Corporate sustainability strategies increasingly focus on supply chain emissions as organizations recognize that Scope 3 emissions typically represent 70-80% of their total carbon footprint. While traditional carbon offsetting allows companies to balance emissions through third-party projects anywhere globally, insetting takes a more targeted approach by addressing emissions directly within a company's own supply chain operations.
Recent investment activity demonstrates growing market confidence in supply chain sustainability solutions. AgriWebb, an Australian livestock management software company, secured $7.2 million in Series C funding, while German regenerative agriculture specialist Klim raised 22 million euros in Series A funding, indicating significant investor interest in technologies that enable more sustainable supply chain practices.
Key Takeaways:
- Insetting targets Scope 3 emissions within existing supply chains rather than purchasing unrelated offset credits
- Recent investments in AgriWebb ($7.2M) and Klim (€22M) demonstrate growing market confidence in supply chain sustainability solutions
- Collaborative landscape-level interventions prove more effective than isolated company-specific projects in sectors like agriculture
- Measurement challenges around causation, additionality, and attribution require robust frameworks to avoid greenwashing concerns
- Supplier engagement depends on market guarantees, price premiums, and peer advocacy to encourage adoption of sustainable practices
Understanding Insetting Versus Traditional Offsetting
Insetting differs fundamentally from offsetting by focusing specifically on emissions reduction within a brand's existing supply chain rather than purchasing credits from unrelated projects. This approach targets Scope 3 emissions directly at their source, creating potential for multiple co-benefits including improved water availability, enhanced biodiversity, and strengthened community livelihoods.
The concept of "stacked benefits" emerges when companies invest in regenerative agriculture or nature-based solutions that simultaneously address carbon reduction, water management, biodiversity conservation, and community resilience. According to Andrew Nobrega, global programmes director at PUR Projet, companies initially investing in supply chains for carbon reduction often discover their investments deliver broader environmental and social benefits.
Landscape-level interventions prove most impactful, particularly in sectors like food and agriculture where multiple companies source from the same suppliers. Collaborative approaches enable brands to work together on comprehensive socio-environmental improvements rather than implementing isolated, disconnected projects that may duplicate efforts or create inefficiencies.
Industry Implementation and Strategic Partnerships
Major corporations are actively developing insetting strategies aligned with ambitious climate targets. Danone's chief sustainability officer Henri Bruxelles emphasizes that for food companies, positive nature impact represents both responsibility and business resilience, with competitive advantages for early movers in sustainable supply chain transformation.
Nestlé supports 15 landscape initiatives globally as part of its 2030 goal to source 50% of goods from producers using regenerative farming techniques. The company's approach includes financial support for equipment and inputs, price premiums through initiatives like the Nescafe Plan 2030, and partnerships with expert organizations to support participating suppliers.
The Cocoa and Forests Initiative exemplifies public-private collaboration, bringing together cocoa and chocolate brands under the World Cocoa Foundation with governments of Ivory Coast and Ghana. While progress has been modest over seven years, the initiative demonstrates potential for coordinated industry action on landscape-scale sustainability challenges.
Consumer goods company Reckitt is trialing agroforestry in its rubber supply chain across Thailand, Malaysia, and Indonesia through partnership with Earthworm Foundation and Nature-based Insights, a University of Oxford spin-out focused on quantifying biodiversity impacts of nature-based solutions.
Standardization and Regulatory Development
The International Platform for Insetting, part of the Business for Nature coalition, works to establish frameworks for corporate insetting activity. Members include fashion brands Kering, Burberry, and Chanel, plus Switzerland's largest supermarket chain Migros and French hospitality group Accor, demonstrating cross-industry interest in standardized approaches.
Current standard-setting organizations including the Science-Based Targets initiative and Greenhouse Gas Protocol provide limited guidance on insetting within broader Scope 3 land-based removals frameworks. However, two new standards are under development: one from Washington-based certification body Verra and another from UK charity Social Carbon.
The European Union's Carbon Removals and Carbon Farming regulation, provisionally agreed in April 2024, should provide additional clarity on attribution and double-counting issues once formally adopted. This regulatory development addresses critical concerns about measurement accuracy and credibility in insetting projects.
Implementation Challenges and Risk Mitigation
Attribution challenges arise when multiple actors participate in insetting projects, making it difficult to determine responsibility for specific impacts. Technical committee chair Nikol Ostianova from the International Platform for Insetting describes scenarios where different companies provide inputs to the same agricultural project, complicating impact allocation and measurement.
Concerns about greenwashing persist, with environmental groups Carbon Market Watch and NewClimate Institute warning that inadequate oversight could reduce insetting to "low-credibility GHG emission offsetting." Their analysis of efforts by Nestlé, PepsiCo, JBS, and Deutsche Post highlights risks associated with non-permanent biological carbon removals compared to geological sequestration solutions.
Measurement difficulties center on causation, additionality, and attribution questions that challenge accurate impact assessment. Companies must demonstrate that improvements resulted specifically from their interventions, would not have occurred otherwise, and can be properly attributed to their investments rather than other factors.
Advanced supply chain analytics capabilities can support the rigorous measurement and verification processes required for credible insetting programs by providing comprehensive data tracking and analysis frameworks.
Supplier Engagement and Economic Incentives
Successful insetting requires effective supplier participation, which depends on addressing economic realities of transitioning to sustainable production methods. While brands typically cover project management costs and capacity building, suppliers must invest capital in new production approaches that may take years to generate positive returns.
Market guarantees and price premiums prove essential for encouraging supplier adoption, particularly among farmers who may be culturally resistant to major operational changes. Suppliers need confidence that sustainable production methods will find premium markets that justify additional investments and transition risks.
Nestlé's approach includes equipment financing, input support like biodigesters for dairy farms, and premium pricing through targeted programs. The company emphasizes starting small and demonstrating success to build supplier confidence, with peer advocacy proving particularly effective for expanding participation.
Local farmer advocacy for insetting benefits helps attract support from public authorities while expert partnerships provide technical assistance that reduces implementation risks for participating suppliers.
Ready to Integrate Sustainability Initiatives with Supply Chain Strategy?
Insetting represents an evolution from traditional offsetting approaches by targeting emissions directly within existing supply chains. While implementation challenges exist around measurement, attribution, and supplier engagement, the approach offers potential for comprehensive sustainability improvements that extend beyond carbon reduction to include biodiversity, water management, and community benefits.
Organizations considering insetting strategies must develop robust measurement frameworks, establish clear supplier incentives, and collaborate with industry peers on landscape-level initiatives. Success requires long-term commitment, adequate financing mechanisms, and partnerships with technical experts who can support implementation complexity.
Contact our team to explore how comprehensive supply chain visibility and analytics capabilities can support sustainability initiatives that combine environmental objectives with operational efficiency and cost management goals.