New York Partner Andrew Otis
shared insight with Law360 on the implementation of an ESG program to manage companies’ climate-related financial risks and lessen the burden on insurers. The article notes companies are scrambling to enhance their environmental, social and governance strategies and recruit qualified board members to prove to insurers that they're worth the risk. Otis adds, with the likelihood of SEC guidance, companies that fail to create ESG programs that include recording and reporting climate change impact could open themselves up to litigation.
"For a board that failed to adequately assess climate risk, D&O coverage could be implicated," Otis said. "Right now, I see insurance companies using ESG programs as a way to identify better performers, to either offer them discounts or more capacity."
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