Potential implications of climate‐related litigation on D&O liability policies

The document examines the increasing risk of climate-related lawsuits against fossil fuel companies and utilities, focusing on how these risks impact directors and officers (D&O) liability insurance. It highlights the potential for shareholder and derivative suits based on financial non-disclosures and the evolving standard of care for corporate leadership. A central concern is the use of 'pollution exclusions' by insurers to deny coverage for climate-related claims, which could leave directors and officers personally liable for damages.

• Fossil fuel companies and utilities are primary targets for climate-related lawsuits, with the volume of such litigation expected to grow globally as greenhouse gas emissions and climate impacts increase.
• Corporate directors and officers face increasing legal risks related to climate change financial disclosures, which may lead to shareholder or derivative suits if the company suffers losses or penalties due to a failure to plan for climate risks.
• There is a significant risk that D&O liability policies will not cover climate-related litigation because insurers may apply 'pollution exclusions' to these claims, even when the lawsuits concern financial disclosure rather than physical pollution.
• The evolving standard of care for directors and officers, driven by increased regulator action and shareholder resolutions demanding climate risk disclosure, is expected to have major implications for D&O insurance coverage.
• Insurance providers have shown a willingness to restrict or refuse coverage for companies perceived as high-risk due to climate change, such as 'carbon majors' like ExxonMobil.

APA

Center for International Environmental Law (n.d.). Potential implications of climate‐related litigation on D&O liability policies. https://www.ciel.org/Publications/Carbon_Annex B_final_19May2014.pdf

Chicago

Center for International Environmental Law. Potential implications of climate‐related litigation on D&O liability policies. n.d. https://www.ciel.org/Publications/Carbon_Annex B_final_19May2014.pdf.

Wikipedia

{{cite report |author=Center for International Environmental Law |title=Potential implications of climate‐related litigation on D&O liability policies |url=https://www.ciel.org/Publications/Carbon_Annex B_final_19May2014.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centerforinternationalenvironmentallawndpotential, author = {{Center for International Environmental Law}}, title = {{Potential implications of climate‐related litigation on D\&O liability policies}}, institution = {Center for International Environmental Law}, url = {https://www.ciel.org/Publications/Carbon_Annex B_final_19May2014.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }