Carbon insetting: can it help your business get to net zero?

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Carbon insetting is nowhere near as well known as carbon offsetting, yet for many businesses it is the missing part of their net zero strategy.

Carbon insetting: can it help your business get to net zero?

Carbon insetting is nowhere near as well known as carbon offsetting, yet for many businesses and organisations it is the missing part of their net zero strategy. Awareness of the concept is gradually growing, but many organisations don’t realise how it can help them meet emissions reduction targets and also make other beneficial changes. Here’s what you need to know.

What is carbon insetting?

Many of us already know that carbon offsetting means investing in carbon reduction or sequestration projects in order to compensate for your own emissions. Carbon insetting is a similar idea, but the crucial difference is that the offsetting happens in an area over which your organisation has some control. For example, while traditional offsetting might involve choosing a renewables project to invest in, carbon insetting might involve setting up your own renewables project on site, or investing in that of a supplier.

With offsetting, the offset scheme you choose has no connection to your business beyond the financial transaction of paying for offsets; with insetting, there is always a strong connection to your business.

Why not just offset?

When you inset rather than offset your company’s carbon emissions, the budget for carbon reduction stays within your company’s own value chain, rather than going to a separate organisation. This means the budget works harder for you, bringing other benefits alongside the main benefit of carbon reduction. For example, identifying an opportunity to cut carbon emissions in your supply chain might mean working more closely with that supplier and helping them to reduce energy use. This means building stronger relationships within your supply chain and perhaps creating cost savings that will be passed on to your organisation.

Insetting also gives you more control and oversight, compared with traditional offsetting. With offsetting, there is always the question of whether the carbon sequestration or savings would have happened anyway. (The concept of a project being genuinely attributable to offset funding is known as “additionality”, and a recent study for the EU found that there is
“considerable uncertainty” in assessing whether offset projects truly qualify as additional.) With insetting, it’s much easier to verify that a project is truly additional, although companies must be careful not to “double-count” carbon savings by labelling the same project as both carbon reduction and an offset scheme.

How does my business get started with carbon insetting?

There is no “one size fits all” way of going about insetting, because each insetting project is shaped by the individual needs and capacities of the business that creates it. That means it can feel daunting compared to the straightforward nature of offsetting, but it’s also one of insetting’s big strengths. Getting started with carbon insetting is an opportunity to look with fresh eyes at the different areas of your business, searching for possibilities. You might look at the raw materials your company uses to see if there is a way of using them more sustainably, or examine your production processes to find out if you could cut waste. It’s worth evaluating every area of your business and supply chain, including customers and staff, for insetting opportunities.

How are other companies going about carbon insetting?

Ice-cream company Ben & Jerry’s has been an insetting pioneer, announcing in 2013 that it would be investing in a manure separator for some of its dairy suppliers. Removing the manure solids from the liquid part of the manure has great potential for reducing the methane emissions of dairy production facilities, but the equipment is expensive. Ben & Jerry’s insetting investment has saved a lot of greenhouse gas emissions in its own supply chain and also helped the farms financially because they have to spend less on transporting and spreading manure.

Ben & Jerry’s have also invested in solar panels at one of their factories and a bio-digester at another. While traditional offsetting might involve investing in a clean energy project somewhere in the world, Ben & Jerry’s insetting schemes mean that the energy generated is used to power its own factories.

The Body Shop is another good example of a company that has embraced insetting. Its Bio-Bridges initiative aims to restore biodiversity to damaged landscapes and promote the more sustainable use of natural resources. Bio-Bridges started with a plan to protect Vietnam’s Khe Nuoc Trong forest, which is an important source of ingredients for Body Shop products. By restoring the forest and giving indigenous people sustainable financing, the Body Shop is investing in emissions reduction but also nurturing its own supply chain.

Is insetting cheaper than offsetting?

It really depends on what you’re measuring. Offsetting is often more economically efficient if you’re simply measuring cost per tonne of emissions reduced. That’s because offsetting schemes tend to use demonstrably cost-effective ways to reduce emissions (and there’s nothing wrong with that). However, insetting may allow a company to go for emissions reduction strategies that aren’t such “easy wins”. Since the money spent on insetting stays within your company’s value chain, this makes it more economically worthwhile to tackle projects that aren’t as cost-effective on paper, but valuable to your business in other ways.

What are the downsides?

It isn’t always straightforward to calculate and verify the emissions abated by carbon insetting. With offsetting, you simply buy carbon credits for however many tonnes of carbon you want to offset. With insetting, you may end up responsible for calculating the carbon savings your project is making. An insetting feasibility study carried out for the coffee producer Green Mountain Coffee Roasters observed: “Bringing the carbon activities to the land from which the company sources agricultural product means moving away from the energy based credits like solar or wind that are easier to document, quantify, validate and monitor.” The company was concerned that moving to less externally verifiable ways of offsetting would diminish its green credibility.

However, it is worth noting that renewable energy projects, popular in traditional offsetting because the emissions savings are easy to quantify, have a lower likelihood of additionality – so you can measure the amount of dirty energy theoretically “saved” by a clean energy project and count that as an offset, but never be sure whether or not it would have happened anyway.

The other main downside of insetting is the amount of engagement required. You can’t just write a cheque and consider your business relieved of its climate obligations. However, many of the businesses that use insetting find that it’s actually beneficial to be more closely involved in the process. If you’re examining every area of your business and supply chain for insetting opportunities, you usually end up learning a lot, finding potential efficiency savings and strengthening relationships. It also means taking more direct responsibility for your company’s emissions, rather than assuming you can pay a completely separate organisation to compensate for them.

Key differences at a glance

Carbon offsetting Carbon insetting
It’s a straightforward financial transaction: you pay a separate organisation to reduce or absorb emissions on your behalf so you don’t have to do it yourself. It means getting involved: you work with areas of your business or organisations closely connected to your business to identify ways to cut or remove carbon.
When you’re comparing offsetting schemes, the information you gather has no relevance beyond helping you choose which one. Looking for insetting opportunities within your organisation or closely linked organisations usually means finding out valuable information about your own processes and building stronger links with stakeholders.
Usually, the project you invest in is already running – you just choose it and invest in it. Usually, you get involved earlier in the process, helping to create the project or at least supporting it from the start.
Money spent on offsets is gone from your business once it’s spent. Money spent on insetting stays within your company’s value chain.
You don’t need to do the work of measuring and verifying the carbon reductions because the offset scheme does it for you. Measuring and verifying the emissions saved by your company’s insetting scheme may be a more complex task and there may not be an established methodology for this.
It’s straightforward to get externally verified carbon credits, because this is handled for you by the offsetting scheme. It’s harder and may not be possible to get your insetting scheme to pass an external audit which can grant carbon credits.
It’s a well established concept, but critics have compared offsets to “get out of jail free” cards, arguing that they help companies avoid taking responsibility for their own direct emissions. It’s a newer and less well understood concept. It involves taking more direct responsibility, but critics warn that insetting allows unscrupulous companies to double-count their emissions cuts as both reductions and offsets.

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