Avoiding Emerging Climate Change Pitfalls: What Directors And Officers Need To Consider

Corporate officers and directors face an array of risks arising from climate change. The most salient at this point would appear to involve disclosure obligations and flooding associated with rising sea levels – including liability associated with such flooding. Coastal flooding reportedly is on the rise and is likely to impact directly the approximately 3.7 million Americans who live within a few feet of high tide, as well as all sorts of related business activities. Other risks that have not yet matured may loom large in the future. The predicted shift to alternative energy and away from petroleum, while likely to bring dramatic change at some point, has not as yet given rise to a clear slate of potential losses. In addition, the handful of nuisance claims related to industrial emissions have so far failed to gain real traction, but that could change.

All of these exposures include liability risks that may prove very expensive to defend. Managing these risks therefore entails ensuring that the broad duty to defend, a staple of virtually all liability insurance policies, is not compromised by creative new interpretations of policy exclusions. Below, we consider some key climate change cases, including those in which the duty to defend has been at issue, and how those decisions may affect the duty to defend in climate-related litigation going forward.