Insurance Australia Group Ltd

The Safer Communities, ESG and Climate Steering Committee meets quarterly to shape, guide, and monitor IAG's enterprise-wide approach to implementing its Sustainability and Climate & Disaster Resilience Action Plan. The Committee is chaired by the GE PP&R and is comprised of senior leaders from across the Group, including the Chief Insurance and Strategy Officer. The Committee supports identification, understanding and management of climate-related risks and opportunities, and guidance on climate-related financial disclosures. The Enterprise Risk Profile (ERP) details the risks that can impact IAG's ability to deliver on its strategic objectives. The ERP is assessed annually and drives divisional implementation of IAG's strategy and decision-making, which is consistent with IAG's Risk Management Strategy and risk appetite. IAG's Risk Appetite Statement (RAS) is approved by the Board and outlines the level of risk IAG is prepared to take in pursuit of its objectives. IAG's Social and Environmental Framework is a Board-approved framework that helps identify and manage IAG's direct and indirect social and environmental impacts, outlines IAG's commitments to action, and defines IAG's approach to continuous improvement, including in relation to climate change. IAG's Responsible Investment Policy is a Board-approved policy that supports IAG's purpose and strategic objectives by managing IAG's impact and performance on responsible investment issues, including climate change.

The Safer Communities Steering Committee shapes, guides and monitors the Group-wide approach, plans and evaluation to support the Group Executive People Performance and Reputation in the setting and execution of IAG's Safer Communities Business Plan. This includes overall oversight of the Climate Action Plan. [...] The Climate Risks & Opportunities Steering Committee ensures appropriate Group Executive and senior leadership oversight of IAG's approach to identifying, understanding and managing financial risks and opportunities from climate change, and guidance on climate-related financial disclosures. It is chaired by the Group Executive People Performance and Reputation and comprises of senior leaders with representation from across the Group. Committee is reviewed regularly in line with organisational changes. Progress updates on the Climate Risks & Opportunities Program are provided to the GLT Risk Committee, a Management committee whose purpose is to assist CEO and GLT to fulfil their risk management and compliance responsibilities, every six months. [...] IAG's Social and Environmental Framework is a Board-approved Framework that helps identify and manage IAG's direct and indirect social and environmental impacts, outlines IAG's commitments to action, and defines IAG's approach to continuous improvement, including in relation to climate change. [...] IAG has published its position on Climate Action within its "Where we stand - IAG's Public Policy Views" document. This outlines IAG's support of mitigation activities and cross-industry collaboration to address climate change.

The Safer Communities Steering Committee shapes, guides and monitors the Group-wide approach, plans and evaluation to support the Group Executive People Performance and Reputation in the setting and execution of IAG's Safer Communities Business Plan. This includes overall oversight of the Climate Action Plan. [...] The Climate Risks & Opportunities Steering Committee ensures appropriate Group Executive and senior leadership oversight of IAG's approach to identifying, understanding and managing financial risks and opportunities from climate change, and guidance on climate-related financial disclosures. It is chaired by the Group Executive People Performance and Reputation and comprises of senior leaders with representation from across the Group. Committee is reviewed regularly in line with organisational changes. Progress updates on the Climate Risks & Opportunities Program are provided to the GLT Risk Committee, a Management committee whose purpose is to assist CEO and GLT to fulfil their risk management and compliance responsibilities, every six months. [...] IAG's Social and Environmental Framework is a Board-approved Framework that helps identify and manage IAG's direct and indirect social and environmental impacts, outlines IAG's commitments to action, and defines IAG's approach to continuous improvement, including in relation to climate change. [...] IAG has published its position on Climate Action within its "Where we stand - IAG's Public Policy Views" document. This outlines IAG's support of mitigation activities and cross-industry collaboration to address climate change.

The Board Charter of Insurance Australia Group Limited (IAG) articulates that the Board has responsibilities to: - Review and monitor implementation of IAG's shared value and sustainability strategy, including climate change; - Monitor the performance of shared value initiatives to create safer, stronger and more confident communities, as well as sustainability aspects under the areas of customer, workforce, community and environment; and - Review external reporting on shared value and sustainability strategies and initiatives, specifically within [the 2019 annual report and the 2019 annual review and safer communities report.](https://www.iag.com.au/sites/default/files/Documents/Results%20%26%20reports/IAGL-FY19-The-Numbers.pdf) Board Committees of IAG include the Risk Committee (where climate change is considered as part of IAG's Enterprise Risk Profile), Audit Committee (with consideration of climate related disclosures), People and Remuneration Committee and Nomination Committee (with consideration of the safer communities, including climate change, approach and activity). Committee responsibilities are set out in Committee [Charters, that are available in the About Us section of this website.](https://www.iag.com.au/about-us) IAG's sustainability performance is managed within a Safer Communities framework and is supported by a number of policies and position statements including IAG's Social and Environmental Policy, Public Policy Position on Climate Change and Climate Action Plan. Progress against IAG's Climate Action Plan is reported to the IAG Board annually. IAG's Chief Executive Officer (CEO) has management accountability for the implementation, performance and external disclosure of IAG's safer communities' activities, which includes climate change and the Climate Action Plan. The Group Executive People Performance and Reputation has accountability for oversight of climate change activity and the Climate Action Plan, with accountability for key objectives and programs outlined in the Plan owned by relevant IAG Group Leadership Team (GLT) members. Progress against IAG's Climate Action Plan is reported to the IAG GLT at least every six months. The IAG Climate Risk & Opportunity Steering Committee comprises five IAG GLT members and senior leaders from across the business. It provides guidance on the strategic direction, risk management, ongoing implementation and development of business opportunities relating to IAG's position on climate change. IAG's Social and Environmental Policy provides a framework for identifying and managing IAG's direct and indirect social and environmental impacts, outlines IAG's commitments to action, and defines IAG's approach to continuous improvement in its social and environmental performance, including climate change. IAG's Public Policy Position on Climate Change outlines IAG's commitment to the Paris Agreement and to continuing to work constructively with government, industry, non-profit groups and local communities to limit carbon emissions, increase resilience and address the risks posed by the changing climate and to continue to incorporate climate considerations into IAG's Investment Policy and approach. IAG's Climate Action Plan is a three-year plan that sets out the framework, commitment and steps to address the effects of climate change. IAG discloses publicly on its Climate Action Plan every six months, showing [visibility and accountability for its commitments. Visit the Safer Communities section to read IAG's latest](https://www.iag.com.au/safer-communities/our-climate-action-plan) Climate Action Plan Scorecard update.

#### Governance

###### IAG's Board and the Group Leadership Team have oversight of ESG and climate-related risks and opportunities within our governance framework. Key responsibilities are detailed in Figure 1.

**Figure 1: ESG and climate-related accountabilities of IAG Board and Management (Group Leadership Team).**

**IAG Board**
**Charter**

--NEW-PAGE--

###### Board and Management oversight

[IAG's Board Charter includes oversight of the Group's](https://www.iag.com.au/sites/default/files/Documents/Corporate%20governance/IAG-Board-Charter-Approved-210520.pdf)
sustainability approach, as a function of the Board, as set
[out in Figure 1. Our Social and Environmental Framework](https://www.iag.com.au/sites/default/files/Documents/About%20us/IAG-Social-and-Environmental-Framework-November-2022.pdf)
(Framework) provides overarching guidance for our
people, detailing our commitments to managing social and
environmental risks and opportunities. This year we have
uplifted our approach to managing ESG risk, this included
a Board-approved update of the Framework.

The Board considers ESG and climate-related risks and
opportunities as part of IAG's core strategy, business
model and financial planning processes. Through IAG's
[standing Audit and Risk Board Committees, climate-](https://www.iag.com.au/about-us/corporate-governance/iag-board-committees)
related impacts are discussed, and progress towards
climate-related milestones and targets is measured and
monitored. Climate-related impacts were discussed in two
of eight Board Risk Committee meetings in FY23.

###### IAG New Zealand Board and Management

The IAG New Zealand Board, its standing committees and
IAG's New Zealand Leadership Team, are responsible for
directly and indirectly governing climate-related risks and
opportunities for IAG New Zealand.

**The New Zealand Board received two education**
**sessions on climate-related impacts in FY23.**
**These sessions covered broader ESG considerations**
**with one focusing on physical and transition risks**
**and opportunities.**

**As part of the ongoing Board education program,**
**a dedicated ESG and climate deep-dive session**
**was held in FY23. This session outlined IAG's**
**approach to managing the long-term physical**
**risk impacts of climate change on our business.**

--NEW-PAGE--

#### Risk management

###### IAG identifies, assesses and reports on ESG and climate-related risks to support the delivery of our strategy. For more information on our overarching risk management process, see 'Section B – Business Risk and Risk Management' of the FY23 Annual Report, and the 'Managing risk at IAG' section of our website.

Identifying climate-related risks

Climate-related considerations are embedded in IAG's risk
architecture and are:

###### • Included in the Risk Management Strategy (RMS), which
governs all risk elements

###### • Assessed for severity, likelihood, velocity, and
connectedness in the Enterprise Risk Profile (ERP)

###### • Quantified or qualified for impacts and managed
through associated divisional plan responses

Our ERP articulates risks that may impact our ability to
deliver on our strategic objectives, outlines controls to
mitigate those risks and supports the implementation of
our strategy. Using stress testing, Management reviews
the ERP quarterly and reports on it to the Board annually.
Emerging regulation is also monitored, identified and
managed as part of our broader risk management
processes.

The FY23 ERP process revalidated 'inadequate climate
change response' as a critical enterprise risk. This is
consistent with previous years, reflecting the systemic
impact of climate change on IAG (Figure 3).

**Figure 3: Climate change risk interdependencies**

--NEW-PAGE--

###### Managing climate-related risks

Climate-related risk management at IAG leverages the
'three lines of defence' model, as outlined in the Risk
Management Framework (RMF):

###### Key tools

IAG uses a variety of models to identify, price, and manage
climate-related risks. Stress testing undertaken through
the Group's Internal Capital Adequacy Assessment Process
(ICAAP) framework during the financial year has been
a useful tool for exploring the potential implications
of climate-related risks. This provides input into risk
appetite, capital target setting and contingency planning.

We also updated our perils technical pricing tool as part of
our roll-out of our Enterprise Platform Delivery. This tool
helps IAG to better price our own perils models as well as
respond to government climate-related programs.

**In FY23, we have improved our risk governance**
**processes by adding six ESG and climate**
**change risk statements to our risk and controls**
**architecture. The ESG-related risks focus on**
**integrating reporting and our response to the**
**regulatory environment. The climate-related risks**
**support adaptation to physical and transition risks**
**and meeting our public commitments.**

###### Line 1

**Own and manage – as an enterprise-**
wide priority, IAG is maturing its
approach to identifying and actioning
climate-related risks through day-today operations. This includes upcoming
training to select IAG employees on ESG
and climate-related risks.

###### Line 2

**Oversight and challenge – IAG's Group**
Risk division provides independent
risk management advice, develops risk
strategies and frameworks, and oversees
general risk performance, including
climate-related risks.

###### Line 3

**Independent assurance – Group**
Audit monitors the effectiveness and
adequacy of the RMF. This includes
performing quality reviews and
assurance on how strategic risks in the
ERP, and how ESG and climate-related
governance is being managed.

#### Governance

###### IAG's Board and the Group Leadership Team have oversight of ESG and climate-related risks and opportunities within our governance framework. Key responsibilities are detailed in Figure 1.

**Figure 1: ESG and climate-related accountabilities of IAG Board and Management (Group Leadership Team).**

**IAG Board**
**Charter**

--NEW-PAGE--

###### Board and Management oversight

[IAG's Board Charter includes oversight of the Group's](https://www.iag.com.au/sites/default/files/Documents/Corporate%20governance/IAG-Board-Charter-Approved-210520.pdf)
sustainability approach, as a function of the Board, as set
[out in Figure 1. Our Social and Environmental Framework](https://www.iag.com.au/sites/default/files/Documents/About%20us/IAG-Social-and-Environmental-Framework-November-2022.pdf)
(Framework) provides overarching guidance for our
people, detailing our commitments to managing social and
environmental risks and opportunities. This year we have
uplifted our approach to managing ESG risk, this included
a Board-approved update of the Framework.

The Board considers ESG and climate-related risks and
opportunities as part of IAG's core strategy, business
model and financial planning processes. Through IAG's
[standing Audit and Risk Board Committees, climate-](https://www.iag.com.au/about-us/corporate-governance/iag-board-committees)
related impacts are discussed, and progress towards
climate-related milestones and targets is measured and
monitored. Climate-related impacts were discussed in two
of eight Board Risk Committee meetings in FY23.

###### IAG New Zealand Board and Management

The IAG New Zealand Board, its standing committees and
IAG's New Zealand Leadership Team, are responsible for
directly and indirectly governing climate-related risks and
opportunities for IAG New Zealand.

**The New Zealand Board received two education**
**sessions on climate-related impacts in FY23.**
**These sessions covered broader ESG considerations**
**with one focusing on physical and transition risks**
**and opportunities.**

**As part of the ongoing Board education program,**
**a dedicated ESG and climate deep-dive session**
**was held in FY23. This session outlined IAG's**
**approach to managing the long-term physical**
**risk impacts of climate change on our business.**

--NEW-PAGE--

#### Risk management

###### IAG identifies, assesses and reports on ESG and climate-related risks to support the delivery of our strategy. For more information on our overarching risk management process, see 'Section B – Business Risk and Risk Management' of the FY23 Annual Report, and the 'Managing risk at IAG' section of our website.

Identifying climate-related risks

Climate-related considerations are embedded in IAG's risk
architecture and are:

###### • Included in the Risk Management Strategy (RMS), which
governs all risk elements

###### • Assessed for severity, likelihood, velocity, and
connectedness in the Enterprise Risk Profile (ERP)

###### • Quantified or qualified for impacts and managed
through associated divisional plan responses

Our ERP articulates risks that may impact our ability to
deliver on our strategic objectives, outlines controls to
mitigate those risks and supports the implementation of
our strategy. Using stress testing, Management reviews
the ERP quarterly and reports on it to the Board annually.
Emerging regulation is also monitored, identified and
managed as part of our broader risk management
processes.

The FY23 ERP process revalidated 'inadequate climate
change response' as a critical enterprise risk. This is
consistent with previous years, reflecting the systemic
impact of climate change on IAG (Figure 3).

**Figure 3: Climate change risk interdependencies**

--NEW-PAGE--

###### Managing climate-related risks

Climate-related risk management at IAG leverages the
'three lines of defence' model, as outlined in the Risk
Management Framework (RMF):

###### Key tools

IAG uses a variety of models to identify, price, and manage
climate-related risks. Stress testing undertaken through
the Group's Internal Capital Adequacy Assessment Process
(ICAAP) framework during the financial year has been
a useful tool for exploring the potential implications
of climate-related risks. This provides input into risk
appetite, capital target setting and contingency planning.

We also updated our perils technical pricing tool as part of
our roll-out of our Enterprise Platform Delivery. This tool
helps IAG to better price our own perils models as well as
respond to government climate-related programs.

**In FY23, we have improved our risk governance**
**processes by adding six ESG and climate**
**change risk statements to our risk and controls**
**architecture. The ESG-related risks focus on**
**integrating reporting and our response to the**
**regulatory environment. The climate-related risks**
**support adaptation to physical and transition risks**
**and meeting our public commitments.**

###### Line 1

**Own and manage – as an enterprise-**
wide priority, IAG is maturing its
approach to identifying and actioning
climate-related risks through day-today operations. This includes upcoming
training to select IAG employees on ESG
and climate-related risks.

###### Line 2

**Oversight and challenge – IAG's Group**
Risk division provides independent
risk management advice, develops risk
strategies and frameworks, and oversees
general risk performance, including
climate-related risks.

###### Line 3

**Independent assurance – Group**
Audit monitors the effectiveness and
adequacy of the RMF. This includes
performing quality reviews and
assurance on how strategic risks in the
ERP, and how ESG and climate-related
governance is being managed.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]IAG's goals and commitments to address climate and disaster resilience are captured in the Climate & Disaster Resilience Action Plan (Action Plan). Launched publicly in November 2021, the Action Plan is an evolution of IAG's FY19-21 Climate Action Plan.

One of Action Plan's three focus areas is 'Transforming the system' which centres on building community climate and disaster resilience by delivering and collaborating on preparedness initiatives, research, adaptation, and policy. This includes contributing IAG's knowledge, insights, and capability towards understanding how climate risks and opportunities impact our value chain.
The Action Plan is aligned to the Paris Agreement, and this is further emphasised by external initiatives IAG is a member of, including the New Zealand Climate Leaders Coalition and IAG's own public policy positioning. IAG's participation in the public policy making process is multi-layered. At the leadership level, IAG's CEO and Executives meet regularly with political, policy making and regulatory leaders. At the policy development level, IAG continually engages with regulators, governments, government agencies and industry associations on public policy issues relevant to IAG.

This engagement takes a number of forms, including:
- participation in government advisory bodies;
- participation in industry associations policy committees (eg Geneva Association, ICA, ICNZ, Business Council of Australia);
- evidence-based submissions on business and economic issues to Government Reviews/Inquiries;

Examples of policy and regulation IAG has contributed to in the reporting period include:
- In Australia, IAG made a public submission supporting Australian Prudential Regulation Authority (APRA) prudential guidelines on Climate Change Financial Risks (CPG 229). IAG welcomed the guidelines as a key driver to further uplift climate risk and opportunity management across the Australian finance sector. IAG, alongside the Insurance Council of Australia, participates in the 'Building Stronger Homes Roundtable' with Master Builders Australia, to lead the discussion on policy changes.
- In New Zealand, IAG is actively lobbying the New Zealand government on climate adaptation through the first National Adaptation Plan, while also engaging the government on flood risk management. IAG also works directly, and through the Sustainable Business Council and Climate Leaders Coalition, to engage on the New Zealand government's Emissions Reduction Plan.

Describe the process(es) your organization has in place to ensure that your external engagement activities are consistent with your climate commitments and/or climate transition plan?[…]IAG's goals and commitments to address climate and disaster resilience is captured in our Climate & Disaster Resilience Action Plan (Action Plan) and Net Zero Roadmap (Roadmap). IAG's Action Plan launched publicly in November 2021, and is an evolution of IAG's FY19-21 Climate Action Plan.