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

This annex provides an overview of perspectives from the insurance industry and legal practitioners regarding the risks that climate-related litigation poses to directors and officers (D&O) liability insurance coverage, focusing on increasing litigation risks and potential policy exclusions.

• Fossil fuel companies and utilities are primary targets for climate-related lawsuits, with an expected increase in the number of filings globally as greenhouse gas emissions and climate impacts intensify. Directors and officers face specific risks related to financial disclosures, where shareholders may file derivative suits based on alleged nondisclosures or claim that management failed to properly anticipate and react to climate causes, potentially leading to personal liability for directors and officers.
• There is a significant risk that D&O liability policies may not cover climate-related claims due to 'pollution exclusions.' Some legal experts suggest insurers may use these exclusions to eliminate coverage even for claims concerning financial disclosure. This risk was highlighted by the 2007 U.S. Supreme Court case Massachusetts v. Environmental Protection Agency, which acknowledged greenhouse gas emissions as "pollutants" under the Clean Air Act, potentially allowing insurers to argue that pollution exclusions apply to greenhouse gas emission disclosures.
• The standard of care for directors and officers is evolving due to increased regulator action and shareholder resolutions demanding more climate change-related risk disclosure. This evolution may lead insurers to either refuse D&O coverage to specific companies or severely restrict the provided coverage, with the possibility of a complete climate change exclusion in the future.
• As early as 2006, insurance companies expressed wariness about providing D&O insurance to companies vulnerableS vulnerable to climate change lawsuits. For example, Christopher Walker of Swiss Re suggested that theS ExxonMobil—which accounted for approximately 1% of global carbon emissions and lobbied against greenhouse gas emission reductions—could have climate-related lawsuits excluded from its D&O insurance.

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} }