Glossary entry

Carbon Insetting

Definitions

Carbon Insetting

Carbon Insetting means a carbon reduction project, verified by a carbon offset standard, which occurs within a company’s supply chain or supply chain communities.

Drafting notes

The concept of carbon insetting is an extension of the concept of Carbon Offsetting. The location of the carbon offset is what differentiates the two concepts. Offsetting refers to carbon credits purchased from carbon reduction projects that are unrelated to the purchaser, whereas, in the case of insetting, the location of the carbon offset project is within the company’s own supply chain and supply chain communities.

In practice “supply chain, and supply chain communities” means any carbon reduction project that is directly within the upstream supply chain or within the geographical region that is directly impacted by the insetting organisation’s supply chain activity.

The Chancery Lane Project is focused on climate change issues. Drafting organisations that wish to take an insetting approach to reducing their Carbon Footprint may also want to invest in projects within their supply chain or supply chain communities that generate other environmental, social or corporate governance (ESG) values. Our definition and clauses can be adapted to reflect a wider ESG approach if required. 

Several different market standards have been developed to verify credits from carbon reduction projects for the voluntary carbon market. The most widely used standards are the:

This definition was developed by the International Carbon Reduction and Offset Alliance (CROA). TCLP has adopted it without significant amendments as we consider it will be suitable for the precedent clauses drafted by TCLP participants.

Application

Corporate climate change commitments and supply chain clauses.

References

PUR Project

ICROA: Insetting

Plan Vivo: Insetting: A User Guide (PDF)

theguardian.com: Forget carbon offsetting, insetting is the future

See also the voluntary market standards that can be used to verify credits from carbon reduction projects referenced in the drafting notes for Carbon Offsetting.