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.”
PITTSBURGH (PRWEB) September 14, 2021
With corporate ESG activities drawing heightened scrutiny and posing both legal and reputational risks when they fail to meet expectations, Steel City Re has launched a new ESG insurance product designed to provide Boards of Directors with much-needed protection. The policy pays for extraordinary “strategic managerial and governance actions signaling corporate values” that may arise in the context of an ESG crisis.
Steel City Re has been the leading provider of parametric insurance solutions for reputation risk for more than a decade. It developed ESG Insurance specifically to help manage the preeminent reputational issue facing corporate boards today.
Under pressure to commit publicly to measurable goals in the areas of environmental stewardship, social justice, and dutiful governance (ESG), some companies are setting those goals without the operational or governance processes in place to make them a reality. Even well-governed firms can be caught up in charges of “greenwashing.” Recent litigation has made it clear that both investors and regulators have the right to consider these ESG statements as material and boards are being targeted in courts of law as well as courts of public opinion.
“The race to set ever higher ESG goals has made accomplishing those goals more challenging and the risk of failure – often very public failure – more serious,” said Steel City Re CEO Nir Kossovsky. “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.”
Like Steel City Re’s flagship enterprise solution, ESG Insurance is a value-enhancing package of services designed to forge reputation resilience for Board of Directors through parametric reputation insurances and risk management advisory services built on a framework of behavioral economics. The policy offers payments for wide range of costs a firm may incur on behalf of the board or individual directors in pursuit of reputation resilience and restoration in the context of ESG issues. The policy is available only to firms whose reputation risk governance, leadership and controls have been vetted through outside underwriting.
ESG Insurance from Steel City Re, combined with reputation insurance for the enterprise, provide a compelling risk management tool, particularly in connection with the type of 21st Century risks that are not well managed by traditional risk management operations. Integrated with enterprise risk management, they help companies prepare “the day before” for “the day after” a crisis. Because they imply reputation resilience, Steel City Re’s solutions are ideal for clients that are using insurances strategically to capture a reputation premium from financially sophisticated stakeholders such as institutional investors, bond raters and regulators.
A synthetic index of reputational value called the RVM Index is the parameter underpinning Steel City Re’s insurance solutions. Relying on a seven-million-event experience base, Steel City Re calculates the value(s) of the one or more parametric trigger(s) best matching the clients’ choices. Both parametric policies pay when the insured’s RVM Index value dips below a trigger value for 20-weeks following a publicly recognized adverse ESG event, or more broadly, an event in the areas of ethics, innovation, safety, security, sustainability, or quality.