A PRACTICAL GUIDE TO INSETTING - March 2022
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A PRACTICAL GUIDE TO INSETTING 10 lessons learnt and 5 opportunities to scale from a decade of corporate insetting practice March 2022
ABOUT THE GUIDE
This guide shares insights and provides more about the concept. When the guide uses “we”,
recommendations from insetting practitioners it speaks from the perspective of the practitioners
to help companies transform their supply chains who provided their input, while “you” refers to the
towards a net zero, resilient and regenerative reader.
future. This includes 10 learnings, from internal
mobilisation to collaboration with partners on the Included in this guide is the Insetting Manifesto. The
ground, and five opportunities to scale insetting as a Manifesto collates the views of the organisations that
strategic practice. This guide is written for insetting were interviewed for this guide and declares what
practitioners – sustainability professionals that this community of practice is advocating for in order
would like to take their companies on an insetting to reach insetting’s full potential.
journey – and for stakeholders that want to learn
ACKNOWLEDGMENTS
This guide was authored based on interviews with Authors: Sandra Brandt, Director International
the following five companies, in alphabetical order: Platform for Insetting and Tilmann Silber,
Accor, Chanel, H&M Group, Kering and Nespresso. Independent Consultant, former Board Member of
the International Platform for Insetting
Further input was provided during a workshop
and through direct engagement with the following Editor: Jen Stebbing
companies, organisations and individuals, in
alphabetical order: Burberry, ClimatePartner, Design: Frida Lundström
Ecosphere+, Native – a Public Benefit Corporation,
Patagonia, PUR Projet, South Pole, Timberland, Tom
Poole and WWF US.
Disclaimer: This guide does not promote specific partners or service providers. Readers interested in learning
more about potential partners and stakeholders active in the insetting space are invited to contact the International
Platform for Insetting for more information.
© International Platform for Insetting
Publication date: March 2022
2
CONTENTS
Context: The growing importance of insetting 4
Introduction: Understanding insetting 6
Chapter 1: The internal insetting journey 9
Lesson 1: Understand materialities and set clear priorities 10
Lesson 2: Use supply risks, co-benefits and marketing potential to demonstrate the business case 11
Lesson 3: Establish a scalable governance for insetting 12
Lesson 4: Develop a system that can track and consolidate the benefits of insetting 13
Lesson 5: Develop a holistic sustainability strategy beyond insetting 14
Chapter 2: Working with external insetting partners 16
Lesson 6: Go the extra mile when selecting and managing project developers 17
Lesson 7: Work with local stakeholders to ‘Design for Need’ 19
Lesson 8: Actively engage your suppliers 20
Lesson 9: Align payments with performance 21
Lesson 10: Communicate progress to your stakeholders 22
Chapter 3: Five opportunities for realising insetting’s full potential 24
Opportunity 1: Using data and technology to drive scale and efficiency 25
Opportunity 2: Evolving insetting from projects to sourcing strategies 26
Opportunity 3: Scaling insetting from projects to landscapes 27
Opportunity 4: Unleashing insetting’s potential for biodiversity and nature positive strategies 28
Opportunity 5: Collectively advocating for recognition and clear rules 29
Conclusion 31
Summary: Insetting at a glance 32
Insetting Manifesto 35
3
CONTEXT
The growing importance of insetting
In order to prevent catastrophic climate change against their commitments whilst building more
and to be on track for a 1.5°C future, science sustainable value chains.
tells us we need to halve our annual greenhouse
gas (GHG) emissions by 2030 (UNEP 2021). Intensive agricultural practices drive biodiversity
Achieving a net zero economy by 2050 requires loss and climate change and, along with forestry
ambitious decarbonisation strategies and a and other land use, account for almost a quarter
fundamental transformation of value chains. of global GHG emissions (IPCC 2020). There
Furthermore, we are losing biodiversity at an is increasing acknowledgement from land-
alarming rate, and we can’t address our current dependent companies that while traditional
climate crisis without reversing the loss of nature. approaches focusing on due diligence and
sustainability certification in their supply chains
The science and why we need to act urgently plays an important role, it is not enough to
are very clear and the majority of the private achieve transformation at the depth and speed
sector is on board. An increasing number of needed to effectively tackle climate risks, nature
companies are committing to ambitious science- loss and to deliver against the Sustainable
based targets for climate (SBTi 2021). In addition Development Goals (SDGs).
to climate, a framework for setting science-based
targets for land, biodiversity, water and oceans For over a decade, a group of forward-thinking
We are reaching a critical ‘tipping point’ for
climate action and have less than a decade to half
our emissions. The transformation of business
models needs to happen now.
is imminent and will provide further guidance for companies with agricultural value chains have
companies on how they can address the twinned combined climate action with addressing socio-
climate and biodiversity crises (SBTN 2020). economic issues in a strategic approach known as
insetting. It enables businesses to invest directly
The bad news is that we are running out of into their sourcing areas, creating positive
time. We are reaching a critical ‘tipping point’ impacts for farmers, communities, landscapes
for climate action and have less than a decade and ecosystems. This guide consolidates valuable
to half our emissions. The transformation of learnings from some of these companies and
business models needs to happen now. The identifies opportunities for how insetting can
good news is that we have the solutions at achieve its full potential in supporting businesses
hand. We must accelerate the use of tools that in their transformational change to net zero and
support companies with how they can deliver nature positive value chains.
4
GLOSSARY
Adjacent sourcing landscapes technologies.
Landscapes that are connected bio-physically,
ecologically and/or socio-economically to the Carbon credit standard
supply chain such that it may provide direct An independent organisation issuing carbon
or indirect benefits to the sustainability and credits based on approved and publically
socio-economic health of the sourcing area. available accounting methodologies,
safeguarding principles and third-party audit.
Climate benefit
A GHG emissions reduction or removal, Decarbonisation
regardless of its certification status. Achieving emissions reductions and carbon
removals in own operations and value chain.
Carbon broker
A company that facilitates the sales of carbon Emissions reduction
credit to an offset buyer against a fee. The reduction of GHG emissions from an
emissions source compared to a without-
Carbon credit intervention scenario.
A unique, tradeable unit representing an ABBREVIATIONS
emission reduction or removal of one tCO2e, Insetting
issued by an independent carbon credit Interventions by a company in or along their CAPEX Capital expenditures
standard. The reduction or removal can be value chain that are designed to generate GHG Greenhouse gases
claimed by retiring the carbon credit in a GHG emissions reductions or carbon IPI International Platform for Insetting
public registry. Retired carbon credits can no removals, and at the same time create KPI Key performance indicator
longer be traded or claimed. positive impacts for communities, landscapes NGO Non-governmental organisation
and ecosystems. tCO2e Tonne of carbon dioxide equivalent
Carbon finance SBTi Science Based Targets initiative
A funding mechanism that provides financial Net zero SBTN Science Based Targets Network
resources to a project that is designed to A status where emissions are reduced to SDGs United Nations Sustainable Development Goals
generate GHG emissions reductions or the absolute minimum through a deep TCFD Task Force on Climate-related Financial Disclosures
removals. Carbon finance typically involves decarbonisation, typically around 90-95% of VCS Verified Carbon Standard
agreement on a carbon price between the baseline emissions (SBTi 2021a). Remaining
involved parties. emissions are neutralised by carbon removals,
which can also be from outside the entity’s
Carbon/climate neutrality own value chain.
A claim that is achieved through CO2/GHG
emissions being balanced by CO2/GHG Offsetting
emission reductions or removals over a Compensation of the climate impact of
certain period of time. Emission reductions a company or product by claiming the
or removals typically need to be certified climate benefit of projects unrelated to the
carbon credits. company’s value chain. This is achieved by
retiring carbon credits that are verified by
Carbon removal a third-party according to a carbon credit
Sequestration of CO2 from the atmosphere, standard.
either biogenic, i.e. in biomass or soils or
technical, e.g. through direct carbon capture
5
INTRODUCTION
Companies need to play their In recent years, insetting has emerged as a way for
businesses to address climate risk and to deliver against
Insetting aims to create carbon removals and emissions
reductions in agricultural supply chains, mostly through
part in tackling the global climate their climate goals, whilst creating positive benefits for nature-based solutions such as agroforestry, reforestation
and nature crises through nature and transitioning to more sustainable and resilient
business models.
and regenerative agriculture. Some insetting interventions
also involve energy and community activities that aim to
Understanding insetting creating positive impacts where improve livelihoods and reduce pressures on natural
Insetting allows businesses to invest directly into their resources, such as introducing clean cookstoves. Insetting
they matter most to them; in value chain, typically through carbon finance, and in close projects can be implemented on farms, in communities or
their own value chains. collaboration with partners on the ground. In order to in adjacent landscapes.
drive transformation, insetting strategies must be long-
term and responsive to local needs.
© International Platform for Insetting
6
A SHORT HISTORY OF INSETTING
The International Platform for Insetting
(IPI) is launched by PUR Projet along
with Accor, Chanel, Kering, L’Oréal
and Nespresso as corporate founding
members. The platform brings together SBTi’s Net-Zero Standard underlines
leaders and supporters of insetting and the relevance of value chain reductions
advances the approach through regular (Scope 3) and carbon removals.
conferences, thought leadership and
knowledge sharing.
Alter Eco is among the first companies Gold Standard releases its draft Value
to develop reforestation and First companies to launch insetting The Science Based Targets initiative Chain Interventions Guidance for pilot
agroforestry projects in collaboration projects include Accor, Ben & (SBTi) is launched off the back of the Paris testing. The guidance aims to develop
with small-scale cocoa farmers, laying Jerry’s, Coop Switzerland and Climate Accord. It is the first initiative rules to account for the climate benefits
the foundation for the concept of Nespresso. The most commonly that requires committed companies to of insetting activities and is supported
insetting. Alter Eco’s first insetting applied activities include improved significantly reduce their value chain by many major companies in the food
project in Peru later also achieves full agricultural practices, agroforestry emissions. This boosts interest in insetting and beverage, and later by the fashion
VCS certification. and clean cookstoves. activities across industries. industry.
2008 2009 2010 2014 2015 2017 2018 2020 2021
The term “insetting” is described The carbon credit standard Plan Vivo The International Platform for Insetting The Science Based Targets Network
publicly for the first time in a report organises the first ever conference fully launches the Insetting Program (SBTN) publishes its first business
by UK-based carbon consultancy dedicated to insetting, in London. Standard to provide guidance and guidance, emphasising the need for
Ecometrica as an “emission reducing the option of benchmarking and third companies to understand and act
activity within the sphere of influence party certification to companies on the upon their interdependencies with
or interest of a company (outside practice of insetting. and impacts on nature, including the
Scopes 1 and 2)” (Ecometrica landscapes adjacent to their value
2009). The description leans on chains. This further strengthens the
carbon offsetting but underlines the case for insetting.
importance of taking responsibility and
ownership of climate change along a WRI and WBCSD launch the
company’s own value chain. Greenhouse Gas Protocol Carbon
Removals and Land Sector Initiative
which aims to further clarify the GHG
accounting rules for land-based value
chains. The initiative aims to publish
the final guidance toward the end of
2022.
7
OVERVIEW
1. 2. 3.
CHAPTER 1: CHAPTER 2: CHAPTER 3:
The internal insetting journey Working with external insetting Five opportunities for realising
partners insetting’s full potential
LESSONS LEARNT 1 - 5 LESSONS LEARNT 6 - 10 OPPORTUNITIES 1 - 5
Lesson 1: Understand materialities 10 Lesson 6: Go the extra mile when selecting 17 Opportunity 1: Using data and technology 25
and set clear priorities and managing project developers to drive scale and efficiency
Lesson 2: Use supply risks, co-benefits 11 Lesson 7: Work with local stakeholders 19 Opportunity 2: Evolving insetting from 26
and marketing potential to demonstrate to ‘Design for Need’ projects to sourcing strategies
the business case
Lesson 8: Actively engage your suppliers 20 Opportunity 3: Scaling insetting from 27
Lesson 3: Establish a scalable 12 projects to landscapes
Lesson 9: Align payments with performance 21
governance for insetting
Lesson 10: Communicate progress to 22 Opportunity 4: Unleashing insetting’s 28
Lesson 4: Develop a system that can 13 potential for biodiversity and nature
your stakeholders
track and consolidate the benefits positive strategies
of insetting
Opportunity 5: Collectively advocating 29
Lesson 5: Develop a holistic sustainability 14 for recognition and clear rules
strategy beyond insetting
8
CHAPTER 1:
The internal insetting journey
Introducing and scaling insetting inside a company is a major endeavour and one in which not
enough insights have been shared to date. We attempt to close this gap, providing some of the
most important lessons we have learnt in the hope that it encourages others to explore insetting
as a way to achieve ambitious climate and sustainability commitments as well as helping to make
their insetting journey a success.
LESSON 1 LESSON 2 LESSON 3 LESSON 4 LESSON 5
Understand materialities Use supply risks, co-benefits and Establish a scalable Develop a system that can Develop a holistic
and set clear priorities marketing potential to demonstrate governance for insetting track and consolidate the sustainability strategy
the business case benefits of insetting beyond insetting
PG. 10 PG. 11 PG. 12 PG. 13 PG. 14
Introducing and scaling insetting inside a company is a
major endeavour and one in which not enough insights
have been shared to date.
9
1.
LESSON 1:
Understand materialities and set
clear priorities
Insetting goes far beyond
climate and delivers a wealth
of other sustainability benefits
perfect traceability and supplier
relations are not an absolute
pre-requisite, and it is possible
TYPICAL PHASES OF AN
in biodiversity, water and
community livelihoods. And it
does so where it matters most
to start insetting with imperfect
information (more on this in
lesson 8).
INSETTING PROJECT
to your company - in your own
value chain. In order to realise You can’t transform your supply Designing and implementing an insetting project often
these multiple benefits and chains all at once, so prioritise follows four phases:
make insetting a success, every before you start. Good
project needs to be tailored candidates for insetting are
to the real material issues in supply chains with a high
your supply chain. strategic relevance for your 1. Scoping study: Identifying priority supply chain or material and understanding
company. Strategically relevant local challenges and stakeholders as well as evaluating potential project types that
Take your time to thoroughly supply chains typically have might fit the local context.
understand materialities and high volumes and value, low
to discuss them with experts replaceability and high level of 2. Feasibility study: Detailed needs assessment, stakeholder consultation, local part-
and stakeholders. If possible, risks and public scrutiny. Also, ner selection, and collaborative project design with project budgeting and plan-
conduct site visits to get your take into account the level of ning. Delivers a full technical and financial project plan.
own impression as such visits support that your supply chain
often give much better insights needs. Where your suppliers 3. Project initiation and implementation: Execution of legal agreements and local
than yet another expert review. are smallholder cooperatives project implementation. Subject to the project type and scale, the implementa-
Catalogue the priority needs of with low technical and financial tion can be spread out over several years, e.g. tree planting seasons.
the communities and ecosystems capacity, a proactive insetting
in your supply chain and design approach is most needed. On the
4. Operation, monitoring and certification: Ongoing operation, periodic moni-
your insetting activities to other hand, with well organised
address them. Traceability and and financially capable suppliers, toring and certification of impacts. Insetting projects can last over 10 years and
long-term commercial relations you might be able to mostly rely climate benefits often start to be delivered after one or two years.
with participating parties can be on leveraging your negotiation
instrumental for insetting as they power and expressing clear
provide transparency, reliability expectations in order to improve
and also emotional links. While their performance on climate and
these ingredients are important, sustainability.
Good candidates for insetting are
supply chains with a high strategic
relevance for your company.
101.
LESSON 2:
Use supply risks, co-benefits and marketing potential to demonstrate the business case
For most companies, investing in communities in delivering against its sustainability When formulating the business case for insetting,
and ecosystems at the beginning of the supply commitments and policies, as well as using benchmark carbon prices can help to
chain has not been part of the traditional way improving the long-term resilience of monetise the value of positive impacts. Keep
of doing business. While the awareness of the your company’s supply chain. This could in mind that compared to regular offsetting,
importance of such investments is steadily include a no-deforestation policy, increasing insetting has historically been more expensive.
increasing, you will still need to formulate a biodiversity or improving livelihoods through However, it delivers important risk reductions,
strong business case including both risks and providing additional sources of income. Future contributes to achieving your sustainability
opportunities to gain the required internal risks constitute a “cost of inaction” - if your commitments, provides additional benefits
support from key stakeholders. company doesn’t act today, it will be more costly through its marketing potential and supports
tomorrow. your value chain decarbonisation. The last point
We recommend using a climate risk lens is very important and has gained significant
that shows how insetting can help to tackle Developing and implementing a fully-fledged traction through the SBTi, which explicitly
physical and transitional climate and other insetting program takes time and affects many rejects the role of offsetting for decarbonisation
risks. The framework provided by the Task Force aspects of a company. It is critical that you bring (SBTi 2021b). Insetting also allows companies
on Climate-related Financial Disclosures (TCFD) your colleagues with you on the journey in to have more transparency and control over
and the evolving Task Force on Nature-related order to receive the support needed for risks related to non-permanence and non-
Financial Disclosures (TNFD) are backed by your programme to be effective. After senior additionality compared to offsetting. This
many investors and can be powerful tools as management, sourcing teams are particularly reduces the reputational risks of projects not
they directly focus on financial risks induced important as they often constitute gatekeepers succeeding. There are some helpful initiatives
by climate change and land use. While to relevant suppliers. Compared to today’s that give guidance on the quality of carbon
physical risks are the direct consequences of a typical price premiums for sustainable raw credits, which are also relevant for insetting, such
changing climate including temperature rise and materials, insetting provides clearly quantifiable as the Carbon Credit Quality Initiative and the
extreme weather events, transitional risks refer impacts, transparent financial flows, and fosters Carbon Offset Guide.
to the potential impact of a changing positive relationships between the company
political, economic and social system in order and the communities or stakeholders at the Compared to offsetting, where developed
to decarbonise the economy. There are also other end of the supply chain. These advantages projects are readily available, insetting typically
important reputational risks linked to not acting can help to get the buy-in from sourcing teams. requires much more time to realise the full
credibly on climate. The pressure by the Fridays breadth of its benefits. Thus, you will need
for Future movement and other environmental Insetting has immense marketing potential to advocate for a longer-term view with
NGOs provide strong arguments. which can help to get buy-in from colleagues your colleagues by highlighting the critical
and senior management. An insetting strategy importance of risks and opportunities over
Understanding the supply chain risks can with a strong link to your company’s products, longer-term horizons. Where supply chains
show the full risk-mitigating effect of insetting. geographies and purpose provides positive, and business cycles are altering quickly, you can
Beyond climate risks, further supply risks tangible and company-specific messages and refer to a systemic change perspective. Luckily,
come from increasingly vulnerable farming is thus a very powerful marketing and branding the emergence of the global Net-Zero-by-2050
communities, water shortages, and poor tool. If possible, translate the impacts of insetting agenda fosters long-term thinking with regards
agricultural practices that are depleting soils. into product level claims to enable bold and to climate change which plays in insetting’s
Well-designed insetting interventions can help credible marketing statements. You could also favour.
to mitigate all of these. Insetting projects consider inviting consumers to participate in
typically take a more holistic approach to your program or come up with entirely new Celebrating early successes can help to
climate action, with interventions that are sustainable products that lean on insetting build traction. Once you have shown internally
aimed at creating positive impacts not only for strategies. Nespresso’s AAA Sustainable Quality that insetting works, you can leverage strategy
climate, but also enhancing natural assets Program provides a good example for consumer review cycles to strengthen the role of insetting
and addressing socio-economic issues. engagement around insetting. in your company and increase the ambition
Insetting interventions generate multiple level.
benefits that can support your company
111.
LESSON 3:
TYPICAL FEATURES OF A COMPANY Establish a scalable governance for insetting
POLICY ON INSETTING
Insetting aims for profound transformation strategic objectives such as farmer livelihoods
Scope: Which geographies and raw materials fall under your insetting and impact, which requires a broad and capacity, resilience and biodiversity
approach? governance structure around it. This can be conservation. Oversight by external experts
achieved through setting up a new committee can help to increase the strength and
Eligibility: What types of interventions (e.g. agroforestry, regenerative or building on existing structures, as long as it integrity of an insetting strategy and fund.
agriculture, cookstoves, forest conservation, etc.) will you include in involves all relevant functions (more on this in As with other centralised budget lines, a fund
your insetting strategy? lesson 2). A broad governance is also important reduces the financial burden put on business
to avoid a misconception of insetting as a units and thus facilitates buy-in. However, a
Certification: Do you require full carbon credit certification for purely “philanthropic” endeavour. Company fund needs to fit existing structures and your
insetting projects or do you allow for other approaches, e.g. an internally functions most relevant for insetting include company’s culture.
developed (carbon) standard? If you rely on your internal standards, sourcing, finance, legal and sustainability. Senior
does the project still require external verification? management buy-in is crucial, particularly Another powerful approach to financing
when taking insetting to scale. This must include insetting could be an internal carbon
Accounting and claims: How will climate benefits of insetting projects functions outside sustainability, with ideally price. In order to be effective, it should be
be accounted for? Will they be claimed as value chain decarbonisation clear CEO backing. It can be helpful to have one in the form of a carbon fee that is internally
or as compensation toward climate neutrality? strategic and one operational committee, with charged on business units and/or brands. Such
the latter meeting more regularly. Individuals a fee could contribute towards an internal
Co-benefits and safeguards: Which other sustainability benefits are can be engaged by including insetting in their fund as described above. Microsoft uses a
you particularly looking for in your insetting projects beyond carbon and personal targets and ideally also linking their carbon fee but the proceeds are invested in
how do you measure these? What are your criteria to prevent negative compensation to it. offsetting rather than insetting. If the carbon
side effects on other sustainability criteria beyond climate (safeguards)? price is a shadow price and thus not charged,
In order to systematically finance and scale it needs to cover relevant sourcing decisions.
Financing: How does your company finance insetting? Is there a insetting, an internal insetting fund is a However, often such sourcing decisions lack
corporate budget line or are regions and business units asked to finance promising approach. Kering’s Regenerative the full picture of climate and nature relevant
insetting independently? Fund for Nature, Burberry’s Regeneration information which makes this approach difficult.
Fund and Danone’s Ecosystem Fund are great Today, many internal carbon price schemes
Governance: Who needs to sign-off insetting projects, and what is the examples of funds which contribute to insetting focus on shadow prices for CAPEX decisions
internal and external reporting structure? goals. A fund can help to secure the long- only and are thus not effective for insetting.
term commitment that is needed for insetting. We have seen better results if it is internally
Beyond climate, it can also bring in other charged.
Insetting aims for profound transformation and impact,
which requires a broad governance structure around it.
12LESSON 4: 1.
Develop a system that can track and consolidate the
benefits of insetting
ACCOUNTING FOR CLIMATE
BENEFITS OF INSETTING
The positive impacts of insetting are its meaningful quantitative KPIs. However, The IPI does not specify its own accounting rules for insetting, but collaborates with
key strength but it can be challenging to hard-to-measure doesn’t mean that these partners to identify and improve best practices in carbon accounting relevant to
bring together data and information from a topics are not material. They can be very insetting. Key considerations and pointers for accounting the climate benefits of
number of projects around the world with a relevant from both a resilience as well as a insetting are as follows.
range of partners. There are a few ways of reputational perspective.
tackling this challenge. • Technically, most climate benefits from insetting constitute so-called removals,
Make your system as digital as possible i.e. CO2 that is sequestered in biomass or as soil organic matter. However, some
Develop a company-wide policy or from local data collection all the way to activities might also lead to emissions reductions (also referred to as “abatement”),
guidance document which clarifies key reporting. There are a range of tools for where no carbon is sequestered, but existing emissions are reduced. This is the
requirements such as the scope, eligibility, local data collection such as the Cool Farm case for example with low-carbon technologies in the early stages of processing
certification, monitoring of co-benefits of Tool and FARM-TRACE as well as others agricultural products, such as boiling, distilling or fermentation processes. Reduced
your insetting projects. This is particularly currently under development. You will use of mineral fertiliser can also lead to reductions. Emissions reductions can be
helpful when your company consists of a probably need to collect local KPIs that are accounted towards a science-based target as long as they occur directly on farm
number of brands or business units that will in addition to the typical carbon standards, land or in the further processing with the value chain.
independently engage in insetting. It also for example on governance and social
helps to clarify the “rules of engagement” development. • Removals from insetting can be used to neutralise emissions towards net zero
with senior management and other claims. According to the SBTi, removals from within or beyond the value chain are
colleagues. The monitoring and accounting for insetting eligible for this “neutralisation”. Other offsetting or compensation measures that
is currently being developed and refined, rely on emissions reductions outside the value chain are not eligible (SBTi 2020).
Link your insetting projects to company- including the GHG Protocol on Removals
wide targets and key performance and Land Use and the upcoming SBTs for • The IPI suggests following carbon credit certification for insetting projects set
indicators (KPIs). These KPIs are typically Nature framework. You will likely need to by standards bodies such as Gold Standard and Verra. As an exception, on-farm
also used in reporting schemes such as CDP. keep exploring new approaches as they emissions reductions can apply the GHG Protocol.
In addition to climate-related KPIs, they can emerge and use whichever works best for
include farmer and community livelihoods, your company. This can also be done as • The release of the GHG Protocol’s Land Sector and Carbon Removals Guidance
biodiversity and water. A good example part of pilot programs that allow testing (release expected in late 2022) is highly relevant for many insetting projects,
of an holistic environmental accounting of new approaches while communicating and will likely reduce the requirements for certification, particularly for on-farm
approach is Kering’s Environmental Profit your involvement. Despite ongoing removals.
& Loss tool, which includes KPIs beyond developments in regards to accounting
climate such as water, waste and land use. As of the benefits created through insetting, • The certification space is evolving rapidly and should be closely observed. Besides
well as these quantitative parameters, don’t the achievements of companies who the developments within the GHG Protocol, Gold Standard’s Value Change
forget the relevance of qualitative data for are using insetting to transform their Initiative provides a particularly helpful resource.
both risk management and story-telling. supply chains show that there is no
When it comes to socio-economic issues better time to start insetting than right
such as gender equality and other human now.
rights, it is not straightforward to develop
131.
LESSON 5:
Develop a holistic sustainability strategy beyond insetting
Achieving positive impacts through insetting is substitute an effective zero-deforestation
a powerful approach to advance a company’s strategy to protect remaining natural forest.
climate and nature strategy. In order to be It’s important to keep a holistic perspective
effective and credible, the insetting projects on nature, considering synergies and trade-
must be embedded in a broader corporate offs with concerns such as biodiversity loss
sustainability strategy. and water shortage. For example, monoculture
plantations of exotic species might deliver
Most importantly, a holistic strategy many climate benefits, but can be disastrous
should follow a clear mitigation hierarchy for local biodiversity. Frameworks such as the
for climate and nature. A company’s upcoming SBTs for Nature and the Natural
insetting approach should not delay the Capital Protocol will facilitate such holistic
decarbonisation of its operations. For approaches. An effective insetting strategy
example, implementing cookstove projects in does not mean that your company should not
communities that overuse and thus degrade also engage in solving material socio-economic
nearby natural forests might be a good idea challenges such as labour conditions.
for an insetting approach in a certain supply
chain, and would lead to carbon reductions. If your company aims to achieve short-term
However, this does not mean that the climate neutrality claims, it will likely require a
company engaging in such an insetting project mixed approach of offsetting and insetting, as
should reduce its endeavours to eliminate offsetting projects are often more immediately
fossil fuels from the energy mix powering their available. In this case, you can aim to increase
operations. The SBTi provides useful guidance the share of insetting in your compensation
by separating out operational (Scope 1 & 2) portfolio over time by substituting
and value chain emissions (Scope 3). offsetting with insetting. Since insetting
projects take time, this transition might easily
Insetting should not lead to the delay of take 10-15 years for a whole company. Starting
other critical mitigation activities either off with specific brands or product lines can be
within or outside the climate sphere. For a good angle to start the transition and scale
example, agroforestry-based insetting cannot from there.
Insetting should not lead to the delay of other
critical mitigation activities either within or outside
the climate sphere.
14Insetting supports us at Kering with our
goal of converting one million hectares of
MOVING FROM REDUCING IMPACTS TO
farms and rangelands in our supply chain RESTORATION AND REGENERATION
landscapes into regenerative agriculture by
2025. “Our first foray into insetting was from a risk lens, and meant to address the
scarcity of raw materials, because we depend on particular qualities and rare
materials. Over time, this has evolved, and insetting is more an integrated part of
our approach to ‘do more good and not just less bad’, which has become our sort
of modus operandi. We are always looking for how we can move beyond merely
reducing impacts, and instead restore and regenerate ecosystems, as well as take
whatever action is needed to improve our sourcing practices.
We have always viewed our impacts through the lens of multiple drivers of impact.
We’ve never just looked at climate impacts. And that’s really because of the
power of natural capital accounting and our Environmental Profit & Loss (EP&L),
which shows us we’ve got to focus on land use change and water pollution. For us
an insetting approach isn’t just about carbon. That is one of the many co-benefits,
but it is also about stopping destructive land use change practices and enhancing
biodiversity outcomes. This also means prioritizing actions to ensure that rural
livelihoods are enhanced as well.
But before you can even make insetting a real thing, you have to have a framework in place
which tells you why you are doing what you are doing, and why it’s important, like our EP&L
does. There has got to be a strategic vision and an understanding of how this relates to your
Scope 3 emissions, working at farm level, and working with nature-based solutions.
Another important initiative at Kering is our Regenerative Fund for Nature, which funds projects
that are implementing and scaling regenerative agriculture in key sourcing landscapes. Ultimately,
we hope that the materials being produced by these projects will move into our supply chain.“
YOANN REGENT,
Head of Sustainable Sourcing & Nature Initiatives, Kering
© Kering
15CHAPTER 2:
Working with external insetting partners
Insetting is always a collaborative effort by actors from within the value chain and external
partners. Identifying and managing all stakeholders required to make an insetting project a
success can often be challenging, but is a critical aspect of your insetting journey. The following
five lessons are topics to consider when working with external partners.
LESSON 6 LESSON 7 LESSON 8 LESSON 9 LESSON 10
Go the extra mile when Work with local stakeholders to Actively engage your Align payments with Communicate progress to
selecting and managing ‘Design for Need’ suppliers performance your stakeholders
project developers
PG. 17 PG. 19 PG. 20 PG. 21 PG. 22
Identifying and managing all stakeholders required to make
an insetting project a success can often be challenging, but is
a critical aspect of your insetting journey.
162.
LESSON 6:
Go the extra mile when selecting and managing
project developers
Companies are not typically (or not yet!) getting engaged beyond certification is
natural insetting project developers, thus critical. In insetting practice we sometimes
working with capable and willing partners is refer to this as the mindset of “going beyond
a key success factor for insetting programs. ticking the box”. A due diligence process is
There are increasingly more project partners key when selecting partners and projects,
with insetting experience in the market. Some but ideally also entails periodic site visits
project developers might not refer to the in intervals that depend on the type of
term insetting, but they may still be good intervention. Video calls with on-site staff and
collaborators, potentially in partnership with other stakeholders can help you to get closer
carbon monitoring and certification experts. to the projects. Hiring independent local
experts can help to cover potential gaps in
Good insetting project developers have your in-house expertise. Due diligence should
technical and geographical experience, so cover social, environmental and governance
your partner should have a significant elements beyond carbon, but also include
and relevant track record. A local presence questions on the climate benefits themselves,
in key regions of your supply chain is of even if the project is carbon certified. Some
To ensure the success of projects, applying
your own due diligence and getting engaged
beyond certification is critical.
immense value. On the other hand, a partner key questions to consider should be: Would
with a global reach can help you to scale the project happen without your support
your insetting program quickly. In selecting (additionality)? How do your partners ensure
partners, it can be helpful to look behind that e.g. planted trees are left in-place for
the facade and engage with peers who the long-term and/or are re-planted after
might have experience in working with these harvesting them (permanence)?
potential partners. Good marketing does not
necessarily mean strong capacities but it can When initiating a partnership, it is key
be very helpful to have a partner that can also to formulate clear expectations upfront
support you in engaging your consumers and that outline what you expect from your
other stakeholders through data platforms partner and to which level you plan to be
and marketing tools. You might well decide to involved. This includes certification status,
choose a range of partners, particularly if you KPIs and frequency of reporting, insights into
are more advanced in your insetting journey. financials, risk management and contingency
planning, site visits and due diligence.
To ensure the success of projects,
applying your own due diligence and
17OVERVIEW OF TYPICAL INSETTING PARTNERS 1. Insetting company manufacturers, or local tree nurseries.
2.
• Typically a consumer-facing company • Project developers typically have the
that finances the majority of the insetting relevant network of such partners.
project and contracts the insetting
project developer. 5. Direct supplier
An insetting project is always a collaborative effort. Though the ideal project • Oversees the overall project and holds • The direct business-to-business supplier
set-up can be quite different across different projects, here is a typical project the project developer and involved to the insetting company.
supplier accountable. • Depending on the level of traceability
structure which includes the different actors and their roles. • Even though it usually has no direct of the supply chain and technical
contract with beneficiaries, it stays capacity of the supplier, the level of
connected to them, e.g. through site involvement can vary greatly. While
visits. some direct suppliers merely support
the coordination, others start to become
2. Insetting project developer the driving force behind insetting and
• A technical service provider specialised start to proactively develop insetting
1. INSETTING COMPANY in project development in the relevant projects, contract insetting project
geographies and technical approaches. developers and/or even substitute those
• Manages projects financially and with in-house expertise.
technically, reporting regularly to the
insetting company. 6. Local suppliers / cooperatives
• Manages and contracts other project • Based in the host country, these
2. INSETTING PROJECT participants such as technical experts, organisations typically manage the
5. DIRECT SUPPLIERS DEVELOPER independent auditors and local relationship with the participating
cooperatives. farmers and communities and support
• Directly interacts with local beneficiaries the project during its stakeholder
for stakeholder engagement, training engagement, monitoring and by
3. INDEPENDENT etc. If the project includes direct providing technical expertise and
AUDITOR payments to the beneficiaries, these training capacities.
are usually managed by the project • If direct payments are made to the
developer and channelled through the beneficiaries, they are often channelled
local supplier. In some cases they are through the local supplier.
also made directly from the project
developer to the beneficiary. 7. Beneficiaries
• Local farmers or farming communities
3. Independent auditor are typically the ultimate beneficiaries
• An auditing company that assures of an insetting project.
the accuracy of the reporting to the • They receive inputs such as seedlings
insetting company. or cookstoves and technical support
• The auditing can be against external to implement activities such as
carbon standards, such as Gold Standard agroforestry. Inputs are provided for
or VCS, or according to internal free or at reduced costs either directly
standards developed by the insetting by the input provider or indirectly
company, typically with support of the from the project developer, often in
6. LOCAL SUPPLIERS / 4. TECHINCAL EXPERTS / insetting project developer. collaboration with the local supplier’s
COOPERATIVES INPUT PROVIDERS • Carbon standards often publish lists field staff.
of their accredited auditors, these are • Based on the project design,
good places to look for auditors with beneficiaries also receive direct
relevant expertise. payments. These are typically subject to
their continued support of the project,
7. BENEFICIARIES: SMALLHOLDER FARMERS, 4. Technical experts / input providers such as tree survival rates over the initial
FARMING COMMUNITIES • Providers of know-how and/or hardware project years. Such schemes are often
to the project. Examples might include referred to as Payments for Ecosystem
local agroforestry or restoration experts, Services.
input providers such as cookstove
18LESSON 7: 2.
Work with local stakeholders to ‘Design for Need’
Engaging local stakeholders is crucial for communities understand that they can shape It is critical to create an ongoing project
effective project design. They should be involved the project while also needing to contribute to it
very early during the process, typically during actively, typically in the form of in-kind work. In order governance to involve local stakeholders
the feasibility stage. Important local stakeholders
include not only participating farmers and other
to achieve the engagement of these stakeholders, it
is critical to create an ongoing project governance
and make sure their voices are heard
community members, but also other experts such to involve local stakeholders and make sure throughout the project.
as academics, field technicians, nurseries, and their voices are heard throughout the project.
colleagues from your sourcing team. The landscape
concept provides a good way of thinking here When designing insetting projects, local
– stakeholders in the area around your specific needs and costs of carbon should be balanced.
farms and communities can be closely related to Some activities might make sense from a climate
your project and need to be involved. In order to perspective, but are relatively expensive, such as
make the project a success, it needs to address the biochar. Some activities might make sense from the
local material sustainability challenges (see lesson perspective of project longevity and permanence,
1) and be co-designed with local stakeholders. but do not directly contribute to climate benefits,
The Gold Standard provides extensive guidance such as the development of saw mills and sales
on consulting local stakeholders, but you probably channels to improve the longterm business case
need to go beyond and adjust the process to your of sustainable forestry in social forestry projects.
specific project. Your insetting project developer Other activities might focus on livelihoods and have
should lead on this. no direct climate benefits at all. When designing
insetting projects, it is important that you carefully
The engagement process can create a sense of balance the different activities needed on the
ownership for local stakeholders, which helps ground in order to develop long-lasting, holistic
to avoid creating new dependencies, whilst and inclusive projects, while still meeting your
still supporting local communities. It is key that benchmarking from a carbon price perspective.
19LESSON 8: 2.
Actively engage your suppliers
The role of suppliers in insetting can vary greatly. At can only be claimed by one party, and therefore
the very least, they should endorse and facilitate your clear communication with your suppliers need to be
insetting project. Some suppliers might even take on ensured. Further guidance on this “double-claiming” is
a big part of the project development. To select the provided by Gold Standard’s Value Chain Intervention
right participating suppliers, you can start with existing Guidance.
suppliers and identify the most motivated and capable
ones. For multi-tier supply chains, you can work your Strongly engaged and financially capable suppliers
way from direct (“Tier 1”) suppliers upwards or from might also agree to co-fund the project. Co-
local farmers (“Tier 4”) downwards. You can also work funding may come in-kind, in-cash, or a combination
towards connecting existing projects to your supply of both. When co-funding is provided in-cash, the
chain by starting to source from the project area. The majority of the funding typically still comes from the
benefits of this approach are that existing projects are insetting company downstream. A typical form of in-
often more mature and it might be an easier way to kind co-funding is through support on-the-ground
challenge the status quo in your existing supply chain. of the supplier’s local network of field technicians.
However, shifting supply chains to a meaningful extent Field technicians have existing strong relationships
requires time, hard work and the correct partnerships with farmers and understand the local context. They
and incentives. The right approach (top-down, can help by creating access, building trust, providing
bottom-up or new supply chain) often depends training and facilitating data collection. Where
on the willingness and proactiveness in your suppliers are significant co-funders, they need to be
specific supply chain. involved in the project governance as well, e.g. in a
regular steering committee. Where suppliers co-fund
Where you work with existing suppliers, they can and climate benefits cannot be co-claimed, there
potentially take a very strong role in supporting needs to be an agreement of how climate benefits
and implementing your insetting strategy. In order are shared. This could well be pro-rata according to
to unlock such collaboration, it is key to align with the different funding contributions, but it is up for
your suppliers on the benefits of insetting. negotiation by the involved parties.
Suppliers and sub-suppliers are often particularly
prone to local risks such as climate change impacts, The last element to keep in mind when engaging
negatively impacted communities and degrading suppliers is traceability. Traceability is a strong
natural resources. The mitigating effects of insetting enabler for insetting, but you can work with more
on such risks provide important leverage to get your opaque supply chains as well. Knowing which
suppliers’ buy-in. Some suppliers might also have farmer produces your product is not only important
their own climate targets, which makes it easier to for risk management, it also creates emotional links.
engage them. However, you need to keep in mind In very volatile and opaque markets, you may also
rules for accounting climate benefits along supply work with farmers in the wider region that you know
chains. As a rule of thumb, climate benefits claimed is relevant to you (the “supply shed”*) without full
as value chain decarbonisation can be simultaneously traceability to farm-level. You can then still claim
shared by different partners along the chain. climate benefits, following a mass balance logic, which
Climate benefits used for compensation of other ensures that you don’t claim more climate benefits than
emissions (e.g. emissions related to manufacturing) your project has resulted in.
*This concept is further described in Gold Standard’s Value Chain Intervention Guidance.
202.
LESSON 9:
Align payments with performance
The financial management of insetting insetting projects, benchmark carbon
projects can be complex, so most insetting prices can be very helpful. Due to the
companies let the dedicated project high diversity of insetting project types
developer manage the project funding. and designs, costs vary widely. Historically,
This process is efficient but requires careful insetting projects in the global south have
oversight and reporting. been typically in the range of 15-30€/tCO2e,
whereas many offsetting projects were
In order to ensure that the motivations of all around 5-10 €/tCO2e. It is expected that
partners are the successful achievement of in future carbon prices will go up. Insetting
positive impact, payments should be as prices might be more stable compared to
much as possible linked to performance, offsetting due to longer time horizons and
often demonstrated by the delivery less exposure to the global carbon markets.
of climate benefits. As this delivery is
often only achieved several years after the Carbon markets can provide an
project starts, it might require internal fund additional source of income for insetting
structures to reserve the budget upfront. activities. Buyers on the carbon markets
Also, project developers can take the role of might be from entirely different industries,
retaining funds until their final dispersal. Even such as an IT company buying carbon credits
with incentivising good performance, your from a food company. In order to access
company will most likely need to provide carbon markets, carbon credits must be
some up-front funding. Almost all project generated, which entails a full certification
developers will require significant funding under e.g. VCS or Gold Standard. Since
at the time of project initiation. This needs the market still is relatively opaque, it might
to be covered by early funding linked to require a carbon broker or specialist to
meaningful and verifiable milestones of access the market. Keep in mind that climate
project implementation. Such milestones benefits sold as carbon credits on the market
might include for example “X trees planted” cannot then be claimed by other parties,
or “Y cookstoves distributed”. Upfront including the insetting company or involved
funding over the first 1-3 years typically suppliers. This means that interventions
includes over 50% of the total project leading to carbon credits sold on the market
funding for newly started insetting projects. are on top of the activities needed to achieve
Direct performance-based payments to the own climate targets of the insetting
smallholder farmers, e.g. in a scheme that company (in other words, the “excess” credits
provides Payment for Ecosystem Services are sold). Accessing carbon markets might
related to tree survival and growth are make sense as the additional funding in-flow
still rarely used in insetting, but potentially allows for larger projects. These in turn are
promising tools to incentivise long-term more cost-effective due to lower fixed costs
performance. (e.g. certification, project design, etc.) and
economies of scale (e.g. in sourcing seedlings
In order to prioritise among potential or equipment).
21© PUR Projet / Elegante
2.
LESSON 10:
Communicate progress to your stakeholders
As you advance on your insetting journey, unknown to consumers and probably many
don’t forget to communicate your investors. Educating your investors and
successes to your stakeholders beyond other stakeholders about the concept
the company. Consumers, investors, of insetting is an important aspect
NGOs, activists and regulators are among of your insetting journey. Investors
the strongest drivers in the transformation increasingly care about climate and
to a sustainable economy. Stay connected nature-related risks (see more in lesson
to them throughout your journey, 2). Insetting can help to mitigate these
talking about both your achievements and is thus highly relevant for initiatives
and challenges. You can engage with such as SBTi, TCFD, TNFD or CDP. Use
consumers through numbers and metrics, these reporting standards as well as direct
but also through sharing powerful stories interactions to inform and engage your
to make your positive impact more investors in order to secure their support.
Sharing valuable learnings with your peers
and interested parties through collaborative
platforms, conferences and other initiatives
can inspire others and contribute to
catalysing action.
tangible and relatable. Great stories Insetting is still a relatively new approach.
involve putting people at the centre, these Sharing your experiences with other
could be farmers or other beneficiaries companies that apply insetting
or indeed colleagues discovering the strategies is therefore extremely
projects. Or you can speak directly about helpful. Sharing valuable learnings with
your insetting projects’ positive impacts, your peers and interested parties through
for example on tree planting and growth, collaborative platforms, conferences and
farmer livelihoods and biodiversity. other initiatives can inspire others and
contribute to catalysing action.
Currently the term “insetting” is still
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