The world is on track for a global temperature rise of 2.7°C by the end of the century.
For example – company A could offset its unavoidable emissions by purchasing carbon credits from company B that is in the business of, or uses, renewable energy.
Alternatively, company A could pay company C for carrying out reforestation initiatives.
However, despite the simple nature of this exchange, some crucial factors such as double-counting and additionality have the potential to reverse the impact of carbon markets from positive to negative.
While the world grapples with the impending challenge of getting to net-zero by 2050, companies and countries will inevitably incorporate the use of carbon offsets.
As explained by the International Platform for Insetting, with the aim of slashing GHG emissions from one’s own supply chain, insetting is the implementation of nature-based solutions such as reforestation, agroforestry, renewable energy and regenerative agriculture.
For example, a company on its insetting journey would first evaluate its own supply chain to identify where the major chunks of their GHG emissions are embedded.
The company has also adopted virtual software and applications to help with sales and marketing operations, reducing air travel by their sales teams and minimizing their travel emissions footprint.
Apart from regulating the ecosystem, by storing water, conserving the soil and absorbing carbon, the initiative offers fresh income opportunities to the farmers through the sale of fruits and timber.
Standards are organizations, usually NGOs, which certify that a particular project meets its stated objectives and its stated volume of emissions.
While compliance markets are currently limited to carbon credits from a specific region, voluntary carbon credits are significantly more fluid, unrestrained by boundaries set by nation-states or political unions.
Accor, a food and beverage operator, has planted over 7 million trees on 400 farmed land parcels as part of its regenerative agriculture practices.
Inferring from the companies making tangible progress with their insetting activities, the world would be better poised to achieve the climate goal of 1.5°C if companies adopted both routes.