by Julie Goodridge

Good morning. My name is Julie Goodridge and I’m the CEO of NorthStar Asset Management in Boston. I’m here today to present our shareholder resolution asking AIG to adopt a policy which respects the human right to water.

We initially filed this resolution at AIG because our company owns Utilities, Inc, a water utility doing business in 17 states, primarily in the southern part of this country. Seven of the states in which Utilities Inc operates suffered severe droughts in 2007. And now, as we watch our company assets fall victim to the subprime debacle, we are quite concerned about our general risk exposure related to climate change, specifically the limited scope of our policy on water.

Water is often called the next oil. We’ve all seen the risks associated with procuring and delivering oil: environmental risks and pollution, warring over resource control, and business risks of wildly fluctuating commodity prices. Although we would argue that water is NOT a commodity, we strongly believe that similar risks exist for water though the consequences of pollution, inaccessibility, and global changes in water regulation.

Responsible risk management requires first and foremost understanding and identification of what constitutes a significant business risk. The most egregious, yet common, failure of risk management has been the omission from consideration (and therefore management) of risks that cannot be priced by financial markets. Much will be written about the failure of financial firms to anticipate problems in the (obscure) market for subprime loans and the subsequent turmoil that engulfed the credit markets. One lesson learned from episodic failures in financial markets (the 1998 LTCM crisis, the 1997 Asian financial crisis, and the U.S. Savings and Loan crisis of the 1980s and 1990s) is that the greatest risks are all too often not quantified by existing systems. Accountability, therefore, requires that management evaluate issues within the larger context of cause and effect.

This larger context with regard to water now includes incorporating the risks associated with climate change such as droughts and floods in areas previously free from such events. We are asking AIG to include in this larger context the risks associated with fresh water scarcity and the legal frameworks that many countries and municipalities are enacting to ensure water supplies are not threatened.

In our company’s statement in opposition of our proposal, the board states “implementation of this proposal would not provide any meaningful benefit to AIG and its shareholders and would be an unnecessary use of funds.”

We disagree.

AIG’s Policy and Programs on Environment and Climate Change identifies adequate water supply for human consumption and agriculture as a risk caused by climate change. Recognizing this risk is a great start and we commend our company’s leadership, but it is not sufficient. Our board has a fiduciary obligation to reduce liability risks.

Last week a South African High Court declared that the human right to water was guaranteed to all South African citizens under both South African law and international law.

National constitutions in eight countries have or are developing human right to water provisions in their Constitutions. AIG operates in five of these countries. The Indian courts have recognized it through the right to life and France recognizes this right in their National Water bill.

Through our company’s risk management process, it would be imprudent of our board to ignore the risk of human rights violations, including the human right to water, as a potential liability.

AIG states in the same policy that our company “will continue to dedicate resources to the development of market-based solutions that address climate change and other environmental issues as they arise, including enhancement and allocation of scarce water resources, which will likely become more serious, if the human population continues to grow and projected climate change impacts occur.”

As our CEO stated earlier, AIG’s record losses over the last two quarters were due in part to economic factors beyond his control: the credit crunch, the weakening housing market and stock-market volatility. As an investment advisor focused on responsible investing, I have been seriously concerned for nearly a decade about the risky, and often unethical, mortgage vehicles out there in the marketplace. As I attend annual meeting after annual meeting this year where the credit crisis is blamed for most of the company’s woes, I keep wondering how is it that the managements of huge companies like AIG could not see these risks? How is that possible?

We fear that addressing climate change and other environmental issues as they arise, rather than anticipating the potential affect on our company’s profits, will force us down a path of risky behavior greater than the subprime crisis we are facing today.

The United Nations defines the human right to water as all people’s right to safe, sufficient, acceptable, physically accessible, and affordable water for personal and domestic use. Developing, defining and implementing a human right to water at our company will place us at a competitive advantage.

Unlike oil, water is not merely a commodity, it is absolutely necessary to sustain all living things.

Every one of us in the world depends on access to safe, sufficient, affordable water. In many countries, such as Tanzania, lack of sufficient, safe water resources require women to often walk a mile to the nearest source, which is often polluted.

In Ecuador, over 100 children contracted Hepatitis A when contaminated water was supplied to their school.

According to the Detroit Water and Sewage Department (DWSD), between July 1, 2001 and June 30, 2002, the utility cut off water to 40,752 residences in the Detroit area affecting 15% customers. Senior citizens, people with disabilities, women with young children, and ex-welfare recipients were victims of these cut-offs.

Indeed, who doesn’t need water? We all do. This resolution asks that we all realize for one moment that water isn’t like anything else. It’s more important than oil or gold. Water is life.

Please vote FOR this Proposal.