Insetting

Insetting refers to the financing and implementation of climate action measures that take place directly within a company's own value chain. Unlike classic offsetting, where emissions are compensated by purchasing credits from projects outside the company, insetting aims to avoid or reduce emissions where they actually arise within the company's own supply chain.

Typical insetting measures include promoting agroforestry or regenerative agriculture among agricultural suppliers, investing in renewable energy or energy efficiency at suppliers' production sites, and reforestation programs on agricultural land within a company's own sourcing chain. Insetting is therefore particularly common in industries with closely linked, often long-term supplier relationships, such as the food and agriculture sector.

A key advantage of insetting lies in its direct connection to a company's actual Scope 3 emissions: because the measures are implemented within the company's own supply chain, the impact and data quality can generally be tracked more reliably than with external offset projects. At the same time, insetting often strengthens supply chain resilience and traceability, creating a dual benefit for companies and suppliers alike.

Unlike offsetting, there is so far no single, widely recognized certification standard for insetting, which makes comparability and verifiability more difficult. Successful implementation therefore requires robust primary data and stable, long-term supplier relationships. Given growing criticism of classic offsetting approaches and a stronger focus of climate targets such as those under the Science Based Targets initiative (SBTi) on actual emissions reduction, insetting is gaining increasing importance.