Have you ever wondered how companies can directly reduce their carbon footprint through their supply chains?
Carbon insets are emerging as a powerful tool in corporate sustainability, helping businesses make a tangible impact within their value chains. An inset refers to climate mitigation activities that occur within an organisation's value chain or supply chain.
These activities can take three main forms:
Carbon removals (e.g. regenerating forest on a farm supplier’s land)
Avoided emissions (e.g. preventing deforestation in sourcing areas)
Emission reductions* (e.g. improving energy efficiency in production processes)
*Note: Currently no reduction credits exist under the NZ ETS.
Carbon removal insets, a specific type of inset, involve projects within a company's supply chain that actively remove carbon from the atmosphere.
So, how do insets differ from offsets?
The key difference is that insets occur within the company’s value chain, giving the business more direct control and responsibility. This often involves close collaboration with suppliers or partners. On the other hand, offsets typically involve purchasing carbon credits from external projects that reduce or remove emissions outside the company's value chain.
Farm-Based Carbon Removal Inset Scenario
Company GreenFarm NZ Ltd*, a dairy farming enterprise in New Zealand. *note: this is a fictional company for demonstrative purposes, any resemblances to existing businesses is purely coincidental.
Objective
To reduce the company's carbon footprint by integrating sustainable practices within its value chain, specifically through carbon removal initiatives.
Project
Native Forest Regeneration on Pasture Margins
Identification and Planning
GreenFarm NZ identifies unused pasture margins and riparian zones (areas next to streams) on its farmland.
They plan to convert these areas into native forests to enhance biodiversity, improve water quality, and sequester carbon.
Implementation:
GreenFarm NZ partners with local environmental NGOs and forestry experts to select the best native tree species for planting.
The planting begins in autumn to ensure the young trees have the best chance of survival.
Regular monitoring and maintenance activities are scheduled to manage pests, weeds, and ensure healthy forest growth.
Using CarbonCrop’s FieldScan app, the company captures photo evidence of the planted areas and receives yearly photographic updates from the same locations.
Carbon Sequestration
As the new native forests grow, they sequester carbon by absorbing CO₂ from the atmosphere and storing it in their biomass and soil.
To measure this, GreenFarm NZ uses carbon accounting methods—techniques to calculate the amount of CO₂ captured annually.
CarbonCrop’s tools streamline this process, removing the burden from the farm suppliers and ensuring measurement without the need to visit the site.
Integration into Value Chain
GreenFarm NZ accounts for the carbon removals from native forest regeneration as insets, directly reducing their carbon footprint.
CarbonCrop's reporting features allows for this information to be easily integrated into GreenFarm NZ's sustainability reports, helping the company meet its internal carbon reduction targets.
Beyond the carbon sequestration, these projects help to enhance biodiversity, improve soil health, conserve water, and strengthen GreenFarm NZ's brand as an environmentally responsible company.
Co-Benefits
Beyond carbon sequestration, the regenerated native forests provide habitats for local wildlife, enhance soil health, and contribute to water conservation.
The project strengthens GreenFarm NZ's brand as an environmentally responsible company, appealing to eco-conscious consumers and investors.
Verification and Reporting
GreenFarm NZ employs third-party verification to ensure the accuracy of their carbon sequestration data and compliance with local regulations, supported by the CarbonCrop platform. This independent verification is crucial for maintaining transparency and credibility.
Supported by the CarbonCrop platform, GreenFarm NZ uses the reporting tools to transparently share their results with stakeholders, showcasing their strong commitment to sustainability.
Ready to make the most of the forests in your supply chain? Explore how CarbonCrop can help you turn your on farm forest carbon removals into an asset.
Glossary
Avoided Emissions: Actions that prevent the release of greenhouse gases into the atmosphere, such as protecting forests from deforestation.
Carbon Accounting: Methods used to calculate the amount of carbon dioxide emissions produced or removed by a project, organisation, or activity.
Carbon Credits: Certificates representing the removal or reduction* of one metric ton of carbon dioxide or its equivalent from the atmosphere. Under the NZ ETS, there are no formal “reduction credits” issued.
Carbon Offset: The purchase of carbon credits from external projects that reduce or remove emissions outside the company's value chain, used to decarbonise.
Carbon Sequestration: The process of removing and storing carbon dioxide from the atmosphere, typically through natural processes like tree growth, direct air capture, or soil management.
Emission Reductions: Actions taken to decrease the amount of greenhouse gases released into the atmosphere from your own business activities. Currently no reduction credits exist under the NZ ETS.
Riparian Zones: Areas next to, or near, rivers and streams that have a significant impact on water quality and ecosystem health.
Sustainability Reports: Documents published by companies to communicate their environmental, social, and governance (ESG) performance and impacts to stakeholders.
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