ESG & Climate Disclosure for Insurers 2026: Navigating the Fragmented Regulatory Landscape

From tracking the evolution of ESG and climate disclosure requirements over the past several years, one observation stands out above all others: the regulatory landscape in 2026 is simultaneously more complex and more fragmented than at any point in the past decade. What once appeared to be a trajectory toward global convergence, anchored by the Task Force on Climate-related Financial Disclosures (TCFD) framework and the promise of harmonized standards, has fractured into a patchwork of overlapping, sometimes contradictory, requirements that vary by jurisdiction, company size, and political climate.

For insurers and the actuaries who serve them, this fragmentation creates a uniquely challenging environment. The SEC has abandoned its climate disclosure rule. California's SB 253 and SB 261 are advancing despite ongoing litigation. The NAIC's TCFD-aligned Climate Risk Disclosure Survey now covers approximately 85% of the U.S. insurance market across 27 participating states. Globally, 21 jurisdictions have adopted the ISSB's sustainability standards on either a voluntary or mandatory basis. The EU has dramatically scaled back its Corporate Sustainability Reporting Directive through the Omnibus simplification package. And a wave of anti-ESG legislation across Republican-led states has created legal constraints that directly conflict with disclosure mandates elsewhere.

This article examines each of these regulatory threads, their specific implications for insurance companies, and what actuaries need to understand as climate disclosure moves from voluntary aspiration to operational reality.

The U.S. Federal Vacuum: SEC Climate Rule Collapse

The most consequential development in the U.S. climate disclosure landscape occurred on March 27, 2025, when the SEC voted to end its defense of the climate-related disclosure rules it had adopted just one year earlier. Acting Chairman Mark T. Uyeda characterized the move as ceasing the Commission's involvement in defending "costly and unnecessarily intrusive climate change disclosure rules."

The backstory matters for context. In March 2024, the SEC adopted final rules requiring public companies to disclose material climate-related risks, including greenhouse gas emissions, governance practices, and the financial effects of severe weather events. Legal challenges were immediate and numerous. Multiple states and business groups filed petitions, consolidated before the Eighth Circuit Court of Appeals in Iowa v. SEC. The SEC voluntarily stayed the rule's implementation as litigation progressed.

Under the new administration, the Commission took the extraordinary step of withdrawing its defense without formally rescinding the rule. In July 2025, the SEC filed a status report stating it did not intend to "review or reconsider the Rules at this time," while simultaneously asking the court to proceed and decide the case on the merits, without Commission participation. In September 2025, the Eighth Circuit rejected this approach and placed the case in abeyance, effectively telling the SEC to either defend the rules or initiate a formal rulemaking process to rescind them.

As of February 2026, the SEC climate rule remains technically on the books but stayed and undefended: a regulatory zombie that creates no current obligations but has not been formally eliminated. For publicly traded insurers, this means no federal climate disclosure mandate exists, though the Commission's existing 2010 guidance on material climate risk disclosure technically remains in effect.

The practical consequence for the insurance industry is that the federal-level vacuum has pushed disclosure obligations downward to state regulators and outward to international frameworks, creating the very fragmentation that a unified federal rule was supposed to prevent.

California's Climate Disclosure Laws: SB 253 and SB 261

Into the federal vacuum, California has stepped with the most ambitious state-level climate disclosure requirements in the nation. Two laws signed by Governor Newsom in October 2023 are now entering their implementation phase, with direct implications for thousands of companies, though notably with a carve-out for insurers.

SB 253 (Climate Corporate Data Accountability Act) requires U.S.-based companies with more than $1 billion in annual revenue that conduct business in California to publicly disclose their Scope 1 and Scope 2 greenhouse gas emissions beginning in 2026, with Scope 3 value chain emissions required starting in 2027. The California Air Resources Board (CARB) has proposed a first-year reporting deadline of August 10, 2026. Reports must conform to the Greenhouse Gas Protocol, and independent third-party assurance will be phased in, beginning with limited assurance and escalating to reasonable assurance by 2030.

SB 261 (Climate-Related Financial Risk Act) requires U.S.-based companies with more than $500 million in annual revenue to publish biennial reports on climate-related financial risks aligned with the TCFD framework or its successor, the ISSB's IFRS S2 standard. The initial statutory deadline was January 1, 2026, but the U.S. Court of Appeals for the Ninth Circuit issued an injunction on November 18, 2025, temporarily halting enforcement of SB 261 pending appeal. Oral arguments took place on January 9, 2026, with no ruling issued as of this writing. CARB has confirmed it will not enforce the January 1 deadline and will set an alternate reporting date after the appeal is resolved. Approximately 100 entities have voluntarily submitted reports through CARB's public docket, which opened December 1, 2025.

Critically, SB 253 is unaffected by the injunction and remains fully in force.

Insurance Company Exemptions. For actuaries and insurance professionals, a key detail is that both laws contain insurance-specific exemptions. SB 261 excludes business entities regulated by the California Department of Insurance or entities in the business of insurance in any other state. CARB has proposed extending a similar exclusion to SB 253. This means the laws primarily affect non-insurance corporations, though insurers with non-insurance subsidiaries or affiliates may still have reporting obligations, and the data generated by covered entities across the economy will flow into insurers' risk assessment processes.

Despite enforcement uncertainty, CARB's rulemaking continues. Draft regulations covering entity scoping, revenue definitions, and fee structures were published in December 2025, with a public hearing scheduled for February 26, 2026. CARB has emphasized enforcement discretion for good-faith first-year submissions, signaling a pragmatic approach to initial compliance.

The NAIC Climate Risk Disclosure Survey: 85% Market Coverage

While the SEC climate rule has stalled, state insurance regulators have quietly built one of the most comprehensive climate disclosure regimes in the U.S. financial sector. The NAIC's Climate Risk Disclosure Survey, originally adopted in 2010, was overhauled in April 2022 to align with the TCFD framework, making the NAIC the first U.S. financial regulator to adopt TCFD-aligned disclosure requirements.

The survey now operates across 27 participating states and territories: Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, New York, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virginia, Washington, and Wisconsin. This coalition covers approximately 85% of the U.S. insurance market by direct premium written. All licensed insurers in participating states with at least $100 million in direct written premium are required to submit survey responses. For reporting year 2024, responses were due August 29, 2025.

The Ceres 2025 Progress Report, analyzing responses from 526 insurance groups representing over 1,723 individual companies, reveals a mixed but improving picture. Across the TCFD's four pillars, 99% of insurers reported on risk management processes, 97% on strategy, and 87% on governance. However, only 29% disclosed metrics and targets related to climate risks, virtually unchanged from prior years and the area Ceres identifies as an "urgent concern." Just 28% of insurers provided disclosures across all four TCFD pillars.

A supplementary Ceres analysis released in August 2025 highlighted what it termed a "measurement gap": among the 45 insurance groups providing the most comprehensive disclosures, 87% had established climate targets, but none provided the emissions targets necessary to track progress toward those commitments. Use of climate scenario analysis increased 28% year-over-year, with 148 insurance groups incorporating it in their 2023 reporting, a positive trend that reflects growing analytical maturity.

Patterns we have observed across multiple reporting cycles suggest that the gap between governance-level awareness and operational measurement capability represents the most significant challenge for the industry. Insurers have become adept at describing their climate risk governance structures and strategic considerations, but translating those frameworks into quantifiable metrics, particularly around portfolio-level emissions, claims attribution, and adaptation investment effectiveness, remains the frontier.

NAIC Climate Scenario Interrogatories in RBC

Perhaps the most consequential NAIC action for practicing actuaries is the adoption in August 2024 of new climate scenario interrogatories within the P&C risk-based capital (RBC) framework. These interrogatories, effective for year-end 2024, 2025, and 2026 filings, require property and casualty insurers to disclose climate-conditioned catastrophe exposure for hurricane and wildfire perils.

The requirement offers insurers two disclosure approaches: a time-based option using commercial catastrophe modelers' climate-conditioned catalogs to project losses in 2040 and 2050, or a frequency-based option assuming a 50% increase in hurricane frequency (Category 3+) and wildfire frequency. Insurers must report probable maximum losses (PMLs) at the 1-in-50, 1-in-100, 1-in-250, 1-in-500, and 1-in-1,000 year return periods under climate-adjusted conditions.

The NAIC has been explicit that these disclosures are informational only and will not be used to develop new risk-based capital charges or calculate additional RBC requirements. All figures are reported confidentially. However, as Gallagher Re noted in its December 2024 briefing, state regulators may use the information to engage with companies, particularly those already in a vulnerable solvency position, regarding the impact of climate change on their underwriting strategies.

The practical challenge for actuaries is significant. Many companies do not currently use climate-conditioned catastrophe catalogs in their standard catastrophe modeling workflows. The industry trade associations initially opposed the requirement on cost and utility grounds, proposing a simpler alternative that would have applied a flat 50% frequency increase to existing PMLs. While the compromise adopted by the Financial Condition (E) Committee offers both approaches, the more sophisticated climate-conditioned catalog option is what regulators ultimately prefer to see.

For actuaries working on catastrophe modeling and capital adequacy, this requirement represents a meaningful extension of the profession's scope, requiring engagement with forward-looking climate science that extends well beyond traditional actuarial time horizons. The three-year sunset provides a defined period during which regulators will assess the value of the data collected before deciding whether to extend or expand the requirements.

The Global Landscape: ISSB Standards Gain Traction

While the U.S. federal climate disclosure effort has stalled, the global trajectory continues to accelerate. The International Sustainability Standards Board's (ISSB) two disclosure standards, IFRS S1 (General Requirements for Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), have achieved remarkable adoption momentum since their publication in June 2023.

As of January 1, 2026, 21 jurisdictions have adopted the ISSB standards on either a voluntary or mandatory basis, with reporting start dates between January 1, 2024, and January 1, 2026. Mandatory reporting became effective at the start of 2026 in Chile, Qatar, Mexico, and Brazil (for publicly listed entities). An additional 16 jurisdictions are planning future adoption. The IFRS Foundation has published jurisdictional profiles for 17 jurisdictions, with 14 targeting full adoption and two adopting climate requirements only.

In the Asia-Pacific region, Hong Kong has required Main Board issuers to report climate-related disclosures based on IFRS S2 on a "comply or explain" basis since January 1, 2025, with large-cap issuers moving to mandatory disclosure from January 1, 2026. Japan, Singapore, and Australia have all aligned their disclosure frameworks with the ISSB standards. Pakistan adopted mandatory reporting for large listed companies as of July 2025. China published a Ministry of Finance climate standard based on IFRS S2 in December 2025, available for voluntary use pending decisions on mandatory scope.

The ISSB has also proposed targeted amendments to ease adoption. In April 2025, the board proposed removing certain Scope 3 emissions categories from IFRS S2 requirements for financial institutions, specifically facilitated emissions from investment banking, insurance-underwriting-linked emissions, and derivatives. This relief recognizes the methodological complexity of measuring financed and insured emissions, which remains a significant challenge for actuaries and risk managers.

For global and multinational insurers, the proliferation of ISSB-aligned requirements means that climate disclosure is no longer optional regardless of the U.S. federal posture. Carriers operating across jurisdictions face an increasingly complex compliance matrix that requires alignment with IFRS S2 at minimum, supplemented by jurisdiction-specific requirements in each market where they operate.

EU CSRD Simplification: The Omnibus Pullback

The European Union's approach to sustainability disclosure has undergone a dramatic reversal. After years of building the most comprehensive corporate sustainability reporting framework in the world, the Corporate Sustainability Reporting Directive (CSRD) and its European Sustainability Reporting Standards (ESRS), the EU executed a sharp pivot in 2025 toward simplification.

On February 26, 2025, the European Commission adopted the Omnibus Simplification Package, motivated by concerns that regulatory burden was undermining EU competitiveness. The package proposed reducing the number of companies subject to CSRD by approximately 80%, limiting reporting obligations to EU companies with more than 1,000 employees and net turnover exceeding €450 million. A "stop-the-clock" directive postponed reporting requirements by two years for Wave 2 companies (originally reporting for financial year 2025) and Wave 3 companies (originally reporting for 2026), including certain captive insurance and reinsurance entities.

On December 9, 2025, the European Parliament and Council reached a provisional agreement on the Omnibus package. Key changes include dramatically reducing mandatory ESRS data points from 1,073 to approximately 320 (a 70% cut), removing the requirement for sector-specific standards, limiting assurance to "limited" rather than escalating to "reasonable," and increasing CSDDD thresholds to companies with 5,000+ employees and €1.5 billion net turnover. The agreement was adopted by Parliament on December 16, 2025, with publication in the Official Journal expected around March 2026.

For European insurers, the practical effect is significant. Financial holding undertakings are now explicitly exempt from CSRD scope. Wave 1 companies that no longer meet revised thresholds can be exempted from reporting for 2025 and 2026, subject to national transposition. The simplified ESRS, expected to be adopted via delegated act within six months of finalization, will apply from financial year 2027, the first reporting year for Wave 2 entities under the delayed timeline.

The EU's pullback does not mean sustainability reporting is disappearing in Europe. Rather, it reflects a recalibration toward proportionality, focusing obligations on the largest enterprises while reducing the trickle-down burden on smaller companies in the value chain. However, as some investors and environmental groups have noted, the simplification risks sending mixed signals about the EU's commitment to the low-carbon transition at a time when climate impacts are accelerating.

The Anti-ESG Backlash: Political Polarization Meets Actuarial Practice

Perhaps the most disorienting development for actuaries navigating the ESG landscape is the emergence of a politically driven anti-ESG movement that explicitly conflicts with climate risk management practices. According to a Pleiades Strategy report published in July 2025, 106 anti-ESG bills were introduced across 32 U.S. states in 2025, with 11 passed by legislatures and nine signed into law. As of September 2025, 192 anti-ESG bills had been proposed that year, compared to only 76 bills supporting ESG initiatives.

These laws take several forms. Anti-boycott statutes restrict state entities from investing in or contracting with financial institutions deemed to be "boycotting" fossil fuel, firearms, timber, or other targeted industries. Anti-discrimination laws prohibit the use of ESG scores in lending and business decisions. Proxy advisory restrictions, like Texas SB 2337 signed in June 2025, prohibit proxy advisors from making recommendations based on ESG or DEI factors. Some states have passed legislation requiring fiduciaries to consider only "pecuniary" factors in investment decisions, effectively constraining consideration of climate transition risk.

However, this movement has encountered significant legal pushback. In a landmark ruling on February 4, 2026, a federal district court declared Texas' SB 13 (the original 2021 anti-ESG law prohibiting state investments in companies that "boycott" fossil fuels) unconstitutional on First and Fourteenth Amendment grounds. The court found the law "facially overbroad" and permanently barred the state from enforcing it. The ruling noted that SB 13 had already cost Texas hundreds of millions of dollars through constrained investment options.

For actuaries, the anti-ESG movement creates a genuine tension. Sound actuarial practice requires consideration of all material risks, including climate-related physical risks and transition risks. Actuarial Standard of Practice (ASOP) No. 46 on risk evaluation in enterprise risk management explicitly directs actuaries to consider risks that could materially affect an organization. Excluding climate risk from investment or underwriting analysis because it carries an "ESG" label is at odds with the profession's risk-based analytical framework.

The American Academy of Actuaries' Climate Change Joint Committee has published guidance acknowledging this tension, noting that ESG factors relevant to insurers include physical climate risks, transition risks from shifting to a low-carbon economy, and stranded asset risks in investment portfolios. The Society of Actuaries' Product Development Section has identified alternative assets, including energy transition infrastructure, as a research focus for 2025. These professional bodies treat climate risk as a legitimate actuarial concern, regardless of the political framing.

What This Means for Actuaries: Skills, Roles, and Career Implications

The convergence of climate disclosure requirements, regulatory fragmentation, and political polarization creates both challenges and opportunities for the actuarial profession. From tracking how these dynamics have evolved over recent years, several practical implications emerge.

Expanding skill requirements. Climate-related disclosure work requires actuaries to engage with data types and time horizons that extend well beyond traditional practice. The NAIC's RBC climate scenario interrogatories demand familiarity with climate-conditioned catastrophe modeling extending to 2040 and 2050, far beyond the one-to-five year horizon typical of reserving and pricing work. Actuaries increasingly need working knowledge of greenhouse gas emissions accounting (Scopes 1, 2, and 3), TCFD/ISSB disclosure frameworks, climate scenario analysis methodologies (including Network for Greening the Financial System scenarios), and the interplay between physical and transition risks.

Investment portfolio analysis. For life and annuity actuaries, climate disclosure requirements are driving demand for analysis of investment portfolio exposure to carbon-intensive assets. The concept of "stranded assets" (fossil fuel reserves and infrastructure that may lose value under aggressive decarbonization policies) directly affects asset adequacy testing and liability matching. PwC has highlighted that insurers face particular challenges in measuring Scope 3 financed emissions, noting that existing standards like the Partnership for Carbon Accounting Financials (PCAF) do not cover all asset classes held by insurers.

Regulatory compliance. Actuaries serving insurers with multi-jurisdictional operations face an increasingly complex compliance matrix. A carrier operating in California, New York, and the EU simultaneously encounters NAIC TCFD survey requirements, NAIC RBC climate interrogatories, California's SB 253/261 framework (to the extent non-insurance affiliates are covered), and potentially the EU's simplified CSRD or ISSB-aligned requirements in other jurisdictions. Each framework has different scoping thresholds, reporting timelines, and assurance requirements.

Career opportunities. The demand for actuaries with climate risk expertise continues to grow. Ceres' research demonstrates that the measurement gap (the disconnect between climate commitments and metrics capabilities) represents an acute need across the industry. Actuaries who can bridge this gap by developing portfolio-level climate metrics, conducting scenario analysis, and translating regulatory requirements into operational risk management frameworks are increasingly valuable. The International Actuarial Association and professional bodies in multiple countries have published guidance on expanding actuarial roles in climate risk management, explicitly positioning the profession as well-suited to address the quantitative challenges of climate disclosure.

For candidates on both the SOA and CAS tracks, understanding ESG and climate disclosure is becoming an important dimension of professional competence, not because it is politically fashionable, but because climate risk is a material financial risk that affects every major line of insurance business. Whether through wildfire exposure in P&C, longevity assumptions in life insurance, or stranded asset risk in investment portfolios, climate dynamics are embedded in the actuarial work product.

Outlook: Complexity as the New Normal

The ESG and climate disclosure landscape in 2026 is defined by contradiction. The federal government has retreated from mandatory climate disclosure while state regulators and international standard-setters have advanced. The EU is simplifying while 21 jurisdictions are adopting ISSB standards. Anti-ESG legislation is expanding while courts are striking down its most aggressive provisions. Insurers are increasingly reporting on climate risk governance while struggling to develop the metrics and targets that would make those disclosures meaningful.

For actuaries, the path forward requires treating climate disclosure not as a compliance exercise but as an extension of the profession's core analytical mission. The tools are evolving (climate-conditioned catastrophe models, portfolio-level emissions analysis, scenario-based capital adequacy testing) and the demand for actuaries who can deploy them is growing. The global protection gap, projected by Ceres at $1.86 trillion in 2025, represents both the industry's greatest challenge and its most compelling case for taking climate risk seriously, regardless of the political weather.