AIG – Address the Impacts of Climate Change (2003 – 2004)
Outcome: Omitted by SEC
RESOLVED: The shareholders request that the Board of Directors prepare a report, at reasonable cost and omitting proprietary information, made available to shareholders by September 30, 2004, providing a comprehensive assessment of AIG’s strategies to address the impacts of climate change on its business.
- We believe the human contribution to climate change has become widely accepted among the scientific community. Legislation, regulation, litigation, and other responses seem likely.
- “In global warming, we are facing an enormous risk to the U.S. economy and retirement finds that Wall Street has so far chosen to ignore.” (Philip Angelides, Treasurer of California) Some of the nation’s largest pension funds have formed the Investor Network on Climate Risk to address “the potential financial upheaval from climate change.” (New York Times, 11/22/2003)
- In November 2003, as part of the Carbon Disclosure Project, 87 institutional investors representing over $9 trillion in assets wrote the 500 largest companies by market capitalization requesting relevant information concerning greenhouse gas emissions. According to the Project Coordinator, “There are potential business risks and opportunities related to actions stemming from climate change that have implications for the value of shareholdings in corporations worldwide.”
- Munich Re’s 2002 Annual Report states that climate related catastrophes are the greatest cost to the insurance industry. Of the 35 largest natural catastrophes costing insurers over €1 billion, only two were not climate related. Climate change may increase erratic and extreme weather events, creating serious environmental and public health impacts.
- Swiss Re sees inaction on climate change as a possible liability for directors and officers (D&O), and is considering potential coverage implications for insured companies that do not address climate change risks. As D&O liability insurance is a significant part of AIG’s business, we believe investors should know how it is addressing this issue.
- We believe proactive behavior in the European Union, Japan and elsewhere may put U.S. companies at a competitive disadvantage. Of 84 signatories to the United Nations Environmental Programme Financial Initiatives Insurance Industry Initiative, only three are North American companies. AIG is not a signatory. (http://unepfi.net/iii/index.htm, 11/2003)
- AIG was one of the founding members of the Risk Prediction Initiative (RPI). RPI, which works to forecast climate changes, does not support using historical records to assess probabilities for future natural catastrophes. RPI believes this, in part, because “human activities may be perturbing global climate.” (http://www.bbsr.edu/rpi/, 11/2003) AIG no longer sponsors RPI.
- “Catastrophe insurers can’t simply extrapolate past experience. If there is truly ‘global warming,’ for example, the odds would shift, since tiny changes in atmospheric conditions can produce momentous changes in weather patterns.” (Warren Buffet, Chairman, Berkshire Hathaway, 1993)
- We believe many of AIG’s business divisions face climate risk. For example, AIG Aviation, AIG Global Energy, and AIG World Source may be impacted by state, national and international regulations. AIG Environmental, Lexington Insurance Company, AIG Reinsurance Advisors, and Stowe Mountain Resort may be impacted by erratic and extreme weather events.