The Shift from Offsetting to Insetting: A Strategic Approach to Sustainability
In our previous article on biodiversity offsets, we discussed the inherent limitations of offsetting, particularly when it comes to biodiversity. The hyper-local and non-fungible nature of ecosystems means that restoration in one area cannot compensate for destruction in another. This fundamental reality necessitates a reevaluation of how companies approach sustainability, emphasizing the need for direct action and more sustainable practices across their value chains. This is where the concept of insetting comes into play.
Understanding Insetting
Insetting focuses on fundamentally altering business practices for more sustainable outcomes. Unlike carbon offsetting, which involves investing in external projects to compensate for emissions, insetting focuses on direct actions within a company's own operations and supply chain. This can include adopting regenerative agriculture practices and circular business models, and substituting hazardous chemicals with eco-friendly alternatives. While offsetting may seem to offer an easy route to becoming nature positive, insetting addresses the root causes of ecosystem destruction, leading to a more sustainable and resilient business model.
Practical Examples of Insetting
Implementing insetting strategies can take various forms, such as:
Sustainable Water Management: Implement water-saving techniques and technologies in business activities to protect local water resources and associated biodiversity.
Biodegradable Materials: Use biodegradable materials for packaging and products to minimize the impact on ecosystems after their use.
Sustainable Procurement Practices: Sourcing ingredients from suppliers who use regenerative agricultural methods that implement diverse crop rotations and intercropping to reduce pest outbreaks, improve soil fertility, and create habitats for beneficial insects and other wildlife.
Circular Design: Redesigning a product's lifecycle to enable refurbishment or recycling, thereby preventing it from ending up in landfills.
Why Offsetting Doesn’t Work
While biodiversity offsets may seem like a quick and easier way to support nature, offsets often fail due to overestimating their impact, environmental changes, leakage, and unreliable baselines. These challenges highlight why offsets alone cannot reliably achieve long-term biodiversity conservation goals, as they often fail to deliver the promised environmental benefits.
Overestimating Impact: Biodiversity offsets often overestimate their conservation impact. For example, a project might claim to protect a certain amount of habitat, but in reality, only a fraction of that area sees any tangible benefits.
Environmental Changes: Climate events like wildfires and habitat destruction can negate conservation efforts. For instance, a wildfire could destroy a protected forest area, releasing stored carbon and nullifying the intended offset benefits.
Leakage: Harmful activities may simply move to new locations, negating the benefits of the offset. An example is when deforestation activities are displaced from a protected area to an unprotected one nearby, continuing biodiversity loss.
Unreliable Baselines: Unreliable baselines can inflate the perceived success of projects. For example, a project might assume a higher rate of habitat destruction without intervention than is realistic, making the project's actual impact appear greater than it is.
The Growing Importance of Insetting
Insetting is increasingly recognized as a crucial strategy for reducing biodiversity impacts and enhancing corporate sustainability. Implementing sustainable agriculture practices in company supply chains has been a leading focus, especially for food and beverage companies. Danone has implemented agroforestry projects within its supply chain, particularly in dairy farming, to improve soil health, increase biodiversity, and enhance carbon sequestration. The company collaborates with farmers to plant trees on their land, creating more resilient and sustainable farming systems. Nespresso has engaged in biodiversity insetting through its AAA Sustainable Quality™ Program that includes promoting shade-grown coffee, which involves planting native trees on coffee farms to create a more biodiverse environment, improve soil quality, and support local ecosystems.
The luxury fashion group Kering, which owns brands like Gucci and Yves Saint Laurent, is committed to biodiversity insetting with a goal of achieving a net positive impact on biodiversity by 2025. They have launched the "Kering for Nature Fund" to convert 1 million hectares of farms into regenerative agriculture and partnered with the Savory Institute to promote regenerative practices in their leather and fiber supply chains. Similarly, L'Oréal's Sustainable Sourcing program includes initiatives like sourcing from sustainably managed forests and supporting agroforestry projects. In 2023, 63% of L'Oréal's raw materials were developed using green chemistry principles. Both companies’ efforts, including biodegradable formulas and renewable packaging, demonstrate how insetting can support biodiversity and sustainability across various industries.
The Way Forward
Reducing impacts on nature is essential for climate stabilization and maintaining critical ecosystem services such as clean air, water, and soil. Companies must adopt practices that genuinely preserve and protect biodiversity. By prioritizing insetting over offsetting, companies can ensure they are taking meaningful and effective actions towards sustainability, creating a positive impact on both the environment and their business. To learn more about how to measure your nature risk and quantify the level of insetting needed, get in touch with us.
