Supply Chain Organizational Governance

The Solution to Your Scope 3 Problem:
Insetting, Explained

As climate strategies evolve, sustainability leaders are asking new questions about how to make meaningful progress on Scope 3 emissions. One concept gaining momentum is insetting—a strategy that’s changing how companies think about emissions reductions across their value chains. Emily Damon, Chief Growth Officer at ClimeCo and an insetting expert, explains what insetting is, how it differs from offsetting, and why it’s quickly becoming a cornerstone of credible climate action.

Sponsored Content | By ClimeCo | Published 1 month ago | About a 5 minute read

Image: Emilio Sánchez Hernández from Pexels

What Is Carbon Insetting?

Insetting refers to a company investing in projects that reduce greenhouse gas (GHG) emissions within its own value chain. These initiatives might include supporting regenerative agriculture with key suppliers, restoring forests on land connected to sourcing, implementing renewable energy at production sites, or switching to low-carbon materials like green steel or biofuels in manufacturing and logistics.

The defining feature of insetting is its direct link to a company’s operations, suppliers, and the foundational industries that support its value chain. Damon notes that insetting has emerged as a solution to the Scope 3 challenge, forged by the rules of the Greenhouse Gas Protocol (GHGP) and the Science Based Targets initiative (SBTi).

Why Insetting Matters

According to the UN Emissions Gap Report 2024, global GHG emissions are at an all-time high, and for many companies, supply-chain emissions account for more than 90 percent of their total footprint—particularly in food, agriculture, and land-use sectors.

“Insetting creates a long-term demand signal for decarbonization and builds resilience throughout the value chain,” Damon explains. It also aligns with growing consumer demand: U.S. shoppers are willing to pay an average premium of 11 percent for products with minimized environmental impact, and nearly half of Gen Z and Millennials say they’ll pay more for sustainable options.

Why Companies Are Turning to Insetting Now

Several forces are driving insetting’s rise. The most immediate is the need to address Scope 3 emissions-those that occur in a company’s supply chain or through product use. With SBTi-validated targets due by 2030, many organizations are shifting from goal-setting to implementation. Insetting offers a practical, scalable way to reach these goals.

But the benefits go beyond compliance. Insetting can strengthen supplier relationships, reduce risk, enhance biodiversity, and build community resilience. It also provides a compelling business case: environmentally responsible products meet consumer demand, drive brand loyalty, and create measurable environmental benefits.

Finally, insetting enhances credibility. By linking climate action directly to their own operations, companies can foster greater accountability and transparency while engaging employees, partners, and other stakeholders.

What High-Integrity Insetting Looks Like

High-integrity insetting ensures that value-chain climate actions deliver real, lasting, and transparent benefits for both the environment and local communities. Damon emphasizes that it’s not just about reducing emissions—it’s about doing so credibly, collaboratively, and in alignment with evolving standards.

ClimeCo recently contributed to Conservation International’s six principles for high-integrity insetting, which emphasize climate impact, collaboration, shared value for communities, positive outcomes for nature, credible data, and practical monitoring. These principles align with the latest SBTi guidance and offer a clear framework for action as standards continue to evolve.

Insetting in Action

Around the world, companies are already demonstrating what insetting can achieve.

Mars Inc. partnered with Fonterra Cooperative Group on a $27 million initiative to reduce greenhouse gas emissions at dairy farms supplying their ingredients.
Primark is collaborating with Maersk to scale the use of biofuels across its shipping routes, cutting logistics emissions.
PepsiCo and Fertiberia expanded a low-carbon fertilizer program across potato and corn farms in Spain and Portugal.
Patagonia and other major brands joined the Advanced and Indirect Mitigation (AIM) Platform to drive supply-chain decarbonization through value-chain interventions.
Disney and Netflix are transitioning production sets away from diesel generators.
Volvo Group is securing increased volumes of near-zero-emissions steel through collaboration with H2 Green Steel.

Addressing Concerns and Building Credibility

Like any emerging solution, insetting faces scrutiny. Critics point to issues of transparency, oversight, and potential double-counting of emissions reductions. Others question whether insetting projects deliver truly additional and lasting benefits.

The industry is responding with rigorous standards and verification mechanisms. Organizations such as the SBTi, AIM Platform, and GHGP are developing robust frameworks and third-party verification tools tailored to insetting. Transparent reporting and advanced monitoring technologies are becoming the norm, strengthening trust and ensuring that insetting delivers credible, measurable results.

With the SBTi Corporate Net Zero Standard (CNZS) V2 and the ongoing GHGP revisions expected to conclude in 2025, final rules are still in development. Damon notes that ClimeCo and its clients are not waiting: “We’re supporting companies finalizing their insetting strategies, launching RFPs, and executing insetting deals despite evolving guidance—because the urgency of the climate crisis demands action now.”

ClimeCo’s leadership in the field is underscored by its in-house expertise: the firm employs several SBTi-certified professionals-among only 45 worldwide-who help clients translate emerging guidance into credible, high-integrity insetting programs.

Insetting vs. Offsetting

While insetting occurs within a company’s value chain, offsetting supports emissions-reduction projects outside it-often in other regions or sectors. Offsetting remains critical to global climate action by channeling investment toward projects like reforestation, methane capture, or clean cookstoves.

“Insetting and offsetting are complementary,” Damon explains. “Offsetting helps reduce emissions beyond a company’s direct reach, while insetting integrates climate action into its own ecosystem-creating shared value for both the company and its partners.”

What’s Next

The promise of insetting lies in its ability to build more resilient supply chains, support communities, and deliver measurable climate benefits. As more consumers choose sustainable products-even paying modest premiums-a “green premium” flows through the value chain, accelerating decarbonization and business growth alike.

“Insetting is about turning small shifts into outsized impact,” Damon concludes. “By working together and upholding high standards, we can make insetting common practice—and move faster toward a net-zero future.”