Corporate climate strategies are evolving to address rising greenhouse gas emissions. Carbon credits still play an important role in decarbonization strategies, but many companies are taking additional steps, including direct investments in emissions-reduction projects within their supply chains.
These interventions—often referred to as carbon insetting or simply insetting—represent a shift toward integrating climate actions into sourcing, procurement, and supplier relationships. As expectations evolve, companies are moving beyond standalone climate actions toward strategies that are more closely tied to their operations and value chains.
As interest in insetting grows, the focus is shifting from concept to execution—where program design, measurement, and credibility ultimately determine impact.
Insetting is particularly relevant for industries such as food and beverage, agriculture, and consumer goods, where upstream emissions make up a significant share of total emissions and supply chains are complex.
Insetting isn’t a substitute for carbon credits—it’s another tool in a company’s overall emissions reduction and removal toolkit. It also connects a company’s decarbonization efforts with operational resilience, supplier engagement, and long-term business strategy.
This guide explains what insetting is, how it’s showing up in different industry sectors, how companies can incorporate it into their larger sustainability and business strategies, and how Anew can help.
What is Carbon Insetting?
The shift to insetting reflects the growing pressure on global companies from investors, regulators, and customers to address greenhouse gas emissions from upstream and downstream supply chain activities, often referred to as Scope 3 emissions, which represent the vast majority of many companies’ overall footprint. As expectations rise, particularly in the EU, companies are being asked to show how their climate actions connect to their sourcing decisions. The scrutiny is prompting businesses to rethink how and where they act, bringing climate strategies closer to the source.
Insetting is part of that evolution. It describes targeted investments or interventions a company makes to reduce or remove emissions within its value chain or sourcing regions, while often simultaneously creating a positive impact on the community. In contrast, many traditional supplier engagement efforts focus on broad behavior change, such as increased data reporting without the same level of measurement, traceability, or accountability.
The agriculture and forestry industries were among the first to adopt insetting. Major food brands and other early adopters funded regenerative agricultural practices and other farming projects, such as fertilizer optimization and manure management, on behalf of their suppliers. Over time, other industries have adopted the insetting approach. Today, insetting practices have been enacted by organizations across many sectors that have significant Scope 3 emissions or complex supply chains.
Insetting often takes place within a specific supply shed, a group of suppliers—often at the sub-national level—that provide similar goods or services, according to the Value Change Initiative, a multi-stakeholder forum that champions net-zero value chains.
In practice, the effectiveness of insetting depends on how well these programs are designed, measured, and integrated into sourcing strategies.
How Insetting Fits into a Decarbonization Strategy
In value chain emissions reduction strategies, insetting complements, but does not replace, the use of high-quality carbon credits to address residual emissions.
A credible decarbonization strategy includes three distinct activities:
- Direct emissions reductions within a company’s own operations and products, such as improving energy efficiency, optimizing logistics, or switching to lower-carbon inputs
- Insetting, which focuses on reducing or removing emissions within a company’s value chain but outside of its direct control
- Procurement of carbon credits to address remaining emissions that cannot yet be reduced
Leading companies are increasingly combining these approaches, using insetting to address emissions within their value chains while relying on high-quality carbon credits to manage residual emissions and long-term targets.
Within this framework, insetting offers a set of advantages that extend beyond emissions reduction alone.
Benefits include:
- Strengthen supplier resilience by improving on-the-ground practices (e.g., soil health, input efficiency, or methane management), which can reduce exposure to climate and cost volatility
- Provide a more direct and controllable pathway for addressing Scope 3 emissions compared to broader market-based approaches
- Increase visibility into supplier emissions and practices, enabling more targeted interventions and long-term improvements
- Support more stable, long-term sourcing relationships by sending clear signals on climate-related targets
- Create a more integrated and defensible Scope 3 strategy by linking emissions reductions directly to sourcing decisions
Insetting is particularly compelling for companies with agriculture-heavy value chains or concentrated sourcing regions. It is also relevant for companies seeking deeper engagement with suppliers or operating under increasing regulatory or investor scrutiny. While insetting offers strong strategic advantages, it can be complex to implement at scale, requiring coordination across suppliers, robust measurement approaches, and clear alignment with procurement goals and practices.
Common Challenges with Insetting Programs
Despite growing interest in value chain interventions, many companies struggle to translate insetting ambition into implementation. Common pitfalls include unclear links to sourcing regions, difficulty measuring outcomes at scale, and overreliance on loosely defined claims.
These gaps can introduce both reputational and operational risk, particularly as expectations around carbon accounting and product-level claims continue to evolve.
Addressing these challenges requires a more structured approach to program design, measurement, and integration with sourcing strategies. Without this structure, insetting risks becoming difficult to scale, challenging to measure, and harder to defend under increasing scrutiny.
Best Practices That Support Credibility
Interventions aren’t automatically credible because they happen inside a company’s supply chain. To inspire trust, claims about supply chain-related emissions reduction efforts must be traceable and accountable. By creating guidelines, reporting activities, and adopting other best practices, companies can show that their insetting activities are transparent and trustworthy. To do that, companies can:
- Measure outcomes using robust and consistent methodologies to quantify emissions reductions or removals
- Report results transparently, linking outcomes to specific interventions and sourcing regions
- Use precise, defensible claims language to avoid overstating impact, particularly when linking insetting activities to Scope 3 reductions or product-level claims
- Ensure additionality by demonstrating that emissions reductions would not have occurred without the company’s intervention
- Align interventions with procurement and sourcing strategies to ensure long-term durability and scale
Strong insetting programs are directly tied to sourcing regions, grounded in measurable outcomes, and intentionally designed to scale over time alongside supplier engagement.
How Anew Works with Clients on Insetting Programs
Anew works with companies to deliver insetting through high-integrity, supply chain-linked projects that produce measurable emissions outcomes.
Transparent. These programs are built around clear links to supply sheds and supplier engagement, enabling traceability, measurement, and alignment with procurement priorities.
Measurable. Anew helps clients and their partners develop and scale programs that include measurable ways to reduce or remove emissions and align with corporate sourcing priorities.
Credible. By employing structured evaluations, measurement frameworks, and due diligence processes, Anew supports value chain interventions that are quantifiable, transparent, defensible, and demonstrate additionality, all of which protect the credibility of clients’ insetting ventures.
Global. Anew tracks current and potential regulations in the US and EU, all the better to ensure multinational clients’ climate strategies remain compliant and communicable across multiple jurisdictions.
Integrated. Because insetting is just one element of an overall decarbonization strategy, Anew takes a portfolio-based approach to implementing initiatives. We help clients integrate supply chain interventions alongside carbon removal or reduction efforts.
Supportive. By forming long-term partnerships with its clients, Anew supports scaling programs from pilot projects to structured, multi-year initiatives that deliver impact and manage risk.
Insetting is powerful—but only when it’s done right.
Anew helps companies design supply chain intervention programs that are measurable, credible, and scalable. Let’s talk about what that could look like for your business.