Is it just us or does the sustainability vocabulary keep coming up with new words all the time?

As if the alphabet soup of regulations wasn’t enough, we’ve now got another new thing: carbon insetting.

Carbon insetting has been doing the rounds recently and has garnered a lot of interest from businesses and the media. And perhaps rightfully so.

While it sounds similar to carbon offsetting, there’s a big difference.

As governments and businesses rapidly shift their focus on transitioning to net-zero, strategies like carbon insetting are becoming more commonplace. So, it is important to understand its essence, advantages, and how to put it to action.

To do this, we first need to look at the more widely-known carbon offsetting.

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What is carbon offsetting – and why is it controversial?

Simply put, carbon offsetting is a way for a business or organisation to compensate for the carbon emissions generated from a project or activity by reducing or avoiding emissions elsewhere.

Usually this is done by investing in external projects or approved carbon offsetting schemes, tree planting being perhaps the one that first comes to mind. In theory, this balances out the carbon footprint.

While it may sound like a practical solution, offsetting has been widely criticised for allowing businesses to continue polluting as long as they offset the carbon they emit – and continue doing business as usual.

Since it is largely unregulated, it’s mostly a marketing tool that is used as a cover for corporate greenwashing.

Planting trees, for example, is a strategy often used by companies to balance their carbon output (the intention being that trees will soak up excess CO2 from the air). If only it were as simple as that.

A UK company planting a billion trees in Namibia does not offset the adverse impact on the climate and affected local communities happening right now. Nor can it justify unsustainable business practices or revenue models that rely on our planet’s finite resources.

When companies rely on removing carbon solely through tree planting, they run the risk of being investigated, harming their reputation and their bottom line. Companies rarely monitor the results of their tree planting campaigns, don’t provide continuing care, and fail to disclose survival rates in reports, as this deep dive by FT points out.

Even Thomas Crowther, the former Chief Scientific Adviser for the United Nations’ Trillion Trees Campaign, has said that tree planting is “often an excuse to avoid cutting emissions”.

So should we stop planting trees altogether?

No. Planting trees is clearly a good thing – when done in a sensible and scientifically aligned way. And there are there are plenty of legit providers out there.

But SBTi and other reputable organisations strongly recommend that carbon offsetting (whether through tree planting or something else) be done only for those emissions that are left that the company couldn’t avoid or reduce. In fact, SBTi has called a major revision of it’s Coprorate Net-Zero Reporting Standard after spotting too much emphasis on carbon offsetting among its members.

What does this mean for you as a business?

As a rule of thumb, you should be aiming to avoid and significantly reduce 90% of your emissions through proven effective strategies like operational changes, innovating your business model, and engaging with suppliers to reduce Scope 3 emissions. And offsetting only what’s left (the remaining 10%).

What about carbon credits – what are they and how can they be used?

The concept of carbon credits, which emerged from carbon offsetting, has also sparked controversy.

A carbon credit is a token that represents the avoidance or removal of carbon emissions, each one representing one metric tonne of CO2. That’s the equivalent of 2,500 miles driven by an average petrol-powered car or 120,000 smartphones charges.

These credits can be purchased from governments and traded between companies to balance out carbon emissions.

But sustainability practitioners argue that the system essentially commoditises sustainability, offering companies a way to pay for environmental damage instead of addressing it at the source.

Reducing your own environmental footprint, treating your workers with respect, and innovating your industry and materials to be as sustainable as possible should all take precedence when planning out your net-zero roadmap.

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What is carbon insetting?

This is where carbon insetting comes in. Unlike offsetting, which focuses on external projects, insetting is all about tackling emissions within a company’s own value chain. That means investing in solutions that directly impact the business’s own operations, from production to logistics and everything in between.

This has the benefit of impacting emissions much closer to a company’s sphere of influence, rather than displacing it to another part of the world.

The World Economic Forum has described carbon insetting as “doing more good rather than doing less bad”. In other words, it represents a shift from compensating for damage to preventing it in the first place. Or as we would call it: common sense.

Humans are weird, we seem to need a term for everything!

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Insetting vs offsetting: What is the difference?

Why should businesses focus on carbon insetting over offsetting?

Carbon insetting is a far more effective strategy for a company than carbon offsetting, as it represents an internal investment rather than an external cost.

While offsetting might offer a quick fix, its impacts are potentially damaging to a company. In contrast, insetting can be the catalyst for a company to transform its business model and drive long-term value in a warming world. Businesses have direct control over their own operations, which makes insetting a more sustainable and responsible approach.

There are also practical benefits. Focusing on the value chain can lead to stronger supplier relationships, increased operational efficiency, and even better competitiveness.

Insetting can also help a company to more accurately measure its Scope 3 emissions – by far the biggest challenge many businesses face – and make real reductions. Scope 3 emissions often make up the majority of a company’s carbon footprint, but they are hard to accurately measure.

Ultimately, carbon insetting is just a label given to all the savvy strategies that businesses should be implementing in becoming net zero.

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What are some practical insetting strategies?

Insetting strategies will depend on the nature of your business, your sector and the makeup of your value chain. But here are some examples of insetting strategies that you can implement:

• Investing in suppliers to help them fund renewable energy solutions such as solar or wind
• If product-based, specifying products and materials produced in a sustainable way from as early as design stage
• Claiming back products from customers at the end of life to salvage and reuse parts and materials
• Using waste or recycled materials
• Switching from ownership to a subscription business model
• Switching all vehicles to sustainable biofuels
• Optimising logistics to reduce transport emissions
• If raw materials are a must, working with suppliers that use regenerative land practices
• Switching to low-carbon production processes

The important thing is also capturing and measuring impact – so you can evidence and report your emissions reductions when needed.

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Lead by example

For example, food and beverage giant PepsiCo has started a programme collecting fees from all business units on employees business-related air travel. It then invests this into regenerative agriculture projects within its supply chain to reduce and capture an equal amount of carbon.

Nespresso, part of Néstle, has also implemented a regenerative agriculture insetting project. It has invested in tree planting within its coffee farms and surrounding landscape to help absorb carbon and improve wildlife habitats.

Global logistics company DHL is helping customers to reduce their scope 3 emissions through the purchase of sustainable aviation fuel to reduce CO2 emissions from air transport.

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Challenges associated with insetting 

While carbon insetting offers a more sustainable and integrated approach to reducing emissions, it also comes with its challenges.

One such difficulty is the complexity of implementation. Insetting requires companies to have a deep understanding of their entire value chain, from suppliers to distribution channels, and to identify specific areas where emissions reductions can be made. This involves:

• Detailed data collection
• Continuous monitoring 
• Capacity to influence or collaborate with partners who may have varying sustainability priorities

Additionally, the upfront investment required for insetting can be higher compared to offsetting. Developing renewable energy projects, switching to sustainable materials, or optimising logistics can involve significant costs.

Unlike the one-time purchase of carbon credits, insetting demands long-term planning and sustained effort to ensure the desired impact. As a result, companies struggle to balance immediate financial pressures with the longer-term benefits of insetting.

Organisational culture and the degree to which top-line management can successfully engage and rally a globally dispersed workforce behind a common goal are deciding factors.

However, for those committed to achieving true sustainability, these challenges often become opportunities for innovation and leadership in their sector.

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How can you commit to insetting?

Carbon insetting has the potential to be a transformative strategy that could have a huge impact on the environment.

At Green Ibex, we realise that taking the first step towards achieving net zero can be a difficult task. Choosing the right strategy in the labyrinth of possibilities is confusing to say the least.

One thing that we won’t do is suggest a sledgehammer to crack a nut, or build you a tanker to cross a stream. With us, you can expect laser-focussed solutions fit for the stage your business is at – and expert resources that increase your capacity without increasing headcount.

We support and guide organisations like yours by implementing sustainability solutions that align with your unique needs and goals.

If you are interested in learning more about how carbon insetting can benefit your business, or would like help launching a carbon insetting programme, please get in touch.