As climate change is a pressing global issue, organizations are exploring ways to reduce their carbon footprints. In the strategies that organizations deploy, two distinct approaches can be found: carbon offsetting and carbon insetting. While both strategies aim to mitigate greenhouse gas (GHG) emissions, their methods and implications differ significantly. Understanding these differences is crucial for project managers and decision-makers striving to implement effective sustainability strategies.

Carbon offsetting involves compensating for an organization’s emissions by funding projects outside its value chain that reduce or remove an equivalent amount of carbon dioxide (CO₂) from the atmosphere. These projects are typically external and can include initiatives such as: reforestation or afforestation projects, renewable energy installations (e.g., wind farms or solar projects), methane capture in landfills or agriculture, and carbon capture and storage technologies.

The idea is straightforward: for every ton of carbon emitted, an equivalent amount is “offset” through these external projects. Companies purchase carbon credits that represent a specific quantity of emissions reduction or removal, often certified by standards like the Gold Standard or Verra.

Carbon Offsetting allows companies to address emissions that are difficult to eliminate in the short term However, offsetting doesn’t address the root cause of emissions, as companies may continue unsustainable practices. Offsetting may therefore be seen as practical on the short-term, but not a solution on the long-term.

Carbon insetting focuses on reducing or removing emissions within an organization’s own value chain. It involves integrating sustainable practices and initiatives directly into business operations, supply chains, or stakeholder relationships. Examples of insetting projects include supporting sustainable agricultural practices among suppliers, transitioning to renewable energy sources within facilities, enhancing forest management practices in owned or managed lands, and improving logistics for reduced transportation emissions.

Insetting emphasizes accountability and long-term commitment to sustainability by creating value for the organization while addressing environmental impacts. Insetting addresses emissions at the source and often leads to operational improvements and innovations. And as organizations may engage suppliers, employees, and communities in their sustainability efforts, insetting often develops stronger stakeholder relationships.

While both approaches play a role in reducing carbon emissions, insetting is increasingly seen as a more robust and sustainable strategy. It prioritizes addressing emissions at their source, fostering systemic change, and aligning with long-term business goals.

Carbon insetting strategies require the development of new business processes, resources, supply chains and/or products. Projects play a key-enabling role in these strategies, as they realize and implement changes in organizations. However, studies show that organizations struggle with implementing their sustainability strategies for a variety of reasons. One reason being the competences of the project managers. Integrating sustainability in business requires project managers to understand how the concepts of sustainability influence the way projects are developed, planned, organized, executed, managed and governed: Sustainable Project Management. The new IPMA “Sustainable Project Management ICB4 Reference Guide” provides a holistic standard on the competences that Sustainable Project Management requires. The Guide provides the foundation of IPMA’s new Sustainable Project Management certifications, that will be launched this year. Follow this blog to stay updated!