Connor's Clause

Condition to Liability Cover for Climate-Related Claims (Commercial Insureds)

A condition to insurance cover requiring the insured to put in place a robust net zero transition plan prior to the inception of cover for climate-related liability claims. 

Jurisdiction: England & Wales

What this clause does

This clause requires a commercial policyholder to have a robust net zero transition plan in place (including emissions reductions targets) at the inception of an insurance policy, before it can access insurance liability cover for climate-related claims. This will drive good behaviour, put the insured on a path to net zero and reduce the risk of climate-related claims being made against the insured, ensuring that the insurer’s business is sustainable.


[Drafting note: Capitalised terms relate to either a defined term in this clause or a defined term in the main agreement that this clause is designed to be inserted into.]

1. Conditions to Cover 

It is a condition precedent to any liability of the Insurer under Section of this Policy*, that the Insured has in place a Net Zero Transition Plan.**

* [Drafting note: Consider writing into this section of the policy, the cover in [Seb and Abby’s Clause] Climate-Related Claims Liability Cover (Commercial Insureds).]

** [Drafting note: Consider also including: 

  • [Kitty’s Clause] General Condition to Commercial Insurance Policies: Climate Change Risk Assessment; or
  • [Lovisa’s Clause] Climate-Related Knowledge Sharing Between Insurer and Insured,– not as conditions precedent to liability, to ensure compliance with the Insurance Act 2015.]


GHG Emissions means emissions of GHGs categorised as [scope 1, 2 and 3 emissions OR scope [] [and scope []] emissions only] by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated periodically. [Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol.]

Greenhouse Gases (GHGs) means the gases that trap thermal radiation in the earth’s atmosphere as specified by the United Nations Framework Convention on Climate Change (UNFCCC) in Annex A to the Kyoto Protocol at the time of commencement of this Policy.

Net Zero Transition Plan means a plan to achieve before 2050 a balance between the Insured’s GHG Emissions and removals of GHGs, that includes:

(a) interim reduction targets for the Insured’s GHG Emissions that are aligned with Paris Agreement Goals; 

(b) short, medium and long-term actions to achieve the Insured’s GHG Emissions reduction targets and a plan for how they will be financed; 

(c) an Offsetting Strategy;

(d) governance and accountability mechanisms to support the plan, including annual reporting and linking executive remuneration to achieving the interim targets; 

(e) an annual review and approval of the plan by the Board; 

(f) independent verification of the plan, including an annual review and approval of the plan by an independent organisation (selected from an list of approved organisations provided by insurers) specialising in monitoring and verifying carbon reductions; 

(g) measures to address risks to, and leverage opportunities for, stakeholders (such as workforce, supply chains, communities and customers) and the environment; and 

(h) promoting a just transition to a low carbon economy.

Offsetting Strategy means a plan specifying:

(a) the verified credits from a recognised offset provider that may be used by the Insured to offset its Residual Emissions;

(b) how the Insured will transition: 

(i) from using credits from offsetting projects that avoid or reduce emissions of GHGs to those from projects that remove emissions of GHGs; 

(ii) to GHG removals that involve long-term storage methods that have a low risk of reversal; [and]

(c) how the Insured will [use best endeavours to] reduce its use of credits by reducing its Residual Emissions [to zero/ by []%] by 2050[; and

(d) the impact of the relevant offsetting projects on a just transition and wider social and ecological goals].

Paris Agreement Goals means the three goals in Articles 2.1 and 4.1 of the UNFCCC’s Paris Agreement, in particular pursuing efforts to limit global temperature increase to 1.5 degrees Celsius above pre-industrial levels.

Residual Emissions means the Insured’s GHG Emissions that are emitted after all reasonable efforts have been made by the Insured to reduce its GHG Emissions.

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