The insurance sector is keen to work with the property industry in designing and building more resilient communities to reduce the impact of extreme weather events, according to Ramana James, IAG’s head of group shared value.
“How do we design and build our infrastructure, but also our homes and streets and everything, in a way that reduces the economic and social impact of these events, which will continue to occur for us here in Australia?” he said.
“What we are excited about as an insurance industry, and working at IAG, is how do we partner with and work with the property sector and industry because together we could probably create more impact than if we did it alone.”
IAG is one of the founding members of the Australian Business Roundtable for Disaster Resilience & Safer Communities, which was established in 2012. Last month the roundtable released two reports, The Economic Cost of the Social Impact of Natural Disasters and Building Resilient Infrastructure, which delivered the first economic analysis of the social impact of natural disasters, and the benefits of ensuring infrastructure assets are more resilient to extreme weather events.
True impact much greater
The Economic Cost of the Social Impact of Natural Disasters revealed the true cost of natural disasters was at least 50 per cent greater than previously estimated. The modelling from Deloitte Access Economics showed that last year’s spate of natural disasters left a $9 billion damage bill – 0.6 per cent of gross domestic product. The economic impact of extreme events is expected to reach an average of $33 billion a year by 2050.
The roundtable called for government and industry to improve infrastructure planning processes and specifically adopt the principles for resilience in their decision making. Other recommendations included:
- Improving incentives through policy change and funding arrangements that ensure disaster resilience is incorporated into infrastructure planning
- Investing to strengthen the technical capacity of practitioners to identify, analyse and evaluate the costs and benefits of resilience options
Managing IAG’s climate change impacts
IAG has established a natural perils research team within the organisation, which has done a lot of work around flood mapping and, according to Mr James, has some of the strongest data in the country.
“That research we use to input into our pricing and our approach but we also look to make some of that data public as well to elevate the capacity of communities and others to think about climate change.”
The company has committed to and is delivering carbon neutrality and is making a significant effort to purchase its carbon offsets from the regions in which it operates and allocating them to programs and projects that support the resilience of communities.
“So it could be, for example, improving riparian corridors and reducing the impact of floods, or supporting Indigenous farming practices in WA that reduces the impact of drought and fires,” Mr James said. “We are trying to see how we can – through even our offsets – make a circular loop and tie back into resilience.”
Other initiatives include:
- motor vehicle insurance premium discounts for low emission vehicles
- requiring the company’s national smash repair network to take part in the EcoSmash program, which assesses environmental performance in regards to health and safety, water management, pollutants, energy use and recycling of materials, and provides tools and support to improve performance.
The shift to social sustainability
Mr James, who took on the newly created shared value role in 2014, established the corporate responsibility function at Vodafone Australia in 2003 and led environmental practice across 26 countries for Vodafone Group during two UK-based secondments. He transitioned to the property industry and spent more than five years at Stockland where he led a team responsible for sustainability strategy and the introduction of shared value across commercial property, residential development and retirement living.
“Some of those global issues like climate change, and therefore energy efficiency, are always going to be consistent no matter what industry you work in,” he said. “What I learnt from working at both Vodafone in telecommunications and Stockland in property was this breadth of skills and capabilities to work across multiple issues and deal with many complex stakeholders and groups.”
During his time at Stockland Mr James enjoyed the shift from environmental sustainability to social sustainability. While the company is still managing and driving green buildings, it began thinking about the social opportunities and impacts of the built form.
“I think Stockland, as well as others in the industry, have done a great job of thinking about not just environmental performance but actually social performance as well, and how we make sure that communities and buildings are built and designed in a way that support those communities to thrive,” he said.
This encompasses visibility, walkability, community structure, connectivity and resilience.
“At IAG a big focus for us is how do we ensure communities are well connected? Because when they are well connected and have good social capital, they’ll be resilient,” Mr James said.
Inspiring shared value
To enable Australian communities benefit from shared value, Mr James said organisations could embed it to their strategy, business planning, financial remuneration and reward.
“How we get government, corporations and not for profits taking on shared value is by capturing their hearts with the stories and emotions but also by driving outcomes through measurements and demonstrations of the value that has been created.”
Sense of energy in sustainability circles
Mr James believes we are seeing real momentum and movement across Australia in regards to businesses embracing sustainability.
“I think these things sometimes go through peaks and troughs but it feels to me, particularly off the back of some global movements at the moment, like there is some real momentum.”