator of an industry struggling with the impacts of climate change.
IAG gets climate change; there is no doubting that. Both Chair Elizabeth Bryan and CEO Peter Harmer spoke at length about the increasing cost of natural disasters, particularly Tropical Cyclone Debbie, and the need for spending on climate change adaptation. And on that front, IAG is streets ahead of its Australian peers QBE and Suncorp.
Yet its claims to leadership on climate fall short of community expectations. Despite being the only insurer to advocate for limiting global warming to 1.5 degrees in formal submissions to various Senate inquiries, IAG admitted its failure to get their message through to government. At one stage, Chair Elizabeth Bryan scoffed at suggestions that IAG could “manage government”. She added that the company focuses on what it “can do”, rather than what it would “like to do”.
However, even on the one thing IAG can genuinely claim leadership on – adaptation to climate change – success has been hard to come by. In the Federal Budget earlier this year, the Government cut funding to NCCARF (the National Climate Change Adaptation Research Facility) and designated only $26 million to disaster resilience, rather than the $250 million recommended by the Australian Business Roundtable, which IAG chairs.
When pressed, CEO Peter Harmer declared the Government was “deaf” to the need for spending on adaptation. And that was as blunt a word as either he or Chair Elizabeth Bryan could muster for a Government clearly out of step with not just the community, but the corporate sector too.
The board was also asked about the ineffectiveness of the Insurance Council of Australia (ICA) at lobbying for action on climate change. Other than a pathetic 2.5 page submission to a Senate inquiry, the ICA has said nothing about climate change since the release of its first policy in August last year. Both the Chair and CEO of IAG delivered the disingenuous response of directing the question to the ICA, despite the fact that IAG currently holds the presidency of the council.
Australia has been inflicted with a toxic debate on climate change and energy policy for over a decade. It has been driven largely by vested interests, keen on delaying on policy outcomes that may make their own businesses less profitable. Yet companies like IAG, at the coalface of climate change impacts (pardon the pun), remain largely silent in the public debate. If IAG is genuine in its concern about “keeping us safe”, and however much its board may not want to, the time has come for them to fight the public fight on climate.