Climate change litigation insurance
Category: Climate and ESG risk · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~3 min read
Category: Climate and ESG risk
Also known as: climate liability insurance, climate litigation risk, transition liability cover
Related concepts: liability climate risk, ESG governance and D&O, climate change insurance
What the exposure looks like
Climate-related legal exposure for UK businesses falls into a few recognisable shapes. There is disclosure and marketing risk: statements about net zero commitments, transition plans or product carbon claims that turn out to be unsupportable, attracting regulatory action, consumer law challenge or shareholder complaint. There is governance risk: allegations that directors failed to assess or manage climate risk in accordance with their duties. There is advisory risk: consultants, engineers, valuers and assessors whose climate-related advice is later said to be negligent. And there is the physical-damage-and-attribution strand, still developing, which seeks to link specific losses to specific emitters.
For most UK commercial buyers the first three matter far more than the fourth. They are also the three that existing wordings were not written with in mind.
How the UK courts have handled it so far
The best-known English attempt to put climate risk directly into directors’ duties failed. In ClientEarth v Shell plc [2023] EWHC 1897 (Ch), the High Court refused permission for a derivative claim against Shell’s directors alleging mismanagement of climate risk. Trower J held that no prima facie case had been shown, emphasising the established principle that it is for directors, acting in good faith, to decide how best to promote the success of the company, and that the court would not substitute its own view of a climate strategy for theirs. The claimant’s very small shareholding was also treated as relevant to its motives.
The most prominent European decision moved in a similar direction on appeal. In the Dutch Milieudefensie v Shell litigation, the Hague Court of Appeal in November 2024 overturned the first-instance order requiring Shell to cut its group emissions by a specified percentage, while not disturbing the broader proposition that companies owe duties in relation to climate. The direction of travel in these two jurisdictions is that courts accept climate as a legitimate subject of corporate duty but are reluctant to set the strategy themselves.
None of that removes the insurance question. Both cases were defended, and defence costs in litigation of that character are substantial whatever the outcome.
Which policy responds
Directors and officers insurance is the primary line for claims against individuals for wrongful acts in managing the company, including derivative claims, shareholder actions and regulatory investigations. Whether it responds depends on the definition of wrongful act, the investigation costs extension, and whether the policy covers costs incurred before any formal claim is made — often the point at which climate matters begin. Entity securities cover, where bought, matters for disclosure-based allegations.
Professional indemnity responds where the insured gave advice: sustainability consultants, energy assessors, engineers modelling flood or overheating risk, valuers pricing transition exposure, and advisers preparing disclosures. General liability rarely responds to pure economic loss or reputational claims, and pollution and gradual-cause exclusions cut across much of the physical strand. Legal expenses and crisis-management extensions are increasingly relevant to the regulatory and reputational element.
Exclusions and wording points to check
Look first for any express climate, ESG or emissions exclusion — these have started to appear, particularly in energy and heavy industry placements, and they are drafted with widely varying breadth. Then check the pollution exclusion, which in many liability wordings is broad enough to catch emissions-related allegations regardless of whether “climate” is mentioned. Then check the conduct exclusions: cover for deliberate acts and for dishonest statements is usually excluded, and the trigger for that exclusion — allegation, admission or final adjudication — determines whether defence costs are funded while the allegation is being fought.
Beyond exclusions, three mechanics matter: whether investigation and pre-claim costs are covered and from what point; how the wording aggregates related matters, since a single disclosure can generate multiple claimants; and territorial and jurisdictional scope, because climate litigation is disproportionately cross-border.
What a business can do about it
Insurance follows governance here more closely than in most classes. Underwriters assessing climate liability exposure look at whether the board sees climate risk regularly and records what it decided, whether public commitments are backed by an evidenced plan, whether marketing and product claims are substantiated before publication, and whether the disclosure process has a proper review chain. A company that can demonstrate those things buys cover more easily and defends allegations more cheaply.
The disclosure discipline is the single highest-leverage item. Most realistic UK climate litigation exposure for a mid-market business is not an attribution claim about emissions; it is a challenge to something the business published about itself.
Why it matters
Climate liability is arriving through ordinary legal routes — directors’ duties, misrepresentation, consumer protection, professional negligence — rather than through a new cause of action. That means it lands on policies already in the programme, and the question at renewal is not “should we buy climate cover” but “what have our existing wordings quietly done about it”. Exclusions are being added faster than most buyers notice.
Frequently asked questions
Is there a specific climate litigation insurance policy?
Not as a standalone product for most UK buyers. Climate-related claims are handled by existing lines — directors and officers, professional indemnity and general liability — so the practical work is checking how those wordings respond and what has been excluded.
Did ClientEarth's claim against Shell's directors succeed?
No. In ClientEarth v Shell plc [2023] EWHC 1897 (Ch) the High Court refused permission to continue the derivative claim, holding that no prima facie case had been shown and that it is for directors acting in good faith to determine how to promote the company's success.
Are climate exclusions common in liability policies?
They are appearing, particularly in energy-exposed and heavy industry placements, and they vary widely in breadth. Broad pollution exclusions can also capture emissions-related allegations even where climate is not mentioned, so both need reading together.
What most affects whether cover is available?
Governance evidence. Underwriters look for board-level oversight of climate risk that is recorded, public commitments supported by an evidenced plan, and a substantiation process for any environmental claim made in marketing or disclosures.
References
Related entries
- Liability climate risk
- Esg governance do
- Climate change insurance
- Directors and officers insurance
- Climate risk advice pi exposure uk
- Ifrs s2 climate disclosure
This entry is part of the Apex Insurance Wiki. It is general insurance information, not legal advice, and states the position as at August 2026. Last reviewed 2026-08-22. Next review: 2027-02-22. Always read the policy wording and take advice on your own facts.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.