The world grapples with the escalating effects of climate change. Companies are increasingly turning to carbon accounting and decarbonization strategies to reduce their environmental footprints. How Carbon Insetting decarbonises value chains today, using innovative tools.
While carbon offsetting has long been the go-to approach, a newer and arguably more impactful method is gaining traction: Carbon Insetting. This strategy offers a tangible, value chain-focused way for businesses to meet climate goals and embed sustainability into their core operations.
What is Carbon Insetting?
Carbon insetting refers to the practice of reducing greenhouse gas (GHG) emissions within a company’s own supply chain. This differs from compensating for emissions elsewhere, as with carbon offsetting. This could include using sustainable fuels for transportation, improving agricultural practices, or enhancing energy efficiency among suppliers.
But insetting is more than just a carbon reduction strategy; it is a business transformation tool. It enables companies to decarbonize operations in ways that create added value:
- Improving relationships with partners
- Enhancing resilience
- Strengthening ESG performance
Dr. Louise Wetherill, a sustainability expert at the World Business Council for Sustainable Development (WBCSD), emphasizes this distinction: “Insetting helps companies internalize their climate responsibilities. It’s not about outsourcing your impact—it’s about owning it and creating shared value in your network.”
Carbon Insetting vs. Carbon Offsetting
While both strategies aim to reduce a company’s carbon footprint, they differ significantly in execution and impact:
- Offsetting: Involves purchasing carbon credits from external projects (e.g., forest conservation anywhere in the world) to balance out emissions.
- Insetting: Focuses on interventions within a company’s own sphere of influence, such as logistics, production, or procurement.
Insetting is therefore considered more credible in carbon accounting because it directly affects the operational GHG emissions (Scope 1, 2, or 3) of the business.
Why Insetting matters in carbon accounting
Accurate carbon accounting is central to corporate climate commitments, especially under frameworks such as the Greenhouse Gas Protocol, Science-Based Targets initiative (SBTi) and regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD). Insetting plays a critical role here by enabling companies to:
- Directly reduce Scope 3 emissions, which typically make up the majority of a company’s carbon footprint.
- Demonstrate transparency and traceability in emission reductions.
- Align with net-zero and science-based targets, which prioritize actual emission reductions over credit-based compensation.
By integrating emission reduction into core activities, companies avoid the reputational risks and scrutiny that sometimes come with offsetting.
Michael Steel, a climate policy advisor with Carbon Trust, adds: “Investors and regulators are beginning to demand real reductions, not just accounting tricks. Insetting gives companies a powerful narrative backed by real impact.”
How does Carbon Insetting work?
But how can Carbon Insetting decarbonise Value Chains today? Insetting projects can take many forms, depending on the sector and type of emissions targeted. However, most insetting strategies follow a core framework:
- Emission mapping: The company identifies where its emissions are concentrated, especially in Scope 3 categories like transportation, purchased goods, or upstream energy use.
- Intervention design: A targeted intervention is designed—such as switching to biofuels in logistics, adopting regenerative farming methods, or improving process energy efficiency.
- Implementation: The intervention is deployed, often in collaboration with supply chain partners or third-party solution providers.
- Monitoring and verification: Emission reductions are measured and verified using standards aligned with major carbon accounting frameworks.
- Attribution and reporting: The reductions are attributed to the company, often with supporting documentation, to be reported in sustainability disclosures and used toward climate targets.
One common insetting approach is through book-and-claim systems. In this model, companies pay for the use of sustainable fuels or practices even if they are not physically used in their own logistics chain, but within the same network. This allows for scalable and flexible decarbonization.
The Insetting market
According to GlobeNewswire, the global bioenergy sector, closely tied to insetting applications, is expected to grow from $296 billion in 2024 to $323 billion in 2025. This is driven by regulatory momentum and investor pressure for decarbonization.
The insetting landscape is therefore evolving rapidly, particularly in sectors such as shipping, logistics, and energy. Some key recent developments include:
- Mitsui OSK Lines (MOL) launched a net-zero alliance in early 2025 that includes carbon insetting for maritime operations. Their goal is to certify emissions reductions through the use of alternative fuels like green methanol and bio-LNG.
- Titan and 123Carbon issued the first LNG-based carbon insets in 2023, allowing shipping operators to share the environmental benefits of clean fuel use across the value chain. These carbon insets are digitally traceable and independently verified.
- Digital platforms such as GoodShipping’s Decarb Desk, launched in 2024 by FincoEnergies, are enhancing traceability. These book-and-claim systems make it possible to track insetting activities and associated CO2 reductions. They also integrate with ESG reporting tools, making corporate transparency more manageable.
- Legislative backing: The European Union and governments like Germany’s are implementing reforms that prioritize insetting. For instance, Germany recently blocked oil firms from using past carbon credits to meet new targets. This encourages real-time reductions such as those achieved through insetting.
Industry analysts see this momentum as a turning point. “Insetting is poised to become a cornerstone of climate strategy, particularly in sectors with hard-to-abate emissions,” notes Isabel Drayton, managing director at GreenPath Advisors.
Conclusion
So how can Carbon Insetting decarbonise value chains today? Insetting is emerging as one of the most credible and effective strategies in the global decarbonization effort. By focusing on emissions reductions within a company’s own value chain, insetting allows for a more integrated, impactful, and transparent approach to sustainability.
As investors, regulators, and consumers demand more than superficial climate commitments, insetting provides a practical path forward, bridging ambition and action. For companies serious about achieving net-zero targets and building resilient, future-ready supply chains, the message is clear: don’t just compensate. transform. Insetting is not only a solution, it’s a strategy for long-term success.
Interested to learn more about Carbon Insetting options in 2025 and beyond? Contact us!
