During the 2012 financial year, IAG continued to perform well on the majority of the indicators used to measure its sustainability. Performance details are contained in IAG’s 2012 sustainability report. A summary follows.

Embedding sustainable practices

During the year, we became a founding signatory to the Principles of Sustainable Insurance, a global, United Nations-backed initiative. As the only Australian insurer among 34 founding signatories, this demonstrates our commitment to drive continuous improvement in our own operations while fostering a more sustainable insurance industry worldwide. The Principles focus on embedding environmental, social and governance issues into decision-making; raising awareness of these issues; managing risk; and promoting solutions.

IAG continued to rank on key global sustainability indices, including the Dow Jones Sustainability Index, FTSE4Good, Global 100 Most Sustainable Corporations and Carbon Disclosure Leadership Index.

Building a sustainable workforce

Ensuring we have the right people in the right roles, with the right capabilities is essential to help address the challenges of the future. During 2012, we piloted a new approach to enhance the way we achieve this, by enabling a greater visibility of our talent base; building a deeper and broader leadership and succession pipeline; and supporting a more mobile workforce.

In addition, a new Enterprise Agreement for employees in Australia became effective during the 2012 financial year, following an overwhelming 89.5% vote in favour. Key improvements include increasing paid parental leave to 14 weeks (up from 12 weeks); and creating a new mid-service leave category to provide people who reach seven, eight and nine years of service with an extra week of paid leave each year.

We introduced a ‘welcome back’ payment for all Australian-based employees who are primary carers and return to work after having a child. IAG now offers one of the most generous parental leave programmes in the Australian financial services industry supporting our focus on diversity at IAG. The number of women in senior management roles increased to 29%, up from 28% last year, putting us on track to achieve our goal of at least 33% by 2015.

Our commitment to improve the safety of our work environment led to a reduction of 46.5% in the lost time injury frequency rate for the Australian businesses from 5.7 to 3.05. This reflects a keen focus on improved reporting processes enabling us to understand and address the causes, and better training.

Responding to customers

Our customers’ policies and risks in force remained stable at 16.1 million during the year, and customer retention remained high. This is a pleasing outcome, which reflects our ongoing efforts to ensure we are constantly evolving to meet our customers’ changing needs.

Each business adopts individual methods to measure customers’ loyalty and actively uses the results to improve processes. IAG’s Australia Direct business introduced a significant change to its customer experience survey methodology, with the 2012 financial year marking the first full year of its use. Each business has recorded improvements, but there is still room to do more.

Making communities safer

During the year our businesses invested more than $9.7 million in community programmes and partnerships closely aligned with promoting safety and resilience in the home, on the road, in business and in the natural environment.

Under Australia Direct’s Community Grants programme, almost $747,000 was awarded to 124 groups to help realise their goals to make Australian communities safer. Since the inception of this programme in 2003, more than $5.3 million has been invested into 1,300 projects nationally.

Our sponsorships of partner organisations which share our goal of making communities safer continued during the year, and in Australia, NRMA Insurance entered into a new major partnership with the NSW State Emergency Service.

We formalised a new set of initiatives through the Risk Matters programme. This continues our work in helping to improve the understanding of risk to prevent loss, reduce it, or better insure it.

Reducing environmental risk

For some years, IAG has advocated the need to develop a resilient built environment to reduce our communities’ vulnerability to natural perils. During the past year we accelerated these efforts.

We also continued to reduce our own carbon footprint, in line with our commitment to achieve voluntary carbon neutrality by the end of the 2012 financial year. By focusing on reducing electricity consumption, business travel, vehicle fuel and paper consumption, we are contributing to a more sustainable environment while minimising costs by using fewer resources.

During the past year, excluding new emission sources, CO2 equivalent emissions were reduced by 6.0%. To achieve carbon neutrality, we purchased 18 months’ worth of carbon offsets, via a carefully selected portfolio of four projects. Each project meets IAG’s strict purchasing criteria and is measurable, transparent and independently audited.