As companies race to reduce their carbon footprints, two terms often come up: carbon offsetting and carbon insetting. While both aim to balance greenhouse gas emissions, they differ significantly in method, location, and impact.
Understanding these differences is essential if you want to avoid greenwashing and take credible, long-term climate action.
What Is Carbon Offsetting?
Carbon offsetting means paying for emission reductions elsewhere to compensate for the emissions your business is producing today.
These reductions typically happen through certified projects such as:
- Reforestation and forest preservation
- Wind or solar power projects
- Methane capture at landfills or farms
- Clean cookstove distribution in developing regions
You purchase carbon credits, each representing one tonne of CO₂e avoided or removed, and use them to “neutralise” your footprint.
Key Points:
- Projects are external to your operations
- Often used to compensate for unavoidable emissions
- Verification is handled by third parties (e.g. Gold Standard, Verra)
- Can be seen as outsourcing your climate responsibility
Used correctly, offsetting can support global decarbonisation. But used as a substitute for cutting emissions, it risks undermining credibility.
Is carbon offsetting greenwashing?
No, carbon offsetting is not inherently greenwashing, but it can become so when used as a shortcut instead of real emission reductions. The key is whether offsets complement a strong decarbonisation strategy or replace it.
When offsetting looks like greenwashing:
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Used to claim “carbon neutral” without cutting actual emissions.
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Cheap credits without clear verification or long-term impact.
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No transparent reporting on reductions versus offsets.
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Marketing highlights offsets while operations stay highly polluting.
When offsetting is legitimate:
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Offsets are used only for residual emissions that cannot yet be eliminated internally.
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Projects are verified under recognised standards and deliver real climate benefits.
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Companies report clearly on internal cuts and what has been offset.
What Is Carbon Insetting?
Carbon insetting involves reducing emissions within your own value chain, whether in operations, supply chains, or communities connected to your business.
Examples of insetting include:
- Supporting regenerative agriculture with your suppliers
- Funding solar panel installations at contract manufacturing sites
- Improving logistics efficiency across your distribution network
- Transitioning raw material producers to low-emission practices
Rather than outsourcing impact, insetting brings climate action in-house.
Key Points:
- Happens inside your supply chain or operational boundaries
- Contributes to Scope 3 reductions
- Aligns with long-term decarbonisation plans
- Builds supply chain resilience and co-benefits (e.g. biodiversity, worker welfare)
Insetting allows companies to go beyond offsetting and make emissions reduction a core business strategy.
Carbon Offsetting vs Carbon Insetting: Key Differences
| Factor | Offsetting | Insetting |
| Location | External, anywhere globally | Internal, within your value chain |
| Type of project | Forests, renewables, carbon removal | Regenerative agriculture, supply chain upgrades |
| Control & integration | Low – typically outsourced | High – built into supplier or operational strategy |
| Reputation risk | Higher risk of greenwashing if over-relied upon | Lower – seen as proactive and embedded |
| Verification | Via third-party carbon credit registries | May be self-assessed or verified insets |
| Impact on Scope 3 | Indirect, limited | Direct, measurable |
Which One Should You Use?
✅ Use carbon offsetting when:
- You need to compensate for residual or hard-to-abate emissions
- You’re in the early stages of sustainability strategy
- You want to support global climate projects
✅ Use carbon insetting when:
- You have influence over your value chain (e.g. suppliers, logistics)
- You’re ready to embed climate action into procurement and operations
- You’re aiming for Scope 3 reductions and long-term resilience
✅ Use both for a balanced strategy:
Offset what you can’t yet reduce, but invest in insetting to reshape the emissions within your control.
A Real-World Example: GANNI’s Insetting Pivot
Fashion brand GANNI announced a bold move away from offsets and towards insetting. Instead of buying carbon credits to cancel out emissions, they partnered with a supplier in Portugal to build a solar plant, directly powering garment production.
This approach doesn’t just cut emissions, it empowers suppliers, builds resilience, and adds legitimacy to GANNI’s climate narrative.
Why Carbon Insetting Is Rising?
- Greater scrutiny on carbon offset quality
- Scope 3 emissions becoming the focus of regulation and investor interest
- Insetting builds business value, not just compliance
By improving the parts of the value chain you already depend on, you don’t just “neutralise” emissions., you reduce them at the source.
Conclusion
Offsetting helps you balance the carbon books. Insetting helps you change the game.
Both have their place in a credible climate strategy. But as pressure grows to show real-world impact, insetting is quickly becoming the new standard.
Frequently Asked Questions (FAQ)
What is the difference between carbon insetting and carbon offsetting?
Carbon offsetting supports emissions reductions through projects outside a company’s value chain. Carbon insetting focuses on reducing emissions within the company’s own operations or supply chain.
What is carbon offsetting?
Carbon offsetting involves purchasing carbon credits to compensate for emissions that a business has not yet reduced. Each credit usually represents one tonne of carbon dioxide equivalent that has been avoided or removed elsewhere.
What is carbon insetting?
Carbon insetting means investing in emissions reductions within a company’s value chain. This could involve helping suppliers adopt cleaner technology or improving the environmental impact of raw material production.
Is carbon offsetting greenwashing?
Carbon offsetting is not automatically greenwashing. It can become misleading when a company relies on credits instead of reducing its own emissions or makes claims that are not supported by clear evidence.
Can a business use carbon insetting and offsetting together?
Yes. A business can use insetting to reduce emissions within areas it can influence, while using high-quality offsets for emissions that cannot yet be eliminated. The priority should remain on making genuine reductions wherever possible.
