Corporate climate strategies: understanding insetting vs offsetting

Over 9,300 companies today have validated science-based targets according to the Science Based Targets initiative (SBTi). As they work to decarbonize across all scopes, companies must decide how to best use the full range of climate mitigation strategies available —including insetting vs offsetting.

While these approaches are often discussed as opposites, they serve different functions within a credible corporate climate strategy. Insetting focuses on reducing emissions within a company’s own value chain, while offsetting concentrates on climate action outside of it. When applied with integrity, the two can be complementary tools that accelerate progress toward global net zero.

Below, we break down the difference between insetting vs offsetting, how each strategy fits within the SBTi mitigation hierarchy, and how companies can use them responsibly on the road to net zero.

What is offsetting?

Offsetting refers to the practice of purchasing carbon credits to compensate, or “offset”, for emissions that a company cannot yet reduce or remove. These credits typically finance climate projects outside the value chain—such as reforestation, renewable energy projects, or clean cooking technologies.

According to the SBTi mitigation hierarchy, companies are expected to prioritize reducing emissions in their value chain first. Offsetting is intended for residual or hard-to-abate emissions, once all feasible internal reductions have been implemented.

Example of offsetting

A food retailer may purchase carbon credits to compensate for emissions from transporting its goods. These investments occur beyond the company’s value chain and often in different geographical locations.

From offsetting to contribution claims

In recent years, offsetting has faced scrutiny, largely due to challenges in comparing external emission reductions to a company’s internal emissions. This has led many experts and organizations such as World Wildlife Fund (WWF) to promote contribution claims as a more credible use of carbon credits.

Contribution claims shift the narrative:

• Companies no longer claim to have “offset” their emissions.
• Instead, they acknowledge that they are contributing to climate action through their investments.

This aligns with a more systemic perspective of net zero, rather than a strict balancing of a company’s own GHG inventory. WWF recommends a money-for-ton approach, in which companies set a price on unabated emissions based on the social cost of carbon and invest accordingly.

Offsetting as a corporate climate strategy

SBTi proposes Beyond Value Chain Mitigation (BVCM) as a possible avenue for companies to support climate action outside their value chains. BVCM refers to the climate action companies take outside of their own value chains. This may include purchasing carbon credits or investing in landscape-level climate or nature projects in regions where they operate.

Key considerations:

• BVCM investments are not accounted for in companies’ Scope 1, 2 or 3 inventory.
• These actions do not contribute to achieving science-based targets.
• High-quality carbon credits require independent verification against international standards, such as Gold Standard and Verra to ensure carbon projects lead to real climate impact.

As of 2025, SBTi is evaluating whether environmental attribute certificates, including carbon credits, may play a role in addressing Scope 3 emissions under updated guidance (Corporate Net Zero Standard v2.0).

Offsetting offers flexibility and can be implemented relatively quickly, but its credibility depends on rigorous verification and transparent claims.

What is insetting?

Insetting refers to emission reductions or removals that occur within a company’s own value chain. This includes interventions implemented with suppliers to reduce Scope 3 emissions and strengthened long-term resilience.

Because insetting directly affects a company’s own inventory, it is essential for meeting science-based targets—particularly for companies with large Scope 3 footprints.

Example of insetting

A food retailer invests in regenerative agriculture practices with its supplying farms, reducing emissions associated with raw material production while improving soil health and biodiversity.

This form of “in-value chain intervention” creates measurable climate, environmental, and social benefits within the system a company depends on.

Ensuring integrity in insetting

SustainCERT validates and verifies value chain interventions ensuring high integrity when implementing insetting, as certain safeguards are in place.

To ensure credibility, SustainCERT’s approach includes safeguards such as:

• Proof of sourcing: Companies must demonstrate they source from the supplier or the Supply Shed where the intervention occurs.
• Evidence of causality: There must be clear proof that the company’s action or investment enabled the intervention.
• Avoidance of double counting: Mechanisms like Impact Units provide clarity and help partners co-claim impacts without freeriding and double counting.

These requirements distinguish insetting from offsetting, where projects occur outside the value chain and do not require proof of sourcing or causality.

Insetting as a corporate climate strategy

Insetting requires long-term planning and collaboration with suppliers. Value chains often shift, which means companies face risks such as stranded assets if sourcing relationships change.

Approaches like the Supply Shed can reduce the risk by creating a geographically defined sourcing area—allowing multiple actors to invest confidently and share value.

Benefits of insetting include:

• Direct reductions in Scope 3 emissions in line with science-based targets
• Increased value chain resilience
• Opportunities for co-claiming climate impacts with value chain partners
• Contributions to climate, ecosystems, and local communities simultaneously

Credible and scalable insetting is rapidly evolving. SustainCERT supports companies through digital verification solutions, an impact management platform, and by facilitating peer learning through the Value Change Initiative.

Insetting vs offsetting: complementary approaches

The strategic question is rarely insetting vs offsetting—but how to use each one in a complementary way to advance a company’s climate strategy.

Insetting

• Reducing emissions within the value chain
• Directly contributes to Scope 3 reductions and science-based targets
• Builds long-term value chain resilience
• Meets increasing regulatory and market expectations

Offsetting (via contribution claims or BVCM)

• Supports climate action beyond the value chain
• Addresses ongoing and residual emissions in the short to mid-term
• Helps companies contribute to global net-zero goals
• Flexible and can be implemented rapidly

Together, these strategies enable companies to take urgent corporate climate action, which is key to ensuring a sustainable future.