Your climate action: does it truly reduce emissions?
Many businesses struggle to understand how their environmental investments impact their carbon footprint. The terms 'insetting' and 'offsetting' are often confused, yet their distinctions are critical for genuine climate action. New guidelines from the GHG Protocol Land Sector and Removals Standard clarify these differences, showing which efforts truly reduce a company's carbon inventory. Understanding this is key for companies aiming to meet ambitious climate targets and contribute meaningfully to a sustainable future.
When companies talk about reducing their environmental impact, two key strategies often come up: insetting and offsetting. Offsetting means buying carbon credits from projects outside your business to balance out your own emissions. It’s like funding a reduction somewhere else to compensate for what you can’t yet eliminate yourself.
Insetting, on the other hand, involves investing directly in projects *within* your own supply chain. Think of working with your suppliers to help them adopt greener practices that reduce emissions from the products and services you buy. This approach actually lowers your company’s reported emissions directly, unlike offsetting, which accounts for reductions separately. The University of Oxford’s Nature-based Insetting Initiative neatly summarizes it: insetting improves the supply chain you have, while offsetting addresses emissions outside your direct control.
This distinction is vital because the way these efforts are counted under the GHG Protocol Land Sector and Removals Standard is different. When you invest in insetting projects, the resulting emission reductions or removals directly decrease your Scope 3 emissions — the emissions from your value chain. This is crucial for meeting strict targets, such as those set by Science Based Targets (SBTi), which demand absolute reductions in your emissions inventory. If your goal is a 50% absolute reduction in Scope 3 by a certain year, insetting helps you achieve that number. Offsetting, while valuable for broader net-zero claims, does not reduce your core inventory numbers in the same way, as highlighted by the SBTi Beyond Value Chain Mitigation framework.
While insetting can be more challenging to implement, requiring strong supplier relationships and clear measurement, its benefits are far-reaching. It strengthens your supply chain, potentially leading to better quality and lower costs over time, and aligns with growing regulatory demands. More importantly, it represents a deeper, more integrated commitment to sustainability. Ultimately, both insetting and offsetting play a role in a comprehensive climate strategy. Insetting is your direct path to reducing your carbon footprint from within, while offsetting helps neutralize remaining hard-to-abate emissions, contributing to a healthier planet. Choosing the right tool for the right target is essential for meaningful environmental progress.