ClimateWise

• 1. Lead in risk analysis
• 2. Inform public policy making
• 3. Support climate awareness among our customers
• 4. Incorporate climate change into our investment strategies
• 5. Reduce the environmental impact of our business
• 6. Report and be accountable.

The world’s climate is changing and the scientific community is overwhelmingly of the view that human behaviour is contributing to this, leading to ongoing significant social and economic impacts. As a result The Co-operative Insurance has joined together with the Association of British Insurers (ABI) and other businesses from the insurance sector to become signatories to a set of six principles called ClimateWise.

The following is a summary of how we have progressed against these principles to date. A fuller report on activities can be found on our website, www.goodwithmoney.co.uk

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1 Lead in risk analysis

In 2007, we worked with the UK Climate Impacts Programme to develop a web based ‘Climate Change Tracker’ that enables people to see the projected impacts of climate change in their region. The Climate Change Tracker can be found at www.climatechangetracker.com

A number of different scientific reports are utilised to support pricing and capital strategy, supported by specialist software to provide information on postcodes, e.g. flooding and weather patterns.

We fund research into climate change issues to help inform and shape our business strategies. Examples are:

• Tyndall Centre for Climate Change’s study 'Living within a carbon budget' which outlined the
  necessary actions the UK must take to reduce its greenhouse gas emissions
• 2007 research by Oxford University’s Environmental Change Institute into the potential to reduce greenhouse gas emissions from the UK housing sector by 80% by 2050.

We offer insurance cover for Hybrid, Liquefied Petroleum Gas and most electrical vehicles, as well as for 'free standing wind powered turbines' and wind turbines attached to a building.

The Co-operative Insurance was a founder member of the Institutional Investors Group on Climate Change (IIGCC) and is a Signatory Investor in the Carbon Disclosure Project.

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2 Inform public policy making

In 2006 and 2007, we worked with Friends of the Earth on its ‘Big Ask’ campaign and called on the Government to introduce a strong Climate Change Bill. The campaign saw over 22,000 customers lobbying their MPs on the Climate Change Bill with every single MP in the country contacted by our customers. We will continue to work on this initiative as the Bill passes through Parliament.

We responded to a consultation on the reform of the Renewables Obligation. We suggested that the obligation should not be banded to the detriment of onshore wind power and that capital grants should be increased to support emerging renewable energy technologies.

We responded to a Defra consultation on the establishment of a Code of Best Practice for carbon offsetting in the UK, wherein it was suggested that the proposed standard was ill-considered in many areas and could endanger a range of African projects. Following submission of written evidence to the House of Commons Environmental Audit Committee’s inquiry into the Voluntary Carbon Offset Market, we gave oral evidence to the Committee in February 2007.

We produced a report on the risks of unsustainable biofuels production, discussing the findings with relevant government and policy advisers, as well as participating in the public debate on the issue via the media and conferences.

Representatives gave presentations on the business’ work on climate change at 24 national conferences and events in 2007 to an estimated combined audience of 4,000 people.

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3 Support climate awareness amongst our customers

Through the launch of new products, and provision of environmental literature with product documentation, we provide customers with information on how to reduce their environmental impact. Examples are:

• We were the first insurer to offer an ecoinsurance motor policy (launched in June 2006). This policy offsets some of the carbon footprint associated with their car usage, and offers a 10% reduction off an ecoinsurance motor premium if the car is in Tax Band A
• A leaflet is inserted into each home insurance new business pack that details how customers can switch to renewable electricity and offers advice on various energy saving tips.

We operate a 'Repair over Replace' policy in our claims process. This includes an initiative to reduce the proportion of new parts used in repairs and, a new plastic repair initiative, resulting in an increased repair to replacement ratio of plastic components. We are presently holding discussions with several suppliers from the vehicle recycling industry regarding the supply of recycled parts.

Other ways in which we communicate on climate change are:

• Our website details our responsible shareholding engagement activities
• Climate change within our press strategy
• Climate related features regularly appear in customer magazines.

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4 Incorporate climate change into our investment strategies

We have integrated the consideration of social and environmental risk into our equity investment decisions. During 2007 a process to specifically recognise climate change, along with other global themes, was formalised. This means that relevant risks and opportunities posed to a company by climate change are now formally considered as part of our stock selection process.

In June 2005, we became the world’s first insurer to launch a customer-led ethical policy, which states, among other things, that Co-operative Insurance will encourage businesses to reduce pollution and their environmental impact, and, in particular:

• Reduce reliance on fossil fuels – which contribute to climate change – and increase their use of renewable energies and energy efficiency.

We will vote against the Annual Report and Accounts resolution at a company’s AGM if we feel their level of disclosure on social and environmental issues is insufficient. During 2007, we also supported nine shareholder resolutions on the environment and climate change.

Our property portfolio is covered by a contract that contains sustainability requirements aiming for a BREEAM rating of 'Very Good'.

A communications strategy for internal and independent financial advisers during 2007 included numerous examples of companies that we hold due to their contribution to tackling climate change. Reports to our pension fund trustees also contain information regarding our position on climate change.

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5 Reduce the environmental impact of our business

As a co-operative business, we operate in a socially and ecologically responsible manner, producing an annual sustainability report that provides an open and honest account of our co-operative, social and ecological performance.

Our sustainability performance is reported against a series of indicators that includes everything from socially responsible investment and financial inclusion to our impact on climate change. We are also the only financial services body worldwide to be certified to the environmental management standard ISO14001 on a company-wide basis.

Since February 2004, we have operated a Sustainable Procurement and Supplier Policy (SPSP), which provides a set of sound sourcing practices to address matters of ethics and the environment for goods and services not for resale. The SPSP commits us to working with suppliers and partners who can make a positive contribution to our pursuit of sustainable development. We will support companies and activities that utilise renewable energies and manage resources efficiently.

Key environmental achievements include:

• Overall our greenhouse gas emissions connected with our premises, transport and refrigerants have reduced by 60% compared with a 2002 baseline
• 99% of the electricity supplied to us was obtained from good quality renewable sources, resulting in 72% reduction in net CO2 emissions from energy consumption
• In 2003, we became the first institutional property investor to transfer all contracts held for our £2bn investment property portfolio to green electricity
• In 2006, The Co-operative Insurance commissioned the UK’s largest Photovoltaics system (350kWp capacity) and installed the UK’s largest micro-wind cluster (19kW capacity)
• In March 2007, we announced our intention to go beyond carbon neutral by offsetting all of our remaining operational and business travel emissions, together with an extra 10% to cover climate change adaptation issues.

The Co-operative Insurance discloses its direct emissions of greenhouse gases within the annual sustainability report of The Co-operative Group. This report is prepared in accordance with the Global Reporting Initiative’s G3 Sustainability Reporting Guidelines, which provide a globally recognised framework for reporting on an organisation’s economic, social and environmental performance.

We also work specifically with suppliers of services to our general insurance claims processes. This activity is concentrated in three areas:

1. Repair over replace. In motor claims, we repair whenever possible rather than replace parts. We anticipate a 7% increase in body panels that are repaired. We have also rolled out a new plastic repair initiative, which will result in an increased
   repair to replacement ratio.
2. Use of recycled parts. We are holding discussions with several suppliers from the vehicle recycling industry regarding the supply of recycled parts.
3. Environmental management. We actively encourage better environmental management, within our motor repair supply chain. Practical examples include a contribution of £121,000 being paid to our approved repairer network during 2007 to ensure correct disposal of waste.

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6 Report and be accountable

As a co-operative business, we believe in ethical values, and these are central to Co-operative Insurance’s and the Group’s long-term strategies. This is reinforced by social responsibility being both one of the five internal business values we operate under and a brand value.

We measure the impact of our operations and physical assets on the environment, and report this publicly on an annual basis in its independently verified Sustainability Report.

This document is a summary of The Co-operative Insurance’s progress against ClimateWise’s principles. The full document is available via The Co-operative Insurance website www.goodwithmoney.co.uk