Steel City Re has launched a new insurance product centred around environmental, social and governance (ESG) activities to provide protection to boards of directors. As a provider of parametric insurance solutions, Steel City Re emphasises the legal and reputational risk of failing to meet ESG requirements and expectations. The company addresses emerging risks and ESG compliance through reputation insurances and captives for risk retention and transfer. Steel City Re highlights that recent litigation has demonstrated both investors and regulators are authorised to consider such ESG statements as material, causing corporate boards to be targeted by both courts of law and public opinion. The product is therefore designed to help manage pre-emptive reputational risks facing corporate boards that are under pressure to publicly commit to ESG objectives. Specifically, the new policy covers “strategic managerial and governance actions signaling corporate values” that may arise in an ESG crisis, where an organisation may openly set targets without the necessary operational or governance processes in place to meet them. Described as a “value-enhancing package of services”, ESG Insurance provides parametric reputation insurances and risk management advisory services based on a framework of behavioural economics and underpinned by a synthetic index of reputational value, the RVM Index. Nir Kossovsky, CEO of Steel City Re, comments: “The race to set ever higher ESG goals has made accomplishing those goals more challenging, and the risk of (often very public) failure more serious.” “In many cases, ESG has become central to companies’ reputations and the adequacy of board oversight will put board members in the crosshairs when regulatory, investor, rating agency and media scrutiny are brought to bear.”
