Climate litigation on the rise
Source: Middle East Insurance Review | Nov 2023
Climate activists are targeting more companies and governments for their failures to address their contribution to climate change and this is likely to increase the risk of climate litigation according to a new insight analysis by Gallagher Re.
An increasing range of insurance clients are seeing their risk profiles altered as small but a growing number of cases have — or could — set important legal precedents that make companies and their directors liable for climate-related harms or failures of disclosure. Insurers are exposed where companies have policies that cover them against litigation costs and risks.
The insight article The Rise of Climate Litigation: A manageable risk or a potential catastrophe? said that climate change litigation is no longer confined to the traditional ‘dirty’ industries, noting that greenwashing claims are a rising concern and as a result, the risk profiles of a much broader range of insureds could be altered fundamentally.
There has been a small but growing number of cases that either have, or could, set important legal precedents – establishing that companies and their directors can be sued and held liable for climate-related harms or failures of disclosure according to Gallagher Re.
It said, “From the perspective of the (re)insurance industry, entire portfolios of insurance business may have to be reviewed and reappraised in light of climate campaigners’ expansion of their legal ambitions.” The risks of such legal action is increasing as global temperatures rise.
The number of climate change-related legal actions has increased sharply, reaching a peak in 2021, and despite a small reduction in 2022, the overall direction of travel seems clear.
Gallagher Re chief science officer Steve Bowen said, “As we move closer to the Paris Agreement targets on greenhouse gas reductions, there’s a definite sense that the level of activism may increase as concerns rise about reaching the 1.5 degrees C benchmark temperature threshold above pre-industrial levels.” M