When we consider carbon insetting, CO2 compensation (also called CO2 binding) becomes part of the corporate value chain, or compensates for CO2 emissions within the production chain of a company or corporation. Unlike in carbon offsetting, no existing climate protection projects will be supported elsewhere in this example.
Climate protection commitments by companies and private individuals should always be based on the following three pillars: Avoiding CO2 wherever possible, reducing CO2 and compensating, or compensating for unavoidable CO2 emissions (avoid, reduce, offset). What's behind the carbon insetting mechanism and what's the difference between carbon insetting and carbon offsetting?
When we contemplate Carbon insetting, climate protection measures in the company's own value chain must be implemented. This process makes sense, since most companies generate or simply buy a high proportion of CO2 emissions in their supply chain. This is due to production and transport of suppliers.
Carbon offsetting with a regional association to a company’s own supply chain
By doing so, it is important to be careful in order to ensure that the selection of a specific climate protection project is linked to a company’s own supply chain. Thus, the producer of a product can consciously support climate protection in a certain region, if he receives a large part of his raw materials from that specific region. However, whether this can already be described as carbon insetting or not is very controversial, even among experts.
Carbon offsetting directly related to a company’s own supply chain
Carbon insetting ensures that a company’s own supply chain profits directly from a specific climate protection project. A regional connection as described above is not sufficient or absolutely necessary here. For example we can mention renewable energy: climate protection projects that are being used directly by companies within their own supply chain. This directly reduces the carbon footprint of your own products. Thus, the effect of this measure is reflected directly in a company’s own supply chain and influences the company’s supply chain exceptionally positively.
Climate protection projects which are implemented in a company’s own supply chain
This measure must be customized to a company's own supply chain, and also be located and implemented directly in that company’s own supply chain. By doing so, measures which reduce waste during production, or reduce energy consumption, are being implemented. This approach is by far the most demanding, since many companies do not have the resources necessary to establish their own climate protection project in their value chain, merely because of their size. Therefore, a compromise is to apply an existing mechanism directly related to a company’s own supply chain.
Oro Moreno, a Panamanian chocolate manufacturer, cultivates cocoa crops on the cocoa fields of its suppliers in addition to afforestation measures. This combination does not only improve the farmers' economic bases, but also directly compensates for the CO2 emissions that occur within the production chain. Thus, carbon insetting pursues a decidedly holistic approach which meets both environmental and social challenges. It decreases the poverty of smallholders, for example.
Another example for Carbon insetting is a chain of restaurants that procure vegetables from fields which succeed in sustainable forest management, and thereby promote reforestation.