Insetting vs Offsetting

Simply put, insetting involves increasing the resilience of raw material production and supply chains by investing in activities that provide measurable reductions in climate impact, supporting biodiversity, and generating benefits for local communities along the supply chain. These activities need to be verifiable, correctly accounted for, and have a low risk of non-additionality, reversal, and creating negative unintended consequences for people, and the environment (Allen et al., 2020). Insetting requires increasing transparency along supply chains, allowing informed decision making at all stages of product development, and embedding information on climate, biodiversity and sustainable development deep into the companies’ operations.

Offsetting, on the other hand, is a straightforward payment for a unit of carbon reduction (i.e. avoiding emissions) or removal (i.e. sequestration and storage), usually outside a company’s value chain. These transactions are quantified by the use of certified carbon credits that are controlled by the project or offsetting scheme. Carbon offset projects often focus on rapid carbon sequestration (e.g. forest plantations, tree planting schemes). Offsets are an attractive proposition for many companies as they provide a quick and easy ‘fix’ to compensate for their own emissions but can come at the expense of biodiversity and human rights locally, and may not deliver the long term carbon storage benefits needed to achieve net-zero (Lewis et al., 2019; Seddon et al. 2021).

“As part of their climate strategies, many companies, organisations, cities, regions and financial institutions are relying on voluntary carbon offsetting—payment to receive credit for a certified unit of emission reduction or removal carried out by another actor. Current best practice helps to reduce some of the well-known risks associated with existing offsets (e.g. improper carbon accounting, re-release of stored carbon, negative unintended impacts on humans or ecosystems, etc.), but is unlikely to deliver the types of offsetting needed to ultimately reach net zero emissions.” (Allen et al., 2020)

Nature-based insetting offers companies the opportunity to enhance the value and resilience within their own supply chains whilst meeting nature-positive and net-zero pledges in a socially just transition. It requires transformative change in the company’s operations, recognizing that running sustainable operations reduces risk and increases opportunity.

References

Allen, M., Axelsson, K., Caldecott, B., Hale, T., Hepburn, C., Mitchell- Larson, E., Malhi, Y., Otto, F., & Seddon, N. (2020). The Oxford Principles for Net Zero Aligned Carbon Offsetting 2020.

Lewis, S. L., Wheeler, C. E., Mitchard, E. T. A., & Koch, A. (2019). Restoring natural forests is the best way to remove atmospheric carbon. Nature, 568, 25–28

Seddon, N., Smith, A., Smith, P., Key, I., Chausson, A., Girardin, C., … & Turner, B. (2021). Getting the message right on nature-based solutions to climate change. Global Change Biology, 27, 1518-1546.