Kennedys creates pioneering insurance product to help tackle climate change

Global law firm Kennedys has created a ground-breaking new insurance product to help tackle climate change.

Working in partnership with The Chancery Lane Project (TCLP), the firm has developed two clauses which, for the first time, will allow insurers to offer their commercial clients liability cover for climate-related injury or property damage claims.

Seb & Abby’s Clause provides climate-related liability cover and works in conjunction with Connor’s Clause, that requires policyholders to put in place a robust net zero transition plan, including emissions reduction targets, before the commencement of cover.

The Chancery Lane Project (TCLP) is a global network of over 3,000 legal and industry professionals working together to create free contractual clauses that make tackling the climate crisis part of the drafting process in all contractual documents. 

Seb & Abby’s Clause and Connor’s Clause will sit alongside more than 120 other TCLP clauses which have been drafted, peer reviewed and then made available for use by organisations, including NatWest, Vodafone and the UK Environment Agency.

TCLP encourages authors to name the clauses after children so that they’re drafted with the next generation, and the planet they’ll inherit, in mind.Denise Eastlake, Legal Director at Kennedys and head of the pro bono team that developed the clauses, chose ‘Seb & Abby’ after her children, while Connor’s clause arrived already named and has undergone a review to dovetail with Seb & Abby’s.

Denise says: “It’s been incredibly exciting to have led such a pioneering project, which is pushing boundaries and encourages insurers to think about what new products they can develop to help tackle climate change. We are also grateful to Liberty Mutual Speciality Markets for their assistance in the drafting of these clauses. It has truly been a rewarding cooperative effort to develop this impactful offering.

“Climate-related litigation is only going to increase - an extreme heatwave resulting in injury and/or damage to property, for example, could give rise to claims against corporates responsible for producing greenhouse gas emissions. This cover provides a way for businesses to mitigate that risk, while also taking meaningful action to reduce their emissions.”

While climate-related liability cover may not be specifically excluded from all public liability policies, if indemnity claims are presented, it is highly likely that cover would be declined on the grounds that the damage was not accidental and/or fell within an exclusion of cover for pollution or contamination.

Becky Annison, Director of Engagement at TCLP, adds: “Litigation risks against corporations are material and growing. We are witnessing a number of climate claims against the private sector which will shape the future of climate litigation, and companies wishing to protect themselves must be taking steps now to decarbonise. 

“These two new clauses are the first of their kind in the UK insurance market and incentivise companies to implement robust decarbonisation plans, and we are looking forward to seeing them used in insurance policies to drive industry best practice.”