US insurer issues climate change policy

London, 18 May: American International Group has become the first major US insurer to publish a climate change policy, acknowledging the risk of climate change and promising to take advantage of the commercial opportunities it presents.

The policy includes plans to step up investment in companies and projects that help reduce or mitigate emissions of greenhouse gases, including participating in international carbon markets such as the EU Emissions Trading Scheme.

The insurer is also working to develop and acquire "green real estate", giving as an example a project in Atlanta that is reclaiming contaminated land in the city centre on which offices, stores and residential units will be built.

Plans are under consideration to develop risk management products for the carbon market, include carbon credits in the Dow Jones-AIG Commodity Index, and provide brokerage and greenhouse gas management services to companies.

The policy also draws links between the insurance industry's exposure to the risks of climate change and potentially lucrative attempts to halt it.

"AIG recognises the scientific consensus that climate change is a reality and is likely in large part the result of human activities that have led to increasing concentrations of greenhouse gases in the earth's atmosphere.

"At the same time, market-based environmental policies and potential new investments provide business opportunities for AIG to address the problem. We will pursue these new opportunities where we have the expertise and capacity to do so in ways that mutually benefit AIG, its shareholders, employees, customers, and the global community," the policy states.

AIG has decided not to publicise the launch of its climate change policy, uploading it to its website without any announcement to the press. AIG spokesman Chris Winans said this was because "we really didn't feel that it was appropriate to use an issue like this to call attention to ourselves".

However, Alice LeBlanc, the insurer's New York-based director of climate change programmes, has been flagging aspects of AIG's plans at recent conferences (See Carbon Finance March 2006, page 3). She will be speaking about the initiative at Climate Change & Investment 2006 an Environmental Finance Publications conference.