IMPACT OF ESG ON D&O LIABILITY
R&C: To what extent is environmental, social and governance (ESG) risk a rising concern for directors & officers (D&Os) in today’s business world? What factors are making D&Os a target for ESG claims?
McGurk: Environmental, social and governance (ESG) is a key operational risk for companies, encompassing, for example, the diversity of the board, policies regarding child labour and modern slavery, the #MeToo movement and the environment. We are seeing an increase in litigation against companies and directors in relation to ESG. Regarding diversity and inclusion, the 2018 UK Corporate Governance Code requires companies’ annual reports to include descriptions of their boards’ policies on diversity, including any objectives and commentary on progress with regard to these objectives. In relation to the environment, climate risk is becoming increasingly important for directors and officers (D&Os) as governments and regulators start implementing the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD). There is increased scrutiny by regulators, shareholders, employees and consumers on what companies are doing to address climate change and the progress they are making.
Jul-Sep 2023 Issue
Aviva