The ESG Police Have Arrived. Is Your Insurance Ready?

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While ESG initiatives are widely seen as good for business as well as the planet, recently their risks have also become more salient, as the SEC has cracked down on companies and investment vehicles alleged not to have followed through on implementing their stated ESG commitments. As ESG risks escalate, so do concerns as to whether they will be covered by insurance. This session will examine D&O insurance coverage for ESG liabilities, focusing on the broad D&O coverage grant, as well as on potential pitfalls in claims and how policyholders may avoid them. These include the conduct exclusion (which should depend on final adjudication); the pollution exclusion (which should not apply when a suit is focused on alleged misrepresentation, not on the pollution itself); and exclusions for civil fines and penalties, the reach of which depends both on policy language and the nature of the enforcement action and penalty. We will look at policy language to be sought or avoided by policyholders, as well as at court decisions focused on these areas of dispute.