What is insetting and how can it help companies decarbonize their value chains?

Companies urgently need to decarbonize if they are to meet climate targets and ensure long-term resilience in the future. A major part of this challenge lies in reducing emissions across value chains, as Scope 3 often represents the largest share of a company’s total footprint. This is especially true in sectors with complex value chains such as food, agriculture, and apparel.

One approach gaining momentum is insetting — when companies invest directly in climate mitigation within their own value chains. Below, we explain what insetting is, how it works, what insetting volume refers to, and how companies can implement it with high integrity.

What is insetting?

Insetting refers to climate mitigation within a company’s own value chain, achieved by implementing interventions that reduce emissions or enhance removals.

Unlike offsetting — which typically funds activities outside the company’s value chain — insetting focuses on measurable improvements where a company sources, produces, or processes its products.

By prioritizing mitigation within the value chain, insetting aligns with the Science Based Targets initiative (SBTi) mitigation hierarchy, which emphasizes focusing on emissions within a company’s own operations and value chain.

When implemented holistically, insetting can deliver climate impact while also improving livelihoods, biodiversity, and ecosystem health.

Understanding “insetting volume”

As more companies adopt these approaches, many track their insetting volume — the total quantity of GHG reductions or removals achieved through insetting interventions. Monitoring insetting volume helps companies assess progress toward Scope 3 targets and compare the impact of different interventions over time.

Why insetting matters

• Reduces emissions embedded in products
• Strengthens supplier relationships
• Enhances climate resilience across sourcing landscapes
• Supports wider sustainability outcomes for people and nature

Examples of insetting

A common insetting method is value chain interventions — projects implemented within a company’s own value chain to reduce or remove emissions. These interventions can occur at farm level, at processing facilities, or within manufacturing operations.

Typical examples include:

• Regenerative agriculture practices that improve soil health and sequester carbon
• Agroforestry, such as planting shade trees in coffee or cocoa systems
• Renewable energy adoption, like solar-powered irrigation or biogas systems
• Technology changes that reduce fuel consumption or improve processing efficiency

In many cases, downstream companies (brands, retailers, or buyers) co-invest in these interventions alongside farmers or mid-level processors, providing training, finance, or technical support.

How to account for the climate impacts of insetting?

A major benefit of insetting is the ability to account for and report associated climate impacts, helping companies advance toward science-based targets. The SBTi prioritizes emission reductions within the company’s own operations and value chain (Scopes 1-3) over actions outside of the value chain, such as purchasing carbon credits.

When insetting falls inside Scope 3

Because most insetting takes place in a company’s value chain and sourcing landscapes, it is often included within the Scope 3 boundary. In this case, emission reductions or removals may be reported directly in the company’s GHG inventory.

When insetting falls outside Scope 3

Sometimes, insetting supports landscapes adjacent to — rather than directly inside — the value chain. These interventions may be accounted as:

• Beyond Value Chain Mitigation
• Market-Based Instruments

Clear accounting is essential for credible reporting, comparability, and alignment with global frameworks.

High integrity insetting

While insetting has strong potential, it must be implemented with integrity to ensure real impact for people, nature and climate.

Research from Conservation International shows that high-integrity insetting has the potential to reduce agricultural value chain emissions by 68%. To support credible implementation, Conservation International and over 40 partners have developed the following principles for high-integrity insetting.

Six principles for high-integrity insetting:

1. Prioritize climate impact

Focus on actions with the greatest emission impact — not only those that fit neatly into existing accounting frameworks.

2. Collaborate in supply sheds and landscapes

Work with other companies, communities, and local stakeholders in shared sourcing regions.

3. Deliver shared value for people

Uphold rights, promote equity and ensure fair benefits across the supply chain.

4. Deliver positive outcomes for nature

Tackle deforestation, protect biodiversity, and improve water and soil health.

5. Make credible claims

Use transparent, impact-based standards and reporting frameworks.

6. Efficient Monitoring, Reporting, and Verification (MRV)

Build accountability while minimizing burdens on producers and communities.

Together, these principles create a foundation that ensures that insetting delivers meaningful and measurable outcomes.

Credibility in insetting

To achieve its intended results, insetting must be credible, consistent, and independently verified. This includes:

• Applying the six high-integrity principles
• Designing interventions collaboratively with suppliers, farmers, and local actors
• Ensuring data quality, transparency, and traceability
• Using third-party validation and verification

Independent verification — such as with SustainCERT — provides assurance that climate outcomes are real, accurate, and appropriate to claim. Verified insetting strengthens corporate disclosures and builds stakeholder confidence.