To cut their carbon footprints, more food and bev companies are looking inward

When evaluating a way to cut carbon emissions, many companies have historically favored offsets. No, not the rapper Offset—an outsourced project that many enlist to reduce their carbon footprints, like planting trees or a solar farm.

But lately, an alternative is more in fashion (and other businesses): carbon insetting.

The process—which focuses on carbon-reduction initiatives within a company’s own operations—has gained traction over the past few years, noted Sandra Brandt, director of the International Platform for Insetting (IPI), as businesses work to understand the environmental impact of their supply chains.

“Through that, they understood that their main impacts are usually where the raw materials that make up their products begin their lives,” she told Retail Brew. The move makes particular sense for land-based industries with agricultural supply chains, Brandt noted, like food and bev and apparel.

• IPI, which was formed in 2015 to support businesses that are insetting, counts H&M Group and Nespresso as members.

Another likely contributor to the interest in insetting? Carbon offsets have come under scrutiny. Companies are looking at insetting as an “investment into your business rather than a donation,” Brandt said. “That’s also why we often actually say insetting is offsetting brought home.”

Ready, (in)set, go

Farmer-owned dairy-cooperative Organic Valley is one of the latest companies to get into insetting, announcing a new program in March to reach its goal of becoming carbon-neutral by 2050.

“We have a really close relationship with our supply,” Nicole Rakobitsch, director of sustainability at Organic Valley, told us. “We know who our farmers are; we have long-term relationships with them, and so it just felt like a more authentic approach.”

The company will debut 30–50 new insetting projects this year within three different categories: energy, improved manure management, and agroforestry, she said.

• Ready for a vocab lesson? Its agroforestry efforts include silvopasture, a process of integrating trees with grazing livestock; windbreaks, which means planting trees in a row to block wind and prevent things like soil erosion; and riparian buffers, aka an area of vegetation near lakes, streams, and wetlands that helps with things like filtering runoff and blocking bank erosion.

Rakobitsch said the move will allow its ~1,700 farmers to participate in the carbon market—where carbon credits are sold to buyers like a company or the government—with Organic Valley.

• The co-op pays its farmers for these projects (a minimum of $15 per metric ton per year), and has an agreement in place that they’re only applied to Organic Valley’s climate goals.

Ins and outs: The journey to insetting isn’t quick or easy, Rakobitsch noted. “It takes time to develop meaningful, long-lasting projects. And for a company who wants to be carbon-neutral tomorrow, or in three years, that would be really, really difficult to do through carbon insetting.”

It also takes a lot of green to go green. Installing things like windbreaks, and even designing what they’ll look like, costs $$. While it depends on the country, trees and materials might be between $5,000 and $10,000, prices that could double when factoring in labor costs, according to Organic Valley.

Antoine Ambert, senior director of innovation and sustainability at chocolate brand Alter Eco, echoed that insetting can be expensive. The company has been doing it since 2008, and became carbon-neutral in 2010.

Its early model of insetting was centered around working with farmers in the Peruvian Amazon to plant timber trees amid cocoa fields and get them certified as carbon credits. It now focuses on transitioning farmers from monoculture to dynamic agroforestry, which entails planting ~15 different tree species (like banana trees) alongside its cocoa trees.

• Its founder, Tristan Lecomte, also founded the insetting organization Pur Projet.

The new process is more of an investment, Ambert said, because it requires a lot more seeds (which cost $500–$700 per hectare) and more training ($2,000–$3,000 per farmer). Though, he noted that revenues for farmers are boosted by 20%–30% compared to a monoculture field.

• Ambert added that carbon-offset prices have been rising over the past six months. According to S&P Global Platts, prices for “nature-based” offsets jumped from $4.65 per tonne to $14.40 per tonne of carbon between June 2021 and January 2022.

“The question is, where do you want to invest that money?” Ambert said. “Do you want to invest that money in an offset project from the other side of the world where you don’t source anything but you just get a certificate that’s like, ‘Okay, you captured enough emissions of carbon from the atmosphere to offset your emissions’? Or do you want to start investing their money with your own partners?”

Setting things straight

Brandt and Ambert both pointed to the Science Based Target Initiative—started in 2015 by a who’s who of nonprofits—as a driver for the shift to insetting. It requires companies aiming to reduce emissions to cut the footprint within their value chain in order to be certified, so it doesn’t accept offsets.

• Over 1,000 companies have made net-zero pledges through the SBTI, including food and bev makers like Clif Bar & Company, JBS, and General Mills.

Offsetting is now seen as the “easy way” to become carbon-neutral, but it’s not necessarily a “long-term solution,” Ambert said.

Put off: There are several reasons why offsetting has gotten a bad rap, noted Vishal Agrawal, Henry J. Blommer Family Chair in Sustainable Business at Georgetown University’s McDonough School of Business.

"Some people are just morally opposed to offsets, because they think it’s like paying your way to get out of trouble,” he said. Charlie Kronick, senior climate campaigner at Greenpeace UK, has even called them a “get-out-of-jail-free card.”

• Some companies have used “bad offsets,” Agrawal said, pointing to “tree-planting schemes” that have grown in popularity within the last decade. (They’re less common now, as companies can find high-quality offsets within carbon registries.)
• There’s also a “misplaced notion,” Agrawal noted, that carbon-emission reduction efforts done outside of a company’s own value chain are less effective.

Mix it up: Despite the criticism, Agrawal argues that avoiding offsets completely in favor of insetting could be a constraint for some—especially smaller companies with smaller budgets. Companies shouldn’t put “extra value” on insetting, he said, and instead favor a combination of both methods.

“For a lot of carbon-reduction goals, you will never be able to get there with just insets,” Agrawal said.

• Furthermore, picking offsets that are “high quality” and “align with your value chain,” like a food and beverage company investing in an agricultural project, is ideal.

Ultimately, Agrawal said companies should “look at all the options” to reduce carbon emissions and determine the method that saves the most tons of carbon per dollar.

“I’m always encouraging companies that, ‘Hey, look upstream, look downstream’—perhaps your biggest opportunities, or your biggest impact, lie somewhere else.”