The environmental risk that we find ourselves faced with is well documented. Weather risk and climate change is a significant risk for IAG as well as the broader community.
Our environmental sustainability strategy includes managing not only our impact on the environment, but also the impact of the environment and the changing climate on our business. Managing our own impact includes our ambition to become carbon neutral by 2012.
Although this year we have not achieved our target of five percent year on year reductions in carbon emissions across the group, we are continuing along a journey. Since 2006, we have decreased our carbon emissions by over 30%. This included a big decrease of 12% from 2008 to 2009. What we have observed is that our reductions occur in step changes, rather than being equal from year to year.
Despite some significant consumption reductions, in Australia we have achieved only a small decrease of 2.3%* in emissions due to the adoption of different emissions factors for the conversion of our paper consumption into CO2 equivalent emissions. In our New Zealand business we have experienced a 4.3%* increase in emissions, in part due to the adoption of different emissions factors for both paper and electricity consumption, but also due to increases in underlying consumption. We strive to ensure that we are using the more appropriate and best practice emission conversion factors which means that from year to year we may need to change the factors that we source. On a more positive note, for the first time this year our reporting now includes our Thai and UK operations.
* Note: 2009 emissions have been restated to reflect a change in the paper emission conversion factor in Australia and a change in the paper and electricity emission conversion factors for New Zealand.
Our Australian business continues to be the largest contributor to our Group emissions, and in the past year delivered a decrease of 2.3%*.
* Note: 2009 emissions have been restated to reflect a change in the paper emission conversion factor.
With an Australian footprint of 53,175 tonnes of carbon, we are just on the threshold of potentially being included in the third year of the National Greenhouse Energy Reporting (NGER) Act in FY11. This means that we will potentially be required to report our Scope 1 and Scope 2 carbon emissions on an annual basis, if they exceed specified thresholds.
While we want to reduce emissions further, Australia saw a 2.6% decrease in electricity consumption, which accounts for 74% of the footprint of our Australian operations.
This year’s consumption reduction has largely been driven by the implementation of some technology to help us manage our computer fleet, and by the consolidation of our property network. During the year we have implemented a Desk Top Power Down initiative, and have seen growing benefits from our green star rated buildings.
Going forward, we want to refine our approach to measuring and monitoring our consumption of electricity across our property network to help us identify those parts of our business that are not performing to expectation, and assist us in identifying opportunities for greater efficiency.
Our Australian operations delivered a significant 12% reduction in our office paper consumption during the year. This has been driven by an increasing commitment on the part of our people to print only when necessary, the consolidation of printers to Multi Function Devices, setting print defaults to double sided printing, and providing the functionality to scan directly to an email.
Print paper use has also decreased by 6.1%, thanks to increasing moves to online or web based solutions for items which would have been printed in the past (see our case studies for details on how we’re reducing print paper use in shareholder materials).
This year, we have updated the source of the factor that we use to convert our paper consumption into carbon dioxide equivalent emissions. As a result, while our consumption has dropped in real terms, the new factor records this as an increase when compared to last year. The impact of this change in emissions factors is a 20.7% increase for office paper and a 28.9% increase for print paper emissions. This is why we have restated our prior year emissions to enable a like for like comparison.
Fuel and travel
Our consumption of fuel by our tool of trade fleet has fallen by over 8% during the year, in part because of a reduction in the size of our fleet. There has been a small improvement in fuel consumption by vehicle compared to 2008/09. Driver education on efficient driving practices is an area of focus for the coming year.
Air travel for our Australian business has increased compared to prior year. This category in particular reflects the challenges that we face in balancing our desire to reduce our emissions, and doing business as a global company.
We continue to strive to limit air travel to essential trips only, encouraging the use of video conferencing. We have also installed leading edge telepresence facilities across our businesses in Australia, New Zealand and the UK in response to employee feedback about the quality of existing videoconferencing facilities.
We continue to work towards a system to measure and monitor water consumption across our property network in Australia. In the meantime, individual sites have developed initiatives to manage their water consumption.
CGU is leading IAG’s work in this area, installing a purpose built water recycling plant in its building on Collins Street in Melbourne. The plant, which commenced operation in May 2010, will supply recycled Class A water for all toilet and urinal flushing water. A secondary process will also provide part of the water supply servicing both building's cooling towers. While the system is new and its performance will be closely monitored, it is capable of delivering up to 60,000 litres per day of recycled water. In one year, this would equate to over eight Olympic size swimming pools.
Our New Zealand business has recorded a 4.3%* increase in emissions. Here too, we have adopted more up to date emissions factors for paper and electricity, however there have also been increases in real terms in consumption of electricity, fuel and air travel.
* Note: 2009 emissions have been restated to reflect a change in the paper and electricity emission conversion factor.
As in Australia, electricity makes up the largest portion of our emissions in New Zealand, in which there has been a 10.4% increase in consumption. This is primarily due to short term factors, such as our double occupancy of old and new premises when transitioning between the two.
Air travel has also increased 16%, due to factors including new business initiatives launched during the year and increased participation in Group wide leadership programs.
More pleasingly, there have been 11% reductions in both office paper and print paper consumption.
The reduction in office paper use is due to a concerted effort from our people in reducing their paper consumption, and also by a reduction in storage space in new the premises. For example, the NZI Centre in Auckland has 70% less storage space than our four previous buildings, prompting a move towards more electronic storage.
In terms of print paper, a new electronic customer renewal process has resulted in less printed customer material.
Clearly, we will be very focused on reducing our emissions in New Zealand in the coming year. A number of initiatives to do this are underway including (but not limited to) the introduction of software that will put all IAG NZ computers into stand by after hours, reducing electricity consumption; launching the Energy Wise Challenge - a program that will run to educate and re-engage the business in simple actions to conserve power; continued implementation of an Electronic Renewal System developed to reduce print paper usage across NZI; increased scrutiny of travel requests and the encouragement of video conferring as an alternative.
UK and Asia
Our UK and Thai businesses are reporting for the first time this year on their emissions.
Reporting on UK emissions reflects slightly different methodology to that used in Australia and New Zealand, as there are differences in the way the business operates – for example the use of gas for heating, and the widespread use of rail rather than air travel for domestic travel. The business has this year reported CO2e emissions of 2,474 tonnes, which was higher than expected, due to factors including increased gas consumption resulting from a long, cold winter, and increased need for staff to travel between the UK and Australia.
This is the first time that our Thai businesses have captured data on the environmental indicators to establish their carbon footprint, reporting emissions of 1,955 tonnes. This reflects a growing trend for larger businesses in the Asian market to recognise the impact that their operations are having on the environment and to report externally on them, driven by an increasing customer and community sentiment.
Not surprisingly, this work confirmed the largest drivers of their footprint were electricity consumption (66%) and fuel for tool of trade vehicles (26%). Safety Insurance has been a largely paperless office since 2002 with the only printing of any note being the policy documentation which is required to be sent to customers and documents required by Thai authorities. NZI Thailand is not paperless as yet but does have a paper recycling arrangement in place with a service provider, Recycle Paper For Trees, who measures the waste on removal and provides a report on the quantity of waste that has been recycled. Office and print paper usage for Thailand is the third main driver at 7.5%.
The collation of this information has not come without challenges, and the businesses have been unable to source complete information on electricity consumption from suppliers. Consequently consumption has been estimated for a number of months this year. The businesses are working with electricity suppliers to ensure the provision of accurate consumption data and cost information going forward.
Working with customers and communities, and influencing government
While we aim to minimise our carbon footprint, climate change is already having an impact on communities in the form of severe weather events.
While climate change is a broad community issue, there are steps IAG is taking to boost adaptation to climate change, both internally and within the broader community.
- Ensuring we have a good understanding of the risks associated with climate change, for example through our dedicated Natural Perils Research Team in our reinsurance division;
- Sharing information on risk and how to reduce it.
- Forming partnerships to help communities adapt.
- Assisting in emergency readiness and response, helping our customers at claims time by ensuring we can make claims payments quicker and help people to get back on their feet.
- Influencing and advocating – insurance companies acting alone, or even collectively, will only have a limited impact in achieving success. What is needed is a collaborative effort on many different levels from a range of stakeholders.
- Adapting our own internal processes, so that we can respond to our customers in an efficient and timely manner.
As a large corporate, IAG recognises the role that we can play in influencing approach and policy so also engages with the government on a number of different issues. We engage at various levels including local, state and federal government, through many different channels including formal submissions through to face to face meetings.
For more information on how we are working to mitigate and adapt to the risks associated with climate change, see our Key Risks and Opportunities section.
In the case studies below we share some of the initiatives that have driven our environmental performance, as well as the challenges we have experienced.
|Towards carbon neutrality|
We view climate change and severe weather events as significant risks to the sustainability of our business and the communities in which we operate. So for several years, we have been working with communities to help them adapt to climate change, offering products and services to our customers to help encourage sustainable behaviour, and participating in the policy debate on climate change.
We also recognise the need to lead by example, ensuring our own impact on the environment is as minimal as possible. So in 2006, as part of our approach to ensuring our ongoing sustainability, we made a commitment to be carbon neutral by 2012.
Having a fuel efficient vehicle fleet is one way for organisations like IAG to reduce their carbon footprint, as well as costs.
But fuel efficient cars are only half the battle – to be truly sustainable, organisations also need to look at the fuel efficiency of their driving practices.
This is the rationale behind IAG New Zealand’s Ecodriver program.
No matter how efficient a vehicle is at using fuel, research suggests the human element also has a significant impact - the driver has the ability to cause excessive fuel consumption, and that expert training, coaching and/or education has yielded improved fuel economy figures of typically between 10 - 20%.
In many companies, offices are buzzing even in the middle of the night.
This is because often companies ask staff to log off but not shut down their computers at the end of the day, so information technology staff can install upgrades and patches overnight.
The problem is, of course, that even when logged off, if they are not completely shut down then the computers are still consuming electricity.
|A sustainable partnership|
While environmental sustainability is a key focus internally, IAG New Zealand company NZI is also using an external partnership to drive sustainability.
NZI has been a foundation sponsor of the Sustainable Business Network (SBN) for the past five years, and is leveraging the partnership to develop practical sustainability tools for its business, as well as for brokers and other key business partners, including:
Shareholder communication and education is an important priority for IAG. However as IAG has one of the largest share registers in Australia, this communication has used significant quantities of print paper.
As a result, IAG’s Group Secretariat has undertaken a campaign to switch IAG's 865,000 shareholders to electronic communications rather than by mail.
When launched 18 months ago, approximately 55,000 shareholders had provided an email address for communications, primarily to receive the Annual Report. The campaign has yielded another 50,000 email addresses for all communications via the email channel.