Global Directors’ and Officers’ Survey Report 2026 - Climate

Historically, climate regulation has been seen as the dominant component of environmental, social and governance (ESG)-related corporate governance. However, in 2026, climate change has, for some, fallen out of favor among policymakers in some regions.

In Europe, the Omnibus I package dramatically narrowed the scope of the Corporate Sustainability Reporting Directive (CSRD), with reporting obligations now applying only to companies with more than 1,000 employees and €450 million in turnover — a sharp contraction from the original ambition of 250 employees and €50 million in turnover.

The Corporate Sustainability Due Diligence Directive (CS3D) was similarly curtailed, with the employee threshold increasing fivefold from 1,000 to 5,000 employees and the revenue threshold more than trebling from €450 million to €1.5 billion. Significantly, the requirement that companies publish climate transition plans was removed from CS3D entirely, and the civil liability regime was dropped. The Carbon Border Adjustment Mechanism (CBAM) also saw a dilution, with a new 50-tonne de minimis threshold, extended deadlines and reduced certificate requirements.

The UK has moved in the same direction. The government accepted all 47 recommendations from the Fingleton Report (the UK Government’s nuclear regulatory review), signaling a decisive pivot toward regulatory efficiency over precautionary breadth. Environmental Impact Assessments are to be replaced by Environmental Outcomes Reports by December 2027, under the explicit principle if a regulatory requirement adds cost and delay without meaningful benefit, it should not proceed.

Across the Atlantic, the retreat has been more abrupt. The Securities and Exchange Commission’s (SEC’s) climate disclosure rules that were once the potential centerpiece of a new era of mandatory sustainability reporting in the US were dismantled outright. US companies now operate in an environment where federal climate disclosure obligations have effectively been eliminated.

Taken together, these developments mark the most significant single-year rollback in climate-related corporate regulation the D&O insurance market has experienced. Yet, throughout the survey, outliers to this trend remain, as those at the forefront of the impacts of climate change, both geographically and financially, continue to prioritize climate change-related risks.

Where does climate sit in the survey rankings?

In the 2026 survey, 47% of respondents rated climate change as an ‘extremely important’ or ‘very important’ risk for directors and officers, a decline of five percentage points from 52% in our 2025 report, placing it 25th out of 32 risks in the overall ranking.

Across all four environmental risk categories tracked in the survey, the direction of travel is uniformly downward. For the third year running, pollution is ranked higher than climate change, leading at 49% (down five percentage points). Nature and biodiversity sits at 43% (down four percentage points), and per- and polyfluoroalkyl substances (PFAS) exposure at 35% (down five percentage points). The environmental risk cluster as a whole has lost between four and five percentage points year on year.

The downward trajectory

The trajectory over the past three survey cycles tells a clear story. In 2023, climate change was the number one risk for directors and officers in GB and the number one risk in Australasia. In 2024, 55% of respondents flagged climate change as a significant D&O risk. This was already a notable figure, but one that has since eroded steadily, although it was a top seven risk in Asia and the Middle East. By 2025, that figure had slipped to 52% as the initial momentum of COP28 and the early wave of CSRD implementation began to fade, and a sense that mandatory sustainability disclosure was an inevitability gave way to political pragmatism. It was no longer in any country’s top seven risks.

The 2026 result of 47% confirms the decline is accelerating rather than leveling off. The drop from 2024 to 2025 was three percentage points; from 2025 to 2026, it widened to five. That cumulative eight-point fall in two years has pushed climate change below the 50% threshold for the first time since 2023, meaning fewer than half of respondents now consider it a significant D&O risk. At this rate, climate change risks may, at least in the near term, fall even deeper into the bottom third of the D&O risk register.

That pollution has now ranked above climate change for three consecutive years isn't because the perception of pollution risk is itself growing — it too is declining — but because the perception of climate change as a risk for directors and officers is declining faster. It's possible traditional environmental liabilities, increasingly litigated in Europe, the UK and further afield, with their established legal precedents and clear causation chains, feel more tangible to respondents than the diffuse, forward-looking nature of climate exposure.

What worries those directors and officers who are concerned about climate?

Among the 47% who do rate climate change as significant, the survey breaks concern down into four sub-categories. Regulatory breach tops the list at 34%, followed by physical risk at 26%, transition risk at 22% and civil litigation or third-party claims at 19%.

There is a notable juxtaposition in regulatory breach holding the top position given the current regulatory landscape globally. At a moment when climate regulation is being rolled back, more respondents cite regulatory non-compliance as their primary climate concern than any other category. In part, the explanation may lie in the unevenness of the rollback itself: different jurisdictions are enforcing climate-related regulations with varying degrees of severity and scrutiny, and the rules remaining in force differ markedly in scope and application. A multinational company may simultaneously face reduced obligations in the EU, near-zero federal requirements in the US, and tightening standards in other markets. Such inconsistencies generate both business and legal risks across multiple jurisdictions.

Another factor is that while the west may be retreating from its focus on climate reporting, which isn’t the case everywhere. Australia only introduced its mandatory climate-related financial reporting obligations last year.

Physical risk, at 26%, is perhaps the most nuanced category from a D&O perspective. While extreme weather events, supply chain disruptions, and asset exposure in vulnerable geographies continue to intensify, they have not yet generated a significant body of personal liability claims against directors and officers.

Civil litigation at 19% is the lowest-ranked climate sub-risk as despite the expansion of the litigation funding market and the broadening of potential claimants beyond traditional environmental groups to include shareholders, pension funds and consumer advocacy bodies, very few claims against directors and officers personally have materialized.

Cases that have been brought have largely been unsuccessful (particularly in the UK), suggesting the risk of personal litigation against boards is, for the time being, lower than was initially anticipated when climate litigation first began to accelerate.

Greenwashing exposure remains a watch item, as the gap between corporate commitments made during the ESG peak and actual delivery becomes measurable (with many of those self-imposed deadlines fast approaching in 2030). For now, the data suggests respondents are calibrating this risk in line with the current legal landscape.

Geography and scale

The regional data reveals sharp divergences. The Middle East stands out as a dramatic outlier: 84% of respondents in the region rate climate change as important, and it ranks fourth among all D&O risks there — the only region where climate appears in the top seven.

This finding reflects a dual pressure: extreme physical exposure in a region already experiencing severe heat stress and water scarcity, combined with the existential economic stakes of energy transition for hydrocarbon-dependent economies. The Middle East is also represented by a much smaller proportion of the overall responses than most other regions (at 3%, it's the same as Africa).

Asia (60%) and Africa (59%) comprise a second tier, both comfortably above the global average. Latin America sits at 54%, while the Pacific (43%) and North America (42%) cluster around the mid-range, which is perhaps surprisingly low for the latter given the scale of US corporate climate commitments in recent years.

Europe, at 39%, ranks below the global average, despite the EU’s historical leadership on climate regulation, consistent with the Omnibus reforms dampening regulatory pressure. The UK anchors the bottom at just 31%, which is a striking result that may reflect the UK government’s deregulatory pivot and the broader political retreat from net zero.

There is also a clear correlation between company size and the risk rating. Organizations with revenues of over $50 million rate climate change materially higher than smaller ones, signaling greater regulatory exposure across multiple jurisdictions, more visible public commitments, stronger investor scrutiny, leading to a higher probability of facing climate-related litigation.

WTW sees insurers reflecting these trends. Smaller companies in economic sectors with limited exposure to climate risks are often not being asked to provide insurers with climate-related information for their underwriting and pricing needs at all.

By sector, energy and utilities lead decisively at 70%, more than 20 percentage points above the global average and the only industry where climate change approaches the upper tier of the risk register.

Industrial companies follow at 52%, consistent with their direct exposure to emissions regulation and carbon pricing mechanisms such as the CBAM. Insurers are still requesting our clients in both sectors provide data about their emissions and pollutant materials they hold as either assets or waste, such as carbon or methane emissions, coal assets and tailing storage facilities. Insurers seem to be particularly interested in coal exposure, with some limiting coverage for organizations with revenues coming from coal above certain thresholds.

Transportation and retail (49%) and healthcare (48%) cluster just above the global average, while finance and insurance sits below at 44%, a notable finding given the sector’s central role in channeling capital toward transition. Services trails at 41%, the lowest of all sectors surveyed.

Climate on the board agenda

Perhaps the most notable result of the 2026 survey isn't about the magnitude of the perception of climate change as a risk for directors and officers, but about how boards are responding to it. Only 9% of respondents report their board ranks climate risk in its top three priorities for current time allocation. Just 16% say more board time should be devoted to climate, and only 2% of respondents ranked this as the number one risk most material to their business. Given the broader context — the political retreat, the limited personal litigation to date and the competing demands on board attention — these figures are perhaps unsurprising.

That last figure — 48% believing their board has the necessary skills for climate oversight — deserves particular attention. Across all 14 categories assessed for board competence in the survey, climate risk and transition scores the lowest. Fewer than half of respondents believe their directors possess the expertise to oversee this area effectively.

This is worth watching, even if the immediate litigation risk to directors hasn’t materialized yet in the way that some had anticipated. When climate risk was primarily a matter of reporting obligations under frameworks like the CSRD or the SEC rules, boards could reasonably manage it through compliance functions and external advisors. But if exposure does shift toward physical risk and operational resilience, it can't be managed through governance structures alone, and the skills gap may become more material over time.

This dynamic is compounded by the soft D&O insurance market. With pricing under sustained competitive pressure, insurers have limited commercial incentive to push climate risk up the underwriting agenda. The result is that climate governance receives less external challenge than it might otherwise. This position might feel comfortable now, but one that could prove less so if the risk environment shifts.

Looking ahead

The political retreat from climate regulation is real, broad-based and accelerating. But political salience and underlying risk exposure aren't the same thing. Physical climate impacts continue to intensify, the litigation funding ecosystem is growing and the gap between corporate commitments and delivery is becoming measurable.

That said, the risk of litigation against directors themselves hasn't yet materialized: very few claims against directors have been brought to date (and the highest profile of those failed). Directors may, therefore, be right to feel the immediate litigation threat to them personally is lower than was initially anticipated.

The greater residual risk may lie not in personal liability but in regulatory enforcement, reputational damage and the governance gap that opens when boards deprioritize climate before the underlying exposures have actually receded.

When it comes to D&O insurance, insurers’ attitudes to climate change have changed dramatically over the last few years. Where once many companies could expect questions from underwriters, unless you're in specific exposed sectors, this is now unlikely to be a focus area for D&O underwriters.