D&O insurance to counter ESG litigation – new issues for insurers and policyholders

[Gunnar Larson]

*Obtaining insurance coverage in this climate of activist shareholders*

The evolving ESG landscape requires companies to plan for claims that did
not exist just a few years ago. Shareholders are actively requiring
<https://corpgov.law.harvard.edu/2021/05/29/shareholder-activism-and-esg-what-comes-next-and-how-to-prepare/>
boards
to be more transparent and responsive to ESG issues, and regulators are
enforcing new disclosure requirements
<https://www.reuters.com/legal/legalindustry/esg-regulatory-landscape-creates-commercial-pitfalls-2021-11-19/>.
Sometimes disclosure alone is not enough: businesses are scrutinized by
shareholders and regulatory entities for underestimating their
environmental impact, or over promising their efforts to minimize climate
change contributions, known as greenwashing.

Even companies doing their best in ESG governance face the risk of
shareholder and regulatory litigation. These risks can be addressed by
directors and officers insurance coverage, which generally protects
companies, their directors, managers and employees against claims for a
“wrongful act.” Unless excluded as a specific type of claim, companies
routinely look to their D&O policies to address shareholder claims and
defray the costs of regulatory investigations.

https://www.policyholderperspective.com/2022/03/articles/insurance-general/do-insurance-to-counter-esg-litigation-new-issues-for-insurers-and-policyholders/
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