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Developing carbon offset projects within a company’s own supply chain   

As public concern about climate change grows, private sector companies are increasingly recognising the case for strategic carbon management in order to protect their bottom-line, and to retain market competitiveness. Companies have faced increased stakeholder and consumer pressure to invest in supply chain emission reductions. This has prompted a growing number of forward thinking organisations to invest in an emergent carbon management strategy termed Insetting.

However, there has been a lack of under-standing about what the term ‘Insetting’ meant, and therefore what constituted best practice. Consequently, in 2016 ICROA commissioned Bristol University to conduct research into the topic. 

The term Insetting was first used in 2009 to refer to the direct investment of a company within its own value chain (up- and down-stream) in order to reduce its carbon footprint. ICROA defines the term as "a carbon reduction project, verified by an offset standard, which occurs within a company’s supply chain or supply chain communities"

ICROA research has shown that emission reduction projects deliver a range of socio-economic and environmental benefits to local communities, in addition to mitigating climate change. Companies who choose to invest in Insetting, and locate emission reduction projects within their own supply chain, are are able to capture more of these non-carbon benefits. In turn, this can lead additional return through effects such as increased supply chain efficiency and customer loyalty.

ICROA recommendations for Insetting best practice

 Insetting characteristic Definition
Type of investment The company invests in the development of an emission reduction project within the perimeter of its supply chain. Projects can be developed by; the company itself, suppliers to the company or 3rd party organisations
Location of the investment The supply chain activity, and communities of the supply chain. The supply chain activity could include; raw material production and sourcing, product transformation or transportation. The supply-chain community is defined as the stakeholders that have a direct link with the supply chain, or impacted by the supply chain activity
Activities covered Any project where GHG emission reduction units are generated (e.g.) that respect principles of international standards recognised  by ICROA. These principles include; Additionality, Uniqueness, Measurability, Permanence and Verifiability
Project verification
The Insetting project must be verified by a carbon offset standard recognised by ICROA

Download the full study 

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