Law firm Clyde & Co makes carbon credits a balance sheet asset in innovative deal

UK law firm Clyde & Co has signed an agreement to buy 10,000 carbon removal credits per year from 2038 in an innovative deal that considers the investment as a balance sheet asset rather than an expense.

The five-year deal with carbon credit firm Nature Broking will see Clyde & Co make forward purchases of insured carbon removals as balance sheet assets. This shifts the initiative from a profit-and-loss expense to a long-term investment, with the expected increase in carbon credits prices representing profitability. 

The two firms worked with specialist advisers Rethinking Capital and used existing International Accounting Standards Board provisions (IAS37: Contingent Liabilities and IAS38: Contingent Assets) to create this structure. In addition, the carbon removal portfolio selected is fully insured against project failure, addressing concerns firms generally have around carbon credits not delivering their promised emissions impact.

Luke Baldwin, co-founder of Nature Broking, said: "For the first time, sustainability professionals can confidently walk into the CFO's office with an investment proposal, not an expense request. 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." 

Three UK projects and one in Kenya 

Using a portfolio strategy – recommended by carbon credit experts to mitigate supply risks – Clyde & Co has selected four existing projects: two UK Woodland Carbon Code-certified projects, one UK rewilding initiative through a buyers club with nature restoration firm Nattergal, and one tree planting, crop diversification and ecosystem restoration, Verra-certified project in Kenya (in collaboration with Save the Children Global Ventures).

In addition, the deal includes a clause to transition to more permanent carbon removal technologies as they scale post-2030. 

Paddy Linighan, Chief Sustainability Officer at Clyde & Co, said: "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.”

Deal aligned with updated SBTi Corporate Net Zero Standard

The agreement seeks to offset Clyde & Co’s residual emissions post-2038 – the law firm’s target date to achieve net zero. It is in line with the anticipated changes in the Science Base Targets Initiative (SBTi) Corporate Net Zero Standard – which offer greater flexibility to offset Scope 3 emissions than previous versions.

“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," added Linighan. 

Carbon market acceleration

The deal comes at a time when trust in the carbon market is beginning to return, after several years of low activity due to controversial projects and concerns over their actual impacts. According to data shared by Nature Broking, quoting MSCI Carbon Markets, companies committed around US$10 billion of capital towards credit generation in the first half of 2025 – more than triple the same period in 2024. 

This new growth comes on the back of several market initiatives to increase integrity of supply and demand, more clarity around the Paris Agreement’s Article 6 governing carbon credit trade, and the EU including international carbon credits in its 2040 climate target.

Nature Broking adds that carbon removal credit prices are projected to multiply by a factor of three to five by 2038, according to Bloomberg forward pricing analysis.