IAG Chair Tom Pockett Keynotes AICD Climate Forum

In my experience a significant uplift is required.

One thing all Directors need to do is ensure everything in our climate-based disclosures is qualified. That way you have a clear record each year.

This is important because standards, data sets, and in many cases business models, are changing every year. We are dependent on government assumptions and a lot of third-party information - and these will all continue to change and evolve.

For example, this year IAG announced two acquisitions, and these will change our base metrics.

My summary of advice for fellow Directors? Treat the disclosures with a Prospectus mindset Qualify assure, and have plenty of legal advice!

While it may be tempting to focus solely on the increase in workload and compliance, I suggest that the new regime also brings opportunities.

The new mandatory reporting requirements deliver a more consistent approach to climate-related reporting, and that may help to promote knowledge sharing to support a smoother, faster transition.

Listed companies across Australia will be at various points of maturity, and forums like this one today are helpful in sharing experience and guidance as we work our way forward. Well-done to the AICD for continued thought leadership and practical advice in this area.

Whole-of-system approach

I wanted to include some comments on collaboration. Transitioning to a lower carbon economy and creating a safer and more sustainable country needs a whole-of-system approach.

IAG boss Nick Hawkins has a nice line that insurers are the shock absorbers that keep banks lending, Australians buying homes and business investing.

So we need to work across sectors, engaging deeply with suppliers, informing and educating customers and advocating for change. We need to engage with industry groups and government at all levels.

For both Stockland and IAG, there are some interesting intersecting issues. For example, when it comes to resources, trades and builders, there are not enough skills in the country to meet demand when major catastrophes occur. Mobility of skilled trades between states is also an issue.

Take the example of Queensland, where a changing climate is increasing the exposure of property and people to extreme events. Here, resources are right now also being drawn into preparation for the Brisbane Olympics, reducing the pool of trades available to help with repairs. Any shortages in labour or materials especially at the time of severe weather events increases the cost of repairs and builds, and therefore increases the cost of insurance.

Stockland is focused on how it will enable its business, supply chain, tenants and communities to move towards net zero greenhouse gas emissions. The business engages with its value chain partners to align on ESG ambitions, and small changes can make a big difference.

The company supports a number of initiatives to drive a reduction in its tenants' emissions, including the increased uptake of renewable energy, energy efficiency upgrades, electrification, and data sharing.

Similarly, IAG is committed to using its knowledge and influence to help accelerate the transition across its value chain, including responsible underwriting, the services it provides to customers, investment decisions, supplier networks, and the products it sources.

It also advocates for greater investment in mitigation such as the building of levies; changes to building codes and land planning so we don't build more homes and buildings in harm's way; and addressing state taxes to immediately help with affordability. Today, Governments collect $8.6bn in taxes from insurance premiums, accounting for around 20 to 40% of a policy's cost. Other issues to be considered include further planned relocation (which in some places is hard but necessary), and the need to bring more trades into the country and allow for more mobility of our trade workforce.

I look forward to further discussion about creating a sustainable future and the important role played by Boards. The implications for national economic and social confidence are significant if we don't act together.

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Thank you Mark, and good morning ladies and gentlemen.

And thank you Uncle Tony Garvey for your welcome. I too acknowledge the Wurundjeri people of the Kulin Nation, and pay my respects to elders past, present and emerging.

The climate change challenge

It is my pleasure to be here today, to discuss the important issue of how we as Board members navigate the increasingly complex world of climate risk.

Both the companies I Chair can attest to the amount of management and Board time that is devoted to understanding the risks and consequences of a changing climate. There are very real impacts to our businesses, our customers and our broader value chains.

IAG's insurance businesses are all about rebuilding and repairing when things go wrong, Stockland is all about building in the right places and building well. So in the domain of climate, they have quite a bit in common.

In fact it's hard to separate insurance and housing. They are both stories about land, construction costs, labour, affordability, rising inequality, and intervention or involvement at all three levels of government.

Let me start with an insurance focus. IAG has a specialised natural perils team that provides us with data on current and future climate-related risks. This slide shows increasing natural perils and reinsurance costs over time. It shines a light on the risks of climate change to our country and the assets owned by households and businesses. Data like this keeps our Board awake at night, and might do the same for most leaders.

Extreme weather events have doubled since 2015, posing significant challenges to individuals, communities and Australia's economic foundations.

Since 2020, Australia has experienced 14 declared catastrophes and 8 significant weather events, resulting in $22.5 billion paid out in insured costs over the last 5 years. This represents a staggering 67 per cent increase compared to the previous 5 years. The floods in northern NSW and South East Queensland in 2022 were the largest insured catastrophe in the world that year.

Last year alone, general insurers in Australia wrote 86 million policies and paid out around $50 billion in claims. Included in that number was $22 billion directed to everyday Australians for motor and home claims.

We've certainly had more benign weather over the last financial year in Australia and also in New Zealand, but there were still six weather events which led to more than 2,500 claims from affected communities.

We are also directly impacted by Global Peril events which exceeded circa $100 billion in the first half of 2025, up from $71 billion in the prior corresponding period, through the cost of our reinsurance with global reinsurance providers.

You will have data from your own businesses that shines a light on the problem through different vectors.

The need for businesses, governments and society to have a coordinated response to the challenges we face as a result of this changing climate has never been more urgent. Only through collaboration can we effectively tackle the underlying risks contributing to climate change, and then manage their impacts to support the safe, secure reputation of Australia, and the wellbeing of our communities.

Culture, climate and community

To my mind, the management of climate risks and opportunities starts with having the right culture.

Successful organisations require operating models that foster and embed ownership of ESG strategy, action and awareness at all levels.

Both Stockland and IAG have high engagement on issues around civilisation and climate. This includes commitment from senior leadership right through the organisation, recognising sustainability priorities and commitments. It is embedded in how we do business.

Stockland's operating model fosters ownership of its ESG strategy across business units and drives delivery across the enterprise. The focus is on building ESG awareness and capability and equipping people with the resources they need to best serve their customers and communities.

IAG's commitment to climate action is driven by its purpose - to make your world a safer place. This guides how it supports its customers and communities to adapt to a changing climate and build disaster resilience.

In May this year, IAG added a Sustainability Faculty to its Learning & Development Academy to provide all its people with the opportunity to understand what sustainability means at IAG, the key areas of focus and how team members can make a difference in their roles.

Culture and capability are critically important.

Leadership considerations

So if culture starts at the top, let's look at what's required of leadership.

At both Stockland and IAG, sustainability - and more specifically climate - are important features on the annual Board program.

For both organisations, Board governance includes:

regular consideration of climate-related risks and opportunities including operational perspectives;
approval of climate strategies and action plans;
ensuring climate-related objectives are hardwired into executive scorecards and remuneration outcomes;
regular management reporting on progress towards stated commitments and targets;
and approval of climate-related disclosures which are being delivered in line with the new reporting regime.

Directors also engage in Education Sessions on emerging trends, given this is a rapidly evolving space and we know we don't have all the answers. This allows for learning and discussion on evolving data sets, changing assumptions, and local and international trends in reporting standards and practices.

We also spend time understanding and appreciating that there are significant dependencies on others for a system-wide approach to decarbonisation.

Climate-related direct risks and opportunities for Stockland and IAG are weighted towards physical risks over transition risks - as you would imagine for an insurance company and a diversified property group. IAG's brands deal with recovery after the impacts of climate change. Stockland is focused on developing and maintaining resilient assets that can withstand and operate with minimal disruption in the face of increasing climate events. Both are working to reduce the impact of controllable emissions.

Both companies also recognise it's not all bricks and mortar, building and rebuilding. There are human/socio psychological consequences of the impact of climate change, as well as social impacts of the transition to a low carbon economy.

For example, the insurance sector plays a pivotal role, by helping individuals and businesses manage the rising costs and impact of weather-related risks.

The rising frequency and severity of weather events, the resulting pressure on supply chains, and the increase in the cost of reinsurance are key drivers of the rise in premiums for customers. Climate change is a force multiplier.

These escalating costs are putting pressure on insurance affordability and availability, especially in high-risk areas. There's a risk that insurance will become inaccessible for people who need it most. Unfortunately, the most vulnerable often bear the brunt of climate volatility owing to their locations, and without adequate insurance, their ability to recover from disasters is severely compromised.

We are advocating for a range of potential solutions, while also ensuring our people are best equipped to help vulnerable customers now, including trauma and empathy training for our front-line people and our suppliers.

Operational excellence and demonstrable action

Looking now to Boards' oversight of strategy as well as the role of management in delivering. We need clear strategies that are embedded in business plans. We need clear accountabilities, operational excellence and demonstrable action.

Both Stockland and IAG are taking considered action and making good progress.

Stockland's ESG strategy is focused on the areas where it can create the most impact through the delivery of innovative and commercially sustainable solutions at scale. Underpinning the strategy are four pillars - decarbonisation, circularity, social impact, and resilience.

Examples of this include its partnership with Energy Bay, which uses renewable energy generated on the rooftops of its logistics and retail assets, to power its commercial buildings and land lease communities - this has an immediate impact on ESG strategy and decarbonisation targets.

In its property developments, Stockland is also using lower carbon materials, like engineered timber to replace steel in land lease community homes, lower carbon concrete across the delivery chain, and electric arc furnace steel - a lower carbon reinforcing steel product.

This year, IAG's refined its climate ambition to: We'll empower choices for a safer place, with three pillars: innovate (in its own operations); educate (leveraging its reach with customers and partners); and advocate (engaging in national discussion on policy change, contributing data and insight).

The company has formed renewable energy agreements across its Australian and New Zealand operations. In Australia, it has entered into a Power Purchase Agreement with CleanPeak Energy with direct linkages to the Grong Grong Solar Farm, via largescale renewable energy certificates, which will supply the equivalent of 20% of IAG's energy demand in Australia over the next six years.

The group has continued transitioning its tool of trade fleet to low-emissions vehicles. As at the end of FY25, nearly half of its Australian fleet and 100% of the New Zealand fleet are hybrid or electric vehicles.

It has exceeded a target to support one million Australians and New Zealanders take action to reduce their risk from natural hazards by FY25 - for example by attending an Emergency-Redi Workshop delivered in conjunction with the Australian Red Cross, or engaging with the Bushire Resilience App.

Of course, it is important that initiatives such as these also meet commercial return requirements.

Transparency and accountability

A few years ago (2023) ASIC Chair Joe Longo said that "ESG is driving the biggest disclosure changes in a generation". And now that we are living through it… he certainly wasn't wrong.