In terms of exposure to professional indemnity claims relating to ESG, part of the challenge for insurance brokers is to determine what ESG information is relevant to the risk being placed, the level of detail required to satisfy the duty to disclose, and how best to communicate relevant information both to insurers and the insured. (Credit: Murrstock/Adobe Stock) In terms of exposure to professional indemnity claims relating to ESG, part of the challenge for insurance brokers is to determine what ESG information is relevant to the risk being placed, the level of detail required to satisfy the duty to disclose, and how best to communicate relevant information both to insurers and the insured. (Credit: Murrstock/Adobe Stock)

Environmental, societal and governance (ESG) factors are now high on the agenda for all businesses, shaping corporate strategy and reporting. ESG has moved beyond a “soft” set of notional aspirations, initially aligned to corporate social responsibility, to become a distinct driver of corporate board and shareholder behaviors, as well as influencing supplier and buyer decision-making.

ESG factors include: (i) environmental (such as extreme weather, GHG, or greenhouse gas, emissions and carbonization, waste management, rights of indigenous communities); (ii) social (workplace culture, employee relations, modern slavery); and (iii) governance (broad structures, shareholders’ rights and relationships, audit arrangements and solvency). There is a growing body of legislation and regulation in both developed and emerging economies, the aim of which is to give teeth to the broader objectives of ESG.

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