Insetting means investing in a greenhouse gas emissions reduction or removal project, verified by [insert name of voluntary standard], that takes place within a company’s value chain or value chain communities.
Distinguishing insetting from offsetting
Insetting (also known as supply chain interventions) is an extension of Offsetting. The location of the offsetting project is what differentiates the two concepts.
Offsetting refers to carbon credits purchased from greenhouse gas (GHG) reduction or removal projects that are unrelated to the purchaser (see TCLP’s Discussion document: offsets, insets and carbon credits).
Insetting refers to purchasing carbon credits from a greenhouse gas reduction or removal project within a company’s own supply or value chain.
Calculating inset emissions
The GHG Protocol does not yet have any guidelines on how to account for emissions removed from insetting. The Science Based Targets Initiative (SBTi) recommends a conservative approach (see SBTi Corporate Net Zero Standard). For more details on the types of carbon offset projects and verification standards, see TCLP’s Discussion document: offsets, insets and carbon credits.
Standard definition for ‘inset’
There is currently no standard definition for insetting. TCLP’s definition is based on the Insetting Report by the International Carbon Reduction and Offset Alliance (ICROA).
ICROA recommended the following best practices:
- The company invests financially in the development and maintenance of a carbon offset project within the perimeter of its supply chain.
- The insetting project occurs within the supply chain or supply chain community.
- Supply chain refers to the operational participation in the company’s supply chain.
- Supply chain community refers to stakeholders that have a direct link with the supply chain (e.g. direct involvement in the production of the product or service or those that are positively or negatively impacted by the supply chain operations).
- The insetting project should generate GHG emission reduction units that respect all the principles of international standards (i.e. additionality, permanence, uniqueness, measurability, verifiability, etc.).
- The insetting project should be verified by a carbon offset standard.
Corporate climate change commitments and supply chain clauses.