Why the Floodgates Are Opening on Climate Litigation

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In less than a decade, climate litigation has moved from being a niche phenomenon in the legal world to a major potential risk for corporations and their senior leaders.

The raw numbers chart this shift. In 2017, there were 884 climate litigation cases in 24 countries. By 2020, these numbers ballooned to 1,550 cases in 38 countries, and as of May 2025, there were nearly 3,000 cases spanning 60 countries, according to the Grantham Research Institute on Climate Change and the Environment.

The 2015 Paris Climate Agreement was a key catalyst in this process. With it came a raft of regulations and reporting requirements, upping the ante in terms of the net zero progress that was expected, along with heightened levels of scrutiny.

All this is made clear by research carried out by the Gallagher Research Centre and Imperial College's Grantham Research Institute. The study looks at rising legal action due to perceived failings by governments and corporations and the insurance implications.

"When poor practices come to light, companies face backlash — not just from customers and stakeholders — but also from activist groups concerned with environmental and social issues," says Steve Bear, executive director, Financial and Professional Risks at Gallagher. "The reputational damage can impact share prices and lead to shareholder class actions."

What is commonly referred to as "event-driven litigation" is a growing exposure for firms and their directors, particularly in highly regulated industry sectors.

Company exposure grows as regulation takes hold

Most of the early climate litigation cases were directed at national governments. In the years following, as more corporations set out their own sustainability targets and became subject to climate legislation, businesses themselves have become frequent defendants in legal action.

Around the world, mandatory reporting and disclosure requirements have come into operation in recent years, including across the EU, UK, US, Canada and Australia.

"There have been so many cases brought in different jurisdictions that it is now very much on the radar of executives," says Wynne Lawrence, a partner at global law firm Clyde & Co. "Certainly, the process of disclosure is becoming so baked-in, through reporting standards and reporting obligations, that there's more and more scrutiny being paid to it."

Greenwashing emerges as a key concern for multiple industries

The US has played host to most climate litigation cases so far, with 164 out of 226 new cases filed in 2024.¹ It's also the jurisdiction where "anti-ESG" (environmental, social and governance) backlash has been strongest.

"The rise of anti-ESG litigation could potentially lead to increased liability risk across different parts of an organization," observes Matt Harrison, global head of Casualty Research at Gallagher Re.

"In one jurisdiction, you're being asked to report and disclose against certain ESG standards. In another jurisdiction, you're actively being targeted and prevented from doing that. There's so much scope to get it wrong."

Cases can take various forms, but in recent years, claimants most commonly seek redress for stranded assets or greenwashing, the latter of which is of particular concern. Greenwashing is where a company is accused of overstating its environmentally friendly — or "green" — credentials.

"Ask any company, 'What's the top sustainability risk that you're facing this year?' and they're probably going to tell you it's greenwashing," says Julien Beaulieu, policy researcher at the Grantham Institute.

Greenwashing is a major concern for large firms in sectors at the forefront of decarbonization efforts — such as oil and gas, and aviation — due to the high levels of scrutiny from a range of stakeholders.

However, as pressure grows to announce and meet ever more stringent climate commitments, a wide range of other firms have been subject to claims — from meal-kit companies to cruise operators.

For climate-related litigation cases, companies from at least 14 different sectors of the economy have been affected, including financial services providers.

Directors and officers liability grows

Alongside claims aimed at companies as a whole, shareholders, communities or individuals can hold company directors personally liable for failing to account for climate risks.

Though no climate-related criminal cases have been launched against corporate leaders, activist groups in the US have produced prosecution memos based on "reckless endangerment" charges, alleging the role of polluters in fueling natural disasters that put lives at risk. The trend could open the door to criminal test cases against individual directors in the future.

An approach that targets individuals as well as companies is particularly common in "polluter pays" cases, which have been aided by advances in climate attribution science in the past decade or so.

For instance, research from the Carbon Majors Database shows that 71% of global greenhouse gas emissions since 1988 can be linked to 100 active fossil fuel producers. In court, such findings are used by plaintiffs to establish and apportion blame.²

From an insurance coverage perspective, claims experience could impact coverage terms and conditions.

"When I first started in this field, around 90% of D&O claims arose from financial losses. Today, the landscape has shifted," says Gallagher's Bear. "The balance of claims is now approximately 50-50, with losses arising from the increased expectations of corporations."

To help insurers navigate this landscape, Grantham has developed four climate litigation scenarios:

• Securities class actions and derivative actions related to failure to disclose climate risks
• Greenwashing-related consumer and investor claims
• Stranded asset litigation against D&O in the fossil fuel sector
• Infrastructure-related liability claims linked to climate adaptation failures

The scenarios provide a useful framework for companies, their senior managers and risk professionals as they work through their exposures and stress-test how D&O coverage would respond.

The results should highlight areas of potential weakness, helping boards strengthen their governance and reporting frameworks, and ensuring they're prepared and well protected for any future claims that arise.

Published December 2025