The AGM this morning was quite a woke-fest. It began with a 5...

The AGM this morning was quite a woke-fest. It began with a 5 minute-long ''Welcome to Country''. Tell me we’re not paying for this stuff by the word!  Chairman Tom Pockett then spent one-quarter of his address discussing ESG. Here is some of what he said - from an unedited transcript - if you can bear it:

-Management of ESG issues is governed by a Board approved social and environmental framework which was updated this year to strengthen ESG governance. To improve the measurement and visibility of ESG, we have introduced a 5% sustainability metric in the FY '24 Group balance scorecard. This year, the Board approved a refresh of our responsible investment policy. We now aim to remove from our investment portfolio companies that derive more than 10% of their revenue from fossil fuel production or extraction. These expanded fossil fuel prohibitions were fully implemented by 30 June 23.
-We also have commitments around responsible underwriting to reduce our exposure to entities predominantly in the business of fossil fuel production or ore extraction. As at 30 June, these entities have contributed only $250,000 in gross written premium, and we remain committed to phasing out these by 30 June '24.
-In regard to Board diversity, this year, we uplifted our gender diversity target to have a 40% to 60% of the Board -- either gender on the Board. Our previous target was to have no less than 30% of each gender. The percentage of women on our Board currently sits at 27%, up from last year's 20%. And while this is good, we remain actively focused on recruiting more female directors as we work to achieve our revised gender diversity target.

You have to wonder how much extra profit IAG could make by staying invested in fossil fuel-related companies (within its investment portfolio) and underwriting insurance for these same companies. Neglecting fossil fuel producers surely leaves enormous amounts of money on the table that rival insurers will gobble up. Yet the chairman apparently feels the balance is right: “it's important that companies like IAG help corporates move towards alternative energy sources, and that's the way we've structured our investment portfolio…we're pretty comfortable with that.” Wow. As for gender diversity quotas, where to begin?

Chairman Pockett did reiterate the financial goals of ‘delivering a 15% insurance margin and a 13% to 14% return on equity on a sort of through-the-cycle basis’, so perhaps not all is lost. But with all the talk of reducing fossil fuel exposure and lifting gender diversity targets, it simply doesn’t feel like shareholder-oriented capital management is high or even middling on the board’s agenda.

General insurers continue to benefit from a steadily increasing premia (at least in line with CPI) and rising interest rates, which increase what they earn on their legal reserves. It’s primarily for these reasons that I like IAG, something of a valuation laggard vs. Suncorp and QBE. But the board’s growing addiction to ESG and woke-ism is making it harder and harder to stay the course.