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Sophie Benson
Enter: insetting, the inward-facing emissions reductions solution that every carbon conscious designer should know about.
Similar names, similar origins. Both offsetting and insetting are designed to generate a reduction in carbon and GHG emissions, but each achieves this goal in different ways. Offsetting generally involves buying carbon credits from projects such as tree planting, renewable energy, or methane capture. Internal emissions are offset via the funding of external projects.
Insetting, on the other hand, refers specifically to "GHG reductions or carbon sequestration interventions that are directly related to a company’s value chain, either by geography, production, or commodity", per the International Platform for Insetting (IPI). Insetting is the practice of making reductions and improvements specifically within the supply chain in question.
There is one very clear issue with offsetting: it allows companies to absolve themselves of their emissions by spending money. And they spend a lot. The voluntary offsets market is worth USD 2 billion, and the ease of buying credits means brands and consumers are led into a false sense of security, creating a "mitigation deterrence": the reduction or delay of at-source emissions reductions. We simply do not have time for this – if we rely solely on carbon offsetting and the hope of future technologies, up to 1.4 degrees of extra warming could occur.
That’s not the only problem. Offsetting projects aren’t guaranteed to offset the exact volume of emissions a company produces. The Dutch advertising watchdog told Shell to stop its "Drive CO2 Neutral" promotion, which relied heavily on offsets, because to offset the 120 million tonnes of CO2 it produces, it would need 12 million hectares of land by 2030 – an area three times the size of the Netherlands. Offsets also aren't guaranteed to be permanent. What if new carbon capture technology isn’t as effective as marketed? Or those trees that were planted are wiped out by drought or wildfires? Offsetting is such an opaque, insular system it’s more likely you’ll hear about "overinflated claims of impact" than admissions of failure or setbacks. A key example of this is the 2023 investigation into the world’s leading certifier, Verra, which has issued over one billion carbon credits to the likes of Disney, Shell, easyJet, and Gucci. Analysis showed that climate benefits from its credits were grossly overstated, with 94% of its rainforest carbon offsets deemed "worthless".
There is also double counting and lack of additionality to consider. Double counting occurs when, for example, a company embarks on a solar energy project and a second company buys carbon credits which supports it as part of its offsetting efforts. Both companies then count this one action towards their climate targets. One action, two lots of emissions supposedly offset. Additionality is called into question when a company buys carbon credits for, say, a peatland regeneration project that was scheduled to go ahead anyway. Their offset hasn’t resulted in any additional emissions reductions. Add all of this to the fact that there is a history of carbon offsets overriding and displacing indigenous peoples, and it starts to become clear that offsetting isn’t quite the environmental saviour it’s made out to be.
The voluntary offsets market is worth USD 2 billion
of extra warming could occur if we rely solely on carbon offsetting
of Verra's rainforest carbon offsets were deemed worthless by a 2023 investigation
The World Economic Forum describes insetting as "doing more good rather than doing less bad within a value chain". As such, it involves actively implementing (mostly nature-based) solutions which directly reduce a company’s own Scope 1-3 emissions. Renewable energy infrastructure, regenerative agriculture which conserves soil, and the restoration of carbon sinks such as wetlands all count as insetting when conducted within a company’s own value chain.
Unlike offsetting, which allows companies of all types to buy the same carbon credits, the direction and function of insetting depends greatly on the Scope in question, the setting, and the company. For logistics and shipping company DHL, insetting means fleet renewal, engine retrofitting, and investment in new infrastructure for fuel production and distribution, allowing for the use of renewable fuels. For beauty brand Natura, however, insetting means remunerating smallholder families in its value chain for providing environmental conservation services. If you are a Paper packaging company, you’ll likely want to focus on funding sustainable forestry and conservation within your supply chain, whereas if you make reusable beauty tools, your first port of call may be assisting in retrofitting supplier factories to run on renewable energy.
Some insetting solutions echo those often associated with offsetting. Tree planting, for instance, can be part of an insetting programme, but crucially it must apply within a company’s own value chain. Nespresso has invested in tree planting on its coffee farms to provide shade for the coffee plants, which helps them thrive. In addition, planted trees protect soil, circulate nutrients, boost biodiversity, and provide income opportunities for farmers through the sale of fruit and timber. By the end of 2019, Nespresso’s insetting programme had led to nearly three million trees being planted, with 8,000 beneficiaries.
The tangible nature of Nespresso’s impact is important. "Local farmers or farming communities are typically the ultimate beneficiaries of an insetting project," explains the IPI. "Based on the project design, beneficiaries also receive direct payments. These are typically subject to their continued support of the project, such as tree survival rates over the initial project years." While the purchase of carbon credits for offsets is hands-off, insetting is collaborative, with a long-term, locally-focused view.
Unlike offsetting which can be ineffective and — at worst — harmful, insetting can result in meaningful emissions reductions, a must if we’re to stand a chance of sticking to the 1.5-degree pathway of halving emissions by 2030. The focus on long-term, nature-based solutions is also vital to tackle biodiversity loss, another essential for the 1.5-degree goal.
The climate crisis is also bad for business – there’s no business on a dead planet, after all – and securing a liveable climate secures a future for your brand, hence why the likes of L’Oréal, Accor, and Chanel are all doing it. Since 2016, L’Oréal has worked with the social enterprise Nafa Naana to help women collectors of shea nuts – a key beauty ingredient – gain access to improved cooking equipment, which is cheaper to run and doesn’t rely on tree felling. In 2019, the company says the project prevented the emission of over 10,500 tonnes of CO2e and avoided the felling of 5,000 tonnes of timber. Accor hotels in countries including France and Morocco serve products from farms where the chain has financed tree planting. Over seven million have been planted since 2009, directly benefiting over 10,000 people, according to the IPI. Meanwhile, Chanel’s Landscape Resilience Fund will finance small businesses and projects to "promote climate resilient agriculture, forestry and sustainable development".
Business and climate meet in each insetting programme. Nespresso protects the source of its profits while re-establishing carbon sinks, and Ben & Jerry’s Project Mootopia, which aims to halve greenhouse gas emissions on 15 dairy farms by the end of 2024, simultaneously reinforces its market position as an eco-minded brand. The latter project focuses on factors like the planting of feed crops to maintain healthy soils and diet changes to reduce enteric emissions (i.e. cow burps). Simply adding Seaweed to cow’s diets can reduce enteric emissions by as much as 52%.
Long-term thinking and investment are intrinsic to insetting. While offsetting is a quick, often cheaper solution (in the first instance), insetting makes better financial sense overall. Insetting projects in the Global South typically cost in the range of EUR 15-30 (USD 16.10-32.30) per tonne of CO2e, but any money invested via insetting stays within a company’s own operations, strengthening its supply chain, increasing yields, and protecting the workforce, as well as mitigating factors like drought, landslides, and wildfire which can severely impact raw material availability and sourcing. The overarching financial benefits are substantial, and there are shorter-term gains and savings too. Fixing leaks as part of responsible water management cuts bills; serving locally produced food saves on freight and shipping costs; and retrofitted, energy efficient facilities powered by renewables are cheaper to run. Environmental savings and cost savings go hand in hand.
trees were planted by the end of 2019 as part of Nespresso's insetting programme
of timber were saved from felling as a result of L’Oréal's insetting initiative with Nafa Naana to support shea nut collectors
Adding seaweed to cow's diets can reduce enteric emissions by as much as 52%
"We started mapping out our carbon footprint in 2016, not as a licence to go nuts and crank out all the fashion collections but because I was frustrated with the politicians and the policy makers not being able to introduce a carbon tax," says Nicolaj Reffstrup, co-founder of GANNI, which set insetting targets in 2020. "In the process we grew a little uneasy about the whole process of offsetting because some brands would offset and then call themselves neutral. We started looking at converting to insetting: making real reductions in our supply chain and setting new targets. We agreed we would go for a 50% absolute reduction by 2027, with 2020 as our baseline. And it’s a massive task because we are growing, and we need to reduce our carbon footprint in absolute terms."
"The first insetting project we embarked on is installing solar panels with two of our Portuguese suppliers," Reffstrup continues. "We facilitate that these suppliers ... run on renewable energy, which also benefits all our competitors who are producing their goods in the same place. Everybody is waiting for everybody to do something, but we need to get together, we need a global audit, and for industry associations to pave the way. Sometimes you’ve just got to do something although it benefits others." GANNI also measures and preserves the biomass of the areas it rolls out projects in and talks to the local community for input and feedback.
Per the IPI, there are four phases to an insetting project. The first is a scoping study to understand the priorities and challenges, and to identify project types. This is where you ask what your hotspots are and what project would best mitigate them. Reckitt, which owns brands including Durex, AirWick, and Strepsils, is in the earliest phase of insetting, working out a plan for the best nature-based actions specific to its supply chain. It's working with Nature-based Insetting (NbI) to develop "measurable interventions", which it will deliver in its biggest global supply chains against Science-Based Targets. Raw materials palm oil, latex, clove, patchouli, and orange oils are the first areas of focus.
Phase two is a feasibility study which details the technical and financial plan, with input from stakeholders. How will you run the project? How much will it cost, how will you pay, and who will you pay? Have you spoken to potential beneficiaries for their input? Kering runs the Regenerative Fund for Nature with Conservation International, with the aim of converting one million hectares of crop and rangelands to support regenerative agriculture. Kering linked priority raw materials to specific countries and welcomes applications from potential beneficiaries who meet the material and geographical criteria. Fund recipients are selected after an assessment by Conservation International of the importance of the material for fashion supply chains; feasibility; and the positive potential outcomes for biodiversity, climate change, and the soil.
Phase three is the project initiation and implementation, which could include executing legal agreements such as contracts with farmers. Burberry partnered with PUR to design and implement regenerative practices with a selection of its Wool producers in Australia, working at the farm level to improve land management approaches and grazing and farming systems.
Finally, phase four is the operation, monitoring, and certification of the project. Phase four is undoubtedly the longest one. Insetting should be viewed as a long-term effort which could last for over a decade. Insetting currently doesn’t require verification or certification against agreed global standards, however many companies use Science-Based Targets, the UN's Sustainable Development Goals, and the GHG Protocol as frameworks for best practice. Standards from Gold Standard, Rainforest Alliance, Plan Vivo, and the IPI can also be applied voluntarily. In addition, companies tend to share any tangible impacts which come from their insetting. Kering, for instance, publishes its funding recipients each year.
Just as there is no one-size-fits-all supply chain, there is no one-size-fits-all insetting plan or project, but there is a growing number of organisations which can assist in all phases of insetting, including the IPI, PUR, NbI, and Plan Vivo. While the phases can act as a guide, the outcomes will be unique to your raw materials, stakeholders, geography, and product. There’s no time like the present to get started.
