3 tips for public companies to avoid common ESG mistakes and liabilities: Risk and insurance

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Christine Schneider is SVP Underwriting, Head of Public Commercial D&O for Argo Pro. She can be reached at [email protected]

As Senior Vice President of Underwriting for Public Commercial D&Os at Argo Pro, I often endorse boards that approve environmental, social and governance (ESG) programs. Companies that do not take their ESG efforts seriously or make statements that they cannot support may expose themselves to liability.

Here are three ways to implement an ESG program that will have a positive impact, satisfy shareholders and comply with regulations.

1) Be authentic and actionable in your ESG initiatives

  • Integrate ESG into your corporate governance. By integrating ESG principles into your organization with board-level support, you can help your entire team deliver on your commitments.
  • Carry out a materiality assessment. An assessment allows you to assess and prioritize ESG issues and explain them to your stakeholders.
  • Don’t promise ESG results that you don’t plan to deliver. So-called “greenwashing” can damage your organization’s reputation and lead to claims against your business.
  • Set clear and definable goals. A detailed plan with specific performance metrics will help you align your organization, measure your progress, and provide transparency.

2) Accurately report your ESG measurements

ESG reporting guidelines vary by industry and geography. The US Securities and Exchange Commission is working on proposals to standardize regulations, ensure clarity and strengthen enforcement mechanisms such as the Climate Task Force and ESG.

Publicly listed companies may soon be required to:

  • Disclose climate-related risksincluding the material impact of severe weather and its impact on your business.
  • Share a risk management plan which identifies, assesses and manages climate-related risks and integrates them into the overall risk management strategy.
  • Provide details on the impact of climate-related events, including estimates and assumption of physical and transition risks.

To ensure you communicate transparently with your shareholders, consider establishing an ESG committee and monitoring evolving reporting requirements.

For example, Argo’s annual ESG report describes and measures specific company goals, including reducing paper waste and minimizing electricity consumption. Our corporate sustainability task force meets several times a year to address climate risks.

3) Understand the risks and opportunities associated with climate change

The cost of extreme weather conditions driven by climate change reached $170 billion in 2021. Weather events will continue to affect the global economy of the future, creating challenges across all industries. Investors want the companies they invest in to mitigate the damage.

You can have a positive impact on the future and reassure shareholders and other stakeholders by:

  • Be aware of the risks.
  • Set clear goals.
  • Implement a risk management strategy.
  • Continuously improve your ESG efforts.

For a more in-depth look at what we do, learn more about Argo’s ESG efforts or view Argo’s 2022 ESG Report. &

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