SAN DIEGO — Climate change-related risks are a growing area of exposure for directors and officers and their insurers, panelists said Thursday at the Professional Liability Underwriting Society’s 35th annual conference.
Even without disclosure requirements, efforts have already been made to litigate and sue “bad actors” in matters related to climate change, said William P. Kelly, senior vice president and U.S. associate head of management and professional liability at Canopius Group Ltd.
There have already been some examples of “high-profile” climate change-related issues, said Maurice Pesso, partner at Kennedys Law LLP.
Recent cases include those filed by attorneys general in New York and Massachusetts against Exxon Mobil Corp. for its climate-related disclosures; the Volkswagen emissions scandal; and the case against Vale Mining Co. after a mine collapse in which more than 270 people died, Mr. Peso.
“There are D&O-related climate issues out there. The question is, are we going to have a lot more?”; he said.
A new climate-related case, written about by Kevin LaCroix, executive vice president in Beachwood, Ohio, for RT ProExec, a division of RT Specialty LLC, in The D&O Diary, involves a hardwood flooring company, Enviva Partners, the panelists said.
According to The D&O Diary report on this case, a securities class action lawsuit was filed Nov. 3 against Enviva after a short-seller report alleged the company engaged in so-called greenwashing and the stock fell.
Greenwashing describes when a company or organization promotes its operations, products or initiatives as more environmentally friendly than they actually are.
“We will continue to see these things,” said Mr. Peso.
In the boardroom, the climate has gone from something that was “not a big deal” to a matter in the spotlight and there is a lot more exposure, said Lenin Lopez, vice president, corporate securities attorney at Woodruff Sawyer & Co.
“It is not just shareholders that boards need to worry about. It’s activist investors, employees and other stakeholders, customers,” Lopez said.
Disclosures by energy companies about wildfire risks look a lot different now than they used to, for example, he said. The climate disclosures must be accurate, he said.
For insurers, the question is how to price the exposure without a wealth of facts, Mr. Kelly. “How do we calculate what our exposure is?” he said.