The Case Study of a Landmark Deal
Kita is proud to have insured a landmark deal with Clyde & Co and Nature Broking. This deal demonstrates:
How corporates can be proactive with carbon removal purchasing and portfolio building, getting ahead of regulations, securing supply and managing costs, while ensuring risks are well mitigated.
How to treat carbon removal credits as balance sheet assets rather than a P&L expense, enabling sustainability teams to have a different ballgame of conversation with the CFO.
How to utilise insurance effectively at the portfolio level, turning uncertain, project-specific downside into a defined and priced risk transfer.
Please see more detail below on the deal itself, why it is innovative, and why this matters for the market.
The deal
Global law firm Clyde & Co worked with carbon credit and natural capital advisors Nature Broking on a multi-year forward purchase programme of carbon removal credits, securing supply for Clyde & Co’s projected residual emissions from 2038 onwards.
Nature Broking selected projects using rigorous due diligence criteria, creating a portfolio aligned with Clyde & Co’s operational footprint.
Kita insured the carbon credit portfolio, protecting against risks that could prevent the insured projects from delivering credits in the future. The limit and policy period were set to match the portfolio’s expected timeline and overall risk exposure. This insurance safeguards Clyde & Co’s strategy, helping them move forward with greater certainty.
As a leading law firm, Clyde & Co needs to be at the forefront of emerging regulatory shifts, understanding the impact for both itself and its clients. This deal makes it clear that Clyde & Co is doing exactly that: Clyde & Co’s sustainability strategy aligns with the Science Based Targets initiative (SBTi) guidance, and is focused on aggressive decarbonisation. However, Clyde & Co is also smartly anticipating the SBTi’s updated standards which increasingly view carbon removal credits as essential for tackling unavoidable emissions. Carbon removal credits have finite supply and forecasted steep price increases. Via this deal Clyde & Co proactively secured their future supply at 2025 prices, rather than relying on reactive purchasing in the 2030s at unknown costs.
Most significantly, as explained further below, this deal exemplifies a groundbreaking new approach to financial structuring that can unlock capital for carbon removal at scale. This is because the forward purchased credits will be treated as balance sheet assets rather than an expense.
Why the deal is groundbreaking
Under prevailing accounting norms, climate-related actions — including carbon credit purchases and investments in nature-based solutions — are typically treated as expenses. This not only penalises companies financially but also obscures the true value of their climate strategies, undermining trust and transparency in the market.
Working alongside specialist advisers Rethinking Capital, Clyde & Co is applying International Accounting Standards Board provisions (IAS37 and IAS38) to capitalise carbon credit investments as assets rather than P&L charges.
This removes the financial deterrent towards action, shifting Clyde & Co’s purchase from a profit-and-loss expense to a long-term investment. This redefines both how corporates can treat carbon credit investments, and how Sustainability Officers can engage with CFOs.
Luke Baldwin, CEO of Nature Broking, says:
“This changes the game for sustainability teams. Instead of walking into the CFO's office with an expense request that hits profitability, they can now present an investment proposal that creates asset value. If carbon removal credit values increase—which forward curves suggest they will—the asset value on the balance sheet increases proportionally through asset appreciation. If decarbonisation accelerates ahead of schedule, the organisation has surplus removal capacity that provides strategic flexibility. This is how we are making carbon removal investment financially defensible for CFOs - framed as liability management, not sustainability expense, and built around hedging, asset allocation, risk mitigation and competitive differentiation.”
Paddy Linighan, Chief Sustainability Officer at Clyde & Co, says:
“This represents a sophisticated business case for long-term climate action that aligns financial prudence with environmental integrity. By treating our net-zero commitment as what it is, a future liability requiring strategic capital allocation, we can invest proactively rather than reactively. This pioneering value-creation partnership with Nature Broking complements our broader decarbonisation programme, which includes an SBTi-approved emissions reduction target of net zero by 2038 and active operational improvements across our global footprint.”
Why it matters
This deal makes it clear that investing into carbon removal isn’t a tickbox exercise or even ‘doing the right thing’ (as important as that is). Instead, smart businesses should treat carbon removal credit purchases as strategic investments that mitigate future liabilities via strategic capital allocation.
This deal is important across multiple facets:
Leadership in this space from a leading law firm is indicative of a wider shift towards sophisticated purchasing that factors in regulatory, financial and legal strategies. Once lawyers figure out how to do this themselves, advising their clients on the same is a logical next step.
The key financial innovation of utilising IAS37 and IAS38 to capitalise carbon credit investments as assets rather than P&L charges is huge. This shift in accounting treatment can be transformative in unlocking climate capital, and it is excellent to see a first use case applied here. Rethinking Capital deserves acclaim for their leadership.
The application of insurance is key – by insuring the portfolio, the delivery risk of the underlying carbon removal projects is mitigated. Further, trust in quality is increased as all parties recognise the insurer has a vested interest in only backing strong projects. This is an enabler for the accounting treatment, and a smoother of internal conversations to get deals over the line. Instead of discussing – ‘what happens if the projects don’t deliver’, the certainty of transferring risk to the insurer enables a financial and strategic outcome focused conversation as to the upside of acting early to lock in price and supply.
Natalia Dorfman, CEO of Kita, says:
“Kita’s specialist carbon insurance protects corporates making forward purchases, pre-payments, or portfolio investments by providing a creditworthy backstop if contracted credits are not delivered within the agreed timeframe. As carbon market procurement shifts from opportunistic spot buying to long-dated forwards and portfolio allocations, insurance should be considered as standard practice to protect those positions and make them bankable. In this way, insurance can transform the risk / return equation for companies engaging in the carbon and natural capital markets, and when combined with a climate-positive shift in accounting treatment, the impact is huge. We are therefore very proud to have worked with Clyde & Co and Nature Broking on this groundbreaking project, and thank them for their leadership in the space.”
For more coverage of this deal, please see:
Clyde & Co makes carbon credits a balance sheet asset in innovative deal
Kita underwrites project risk for Clyde & Co carbon removal deal | Sustainable Insurer
Law firm Clyde & Co announces innovative five-year carbon removal deal | BusinessGreen News
For more information on our work with the legal and accounting underpinnings of the carbon market, please visit:
The Legal Nature of Carbon Credits — Kita
Accounting for Net Zero - Kita in collaboration with Rethinking Capital
