‘The world is going through rapid changes economically and environmentally and the need to bring Directors of insurance entities to speed on these developments to enable sustainability.’
This was part of the establishing points in the address of the Commissioner for Insurance, National Insurance CommissionSunday Thomas at the 2022 Directors Conference in Lagos where the theme was “Transforming the Insurance Industry Through ESG Principles: Directors’ Roles.”
The charge is important for several reasons, first the timing, coming at the end of the year is a clear indication that the focus is for the coming year, 2023 and a lot of responsibilities rests with directors of insurance companies not to fall short of ESG global goals.
Thomas took the stage but not alone, he beckons on the directors to come up higher and ne takes the next step to open the the ESG book he wants them to digest and execute not only for the nation’s business good but to conform to global ESG demands. “We must take cognisance of the fact that industrialisation and economic development have given rise to a wide spectrum of environment externalities and social impacts bringing to the fore issues such as board structure, shareholders rights, business ethics, risk management, incentives and execution compensation.”
Escalating the ESG mandate for todays corporate world, NAICOM helmsman said, “for businesses to continually develop, they must take into consideration the community in which they operate, ensure consistent value to customers, maintain the highest standards of governance and ethics, and mitigate its overall impact on the environment.”
ESG he said now resonates with different segments of business including sustainable finance and he boxed it in. “Sustainable finance which is a creation of economic value through the provision of financial services now integrates environmental, social and governance (ESG) considerations for the lasting benefit of stakeholders and the society at large. The objective is to achieve a balance in the pursuit of economic prosperity with environmental protection and social development.”
He builds further on sustainable finance, “In the financial services industry, there is an increasing realisation that sustainable practices have a positive potential to save costs, increase revenues, reduce risks, develop human capital and improve access to finance thus, ignoring sustainability issues increases legal and reputational risk.”
As germane as the ESG issues are, its not trending in global business as much as it should command and this create a risk for sustainable business. Both at home and abroad regulator and world finance institutions are calling for urgent compliance with ESG.
AGCS Allianz Global Corporate & Specialty in its current report highlighted ESG issues and the global head of financial lines, Vanessa Maxwell said “inadequate or non-compliant response to ESG issues are all among the key risk trends in D&O insurance space.”
Explaining more on the that covered the globe, Vanessa “ESG related liabilities – whether it is inadequate action on climate change or diversity and inclusion issues – can potentially become significant exposures for D&O insurance as well.”
AGCS exploration report gave a global picture of cyber risk going into 2023 and directors responsibilities and liabilities Rishi Baviskar, global cyber experts leader at AGCS’ Risk Consulting team, takes this on and harps on focus on directors: “Around the world, directors have already been called to account, including in derivative and direct litigation, due to their alleged failures to institute appropriate governance and protection against cyber security risk.
“Major breaches experienced by publicly traded firms have damaged investor confidence, causing share price drops, and thereby becoming ‘events’, which again can give rise to costly class action securities litigation. Boards therefore need to initiate and implement a cyber risk management structure that covers the entire organisation.”
