Companies need to focus on developing a clean energy strategy: the impacts of not having one are no longer just reputational. Insurers are increasingly looking for a demonstrable commitment to environmentally friendly production. Searching questions should be asked about how their clients’ businesses are dealing with environmental concerns. The insurance industry also needs to explore how companies are monitoring and managing risk in these areas. This should be part of every D&O renewal meeting discussion.

Climate change-related litigation is on the rise, and the organisations named in court filings are from an increasingly wide range of industry sectors. Within this wider legislative trend, there is also a growing incidence of cases brought against firms for engaging in so-called ‘greenwashing’. This can range from accusations that firms are making unsubstantiated or misleading claims about the environmentally friendly credentials of their products or services, to making highly selective disclosures about the environmental impacts of their business practices, to misleading and/or overstated claims about their performance in the context of halting climate change (sometimes referred to as ‘climate-washing’)

With so much external focus on environmental risks, we feel it is important to support clients who are actively managing such risks. By introducing a pioneering underwriting syndicate in Lloyd’s, which focuses exclusively on offering additional capacity to businesses that perform well against ESG metrics, we hope to highlight what the insurance industry can offer to its customers by helping them manage environmental as well as social and governance risks and the potentially costly implications of greenwashing and other climate-related litigation.

Our focus is on helping clients transition to a greener future. That means supporting them to take the often complex and expensive steps needed, mindful that decisions taken today can have long-term consequences. So, it is heartening to see that trust in insurers is increasing, as it also confers responsibility. Insurers can use their position as facilitators of transition and enablers of progress – but we also have a responsibility to encourage resilience and to challenge clients to develop their clean energy strategies, emphasising both the commercial advantages and reputational risks of failure to keep pace.