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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, there have already been attempts to litigate and sue “bad actors” on issues related to climate change, said William P. Kelly, senior vice president and U.S. deputy head of management & professional liability lines at Canopius Group Ltd.
There have already been some examples of “high-profile” climate change-related matters, 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. following a mine collapse in which more than 270 people died, Mr. Pesso said.
“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 R-T Specialty LLC, in The D&O Diary, concerns a wood flooring company, Enviva Partners, 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 its stock dropped.
Greenwashing describes when a company or organization markets its operations, products or initiatives as more environmentally friendly than they actually are.
“We’re going to keep seeing these things,” Mr. Pesso said.
In boardrooms, climate has transitioned from something that “was not a big deal” to an issue in the spotlight and there’s a lot more exposure, said Lenin Lopez, vice president, corporate securities attorney, at Woodruff Sawyer & Co.
“It’s not just shareholders that boards need to worry about. It’s activist investors, employees and other stakeholders, customers,” Mr. Lopez said.
Disclosures from energy companies around the risks of wildfires look a lot different now than they used to, for example, he said. Climate disclosures have to be accurate, he said.
For underwriters, the question is how to price the exposure without a body of facts, Mr. Kelly said. “How do we calculate what our exposure is?” he said.