New insurance solution to protect against ESG ‘greenwashing’
Steel City Re, a provider of parametric insurance solutions for reputation risk, has launched a new environmental, social and governance (ESG) insurance product designed to protect boards of directors.
The policy pays for extraordinary “strategic managerial and governance actions signaling corporate values” that may arise in the context of an ESG crisis.
Steel City Re noted that under public pressure some companies are setting ESG goals without the operational or governance processes in place to make them a reality. Even well-governed firms can be caught up in charges of “greenwashing”.
Recent litigation has made it clear that both investors and regulators have the right to consider these ESG statements as material and boards are being targeted in courts of law as well as courts of public opinion.
The company has therefore developed a new solution to help manage the preeminent reputational issue facing corporate boards today. The policy offers payments for wide range of costs a firm may incur on behalf of the board or individual directors in pursuit of reputation resilience and restoration in the context of ESG issues. The policy is available only to firms whose reputation risk governance, leadership and controls have been vetted through outside underwriting.
“The race to set ever higher ESG goals has made accomplishing those goals more challenging and the risk of failure – often very public failure – more serious,” said Steel City Re CEO Nir Kossovsky (pictured). “In many cases, ESG has become central to companies’ reputations and the adequacy of board oversight will put board members in the crosshairs when regulatory, investor, rating agency and media scrutiny are brought to bear.”
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