Skip to content
←Back to glossaryLaw & regulation

ESG criteria

Environmental, social and governance criteria, whose place in underwriting depends on their predictive materiality rather than their moral reach.

Definition

ESG criteria gather the environmental, social and governance factors that a large share of insurers now build into underwriting. Two distinct justifications support their use, and they need untangling. The first rests on values: it is fragile, because it hangs on a political consensus that the 2025 backlash fractured. The second rests on materiality: it holds, because some ESG criteria, the quality of governance or climate exposure, genuinely predict loss. Founding ESG on materiality anchors it in observation, apolitical and unassailable. Founding it on morality exposes the insurer to terrain where its legitimacy is weak. ESG also plays three roles that are often confused: a selection criterion, a source of claims to cover, and an object of the insurer's own conduct.

Its 9 cross-references, woven across the glossary's 18 categories
ESG criteria: Law & regulation glossary illustration, AlgoPolis
Example

Raising the premium of a poorly governed company is a material ESG criterion, predictive of frauds and disputes; refusing to insure an activity out of moral conviction alone belongs to a more fragile register.

Read next
Law & regulationGreenwashingMisleading overstatement of a company's sustainability efforts, now a major ground for litigation and directors' liability claims.Read the entry →FinanceFinancial materialityThe character of a factor that genuinely affects financial performance or risk, as opposed to a mere moral preference.Read the entry →InsuranceClimate transition riskThe economic and financial risk arising from decarbonization, distinct from physical climate risk: write-downs of fossil fuel assets, regulatory changes, liability litigation.Read the entry →
Related terms
Related articles
Stay informed

Follow the research

One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.

No spam, one-click unsubscribe, no data ever sold.