26 October 2018
“We are feeling the effects of climate change already: we see it in our own industry’s data, which tells us an inescapable truth.”
That was CEO Peter Harmer today at Insurance Australia Group (IAG’s) annual general meeting (AGM). His company used the meeting to launch a ‘climate action plan’ that commits IAG to disclosing climate risk by 2020.
Shareholders at the AGM wanted to know if the action plan would “include a detailed scenario analysis demonstrating the resilience of IAG’s strategies under different climate-related scenarios, including a 2°C or lower scenario in financial year 2019’s annual report?”
Chairman Elizabeth Bryan said that IAG planned to carry out such analysis – even though the plan itself states this won’t be ready until 2020.
Another shareholder, critical of the climate action plan’s lack of detail asked whether IAG would publish information relating to different climate scenarios, particularly the 4°C and 6°C scenarios, which pose the most risk for IAG. She also asked if IAG would publish a 1.5°C scenario – in line with the recent International Panel on Climate Change report’s recommendations.
“When will we see those scenarios published. And when will we see the climate action plan revised in light of that new science that has come out?”
“The scenarios we have spent the most time modelling have been +2°C and a +3°C world,” responded Harmer.
“Will those scenarios be published?” asked the shareholder.
“That’s under discussion at the moment and it ties in with whether or not we should… The answer to that question will be dependent on what we do with our data,” said Harmer.
Investment of coal through its portfolio
IAG does not insure coal projects, unlike Australia’s biggest insurer QBE. It does, however, invest in thermal coal.
Allianz, Axa, Aviva, Generali, Hannover Re, Lloyd’s, Munich Re, Nippon Life, SCOR, Swiss Re, and Zurich are just some of the insurance companies dumping their thermal coal company shares because of that industry’s contribution to global warming, which is fueling floods, storms and bushfires.
“Why is IAG still investing in thermal coal?” asked another shareholder.
The board said IAG’s shares in dirty companies was comparatively small, and that they take a “hard look at the path through, from the business they are in to how they are going to translate the companies out of that business.”
The shareholder followed up to ask:“Why can’t we follow other insurers example, like Medibank, who publicly ruled out fossil fuel investments at their annual general meeting last year.”
IAG’s board said it believes it is better to invest in dirty companies seeking a transition. Yet because IAG refuses to make public any detail on which companies it is invested in, shareholders are unable to verify if those companies are actually undertaking a transition or not!
IAG’s climate action plan says, on page 9 that its objective is to “shift investments to companies that have a lower exposure to climate-related risks or a forward-looking strategy to manage these risks.” This does not clearly show that coal is being ruled out completely.
Australia’s big insurance companies are making extreme payouts on extreme weather, but are still invested in the fossil fuel industry that is making climate change worse.
We’re calling on Australia’s major general insurers, IAG, QBE and Suncorp, to:
- rule out underwriting any further coal, oil and gas extraction, transportation and infrastructure projects, including Adani Carmichael*
- divest from fossil fuel assets in its investment portfolio
- advocate publicly and actively for policies that will rapidly reduce carbon emissions and phase out fossil fuel use
- educate customers about the effects of climate change on premiums, and participate in risk mitigation measures.