The existence or absence of sound corporate governance has always been a factor when underwriting a D & O risk.

Sound governance includes sound ESG practices.

It is becoming standard for D & O underwriters to undertake an ESG analysis as part of the underwriting process so that underwriters can achieve as much comfort as possible before releasing terms.

In markets in both the United States of America and Europe, ESG-related litigation risks are increasing with activist investors and other stakeholders challenging organisations and their directors and executives in court about their ESG pledges.

In other jurisdictions insureds have seen an exposure and litigation based on their own voluntary ESG reporting.

An oil giant has for example been sued by ClientEarth arguing that its directors are personally liable for the company’s failure to meet its Paris climate agreement goals.