Climate language moves fast, and "carbon neutral" has become one of those phrases that means almost everything and nothing at once. Behind it sit two genuinely different strategies- carbon offsetting and carbon insetting- and the difference between them matters far more than the similarity in their names suggests.
It shapes how businesses think about the makers they work with, the supply chains they build, and the real commitments they make around climate action. Here's what each approach actually means, why the distinction matters, and where the conversation is heading.
What Offsetting Actually Does
Carbon offsetting means compensating for emissions by funding reductions or removals outside a company's own operations or value chain. In practice, this usually looks like a business calculating its emissions, then buying credits from a project somewhere else in the world- for example, a forest conservation scheme or a renewable energy installation.
It's a familiar model, and it isn't without merit. For many businesses, it has been the primary way of taking some responsibility for their climate impact. But it has a structural weakness that's increasingly hard to ignore: the company doing the polluting and the project doing the cleaning up have no real relationship. Offsetting provides a mechanism to take responsibility for emissions, but it does not directly address or reduce emissions at the source. The emissions still happened. The supply chain that produced them hasn't changed. Somewhere else, on paper, an equivalent amount of carbon was theoretically avoided or removed- but the two events are connected only by a transaction, not by any operational link.
There have also been well-documented cases where offsetting schemes have failed to deliver the reductions they claimed. A forest that was never actually at risk of being cut down doesn't represent a real avoided emission, no matter how many credits get sold against it. Growing public and regulatory scrutiny of these failures has pushed the conversation toward something more robust.
What Insetting Does Differently
Insetting involves funding a company's own carbon avoidance or carbon removal projects, within that company's own supply chain, without transacting on a carbon market. Rather than paying a third party to fix a problem elsewhere, insetting means addressing emissions inside the system that produced them- the farms, the production methods, the materials, the logistics that a company actually touches and can influence directly.
The World Economic Forum describes insetting as focusing on "doing more good rather than doing less bad" within one's own value chain- a distinction that captures something important. Offsetting is fundamentally a compensation mechanism. Insetting is a transformation mechanism. One pays to balance a ledger; the other changes how the underlying activity is done in the first place.
Because insetting projects are inside a company's own operations, that company has far more control over what gets funded and can directly measure the impact on its own emissions, rather than trusting a certification body's assessment of a project on the other side of the world. This makes insetting more auditable, more credible, and more likely to produce durable change.
The Role of Technology: Direct Air Capture
Beyond nature-based insetting approaches (regenerative agriculture, agroforestry, reforestation), a newer category of carbon removal has emerged through direct air capture (DAC) technology- machines that pull CO₂ directly from the atmosphere and store it permanently underground.
Climeworks, the Swiss pioneer in this space, is one of the most prominent examples. Unlike nature-based approaches, which depend on ecosystems remaining intact and can be reversed by fire, drought, or land use change, DAC-based removal is considered permanent. The CO₂ captured is mineralised into rock, where it will stay for thousands of years. It is measurable, verifiable, and doesn't require a forest to remain standing for decades to hold its end of the bargain.
The limitation is cost and scale- DAC is currently expensive compared to nature-based approaches. But as the technology matures and demand grows, costs are falling. For businesses looking to contribute to genuinely verifiable carbon removal rather than avoidance, DAC represents a meaningful option alongside, not instead of, insetting within the supply chain.
Why the Distinction Matters More Than Ever
As climate expectations tighten, companies are under increasing pressure to move from offsetting toward insetting, and ultimately toward deeper, more measurable emissions reductions. Some of that pressure is regulatory- the EU's Corporate Sustainability Reporting Directive and the tightening of greenwashing rules across several jurisdictions are making vague carbon neutral claims harder to sustain without substance behind them. Much of it is simply consumer and investor expectation catching up to what the science has been saying for some time: compensation isn't the same as reduction.
This doesn't mean offsetting has no place. Both tools have a role to play, and companies should ideally develop a strategy that incorporates elements of both to meet their climate targets. But where insetting is possible- where a business has genuine visibility and influence over its supply chain- it tends to produce a more durable, more honest form of climate action. One rooted in how a business actually operates, not in a market transaction layered on top of it.
A Practical Framework for Getting Started
The sequence that most sustainability practitioners now advocate is roughly this:
First, measure. You can't reduce what you don't understand. A meaningful climate strategy starts with actual emissions accounting across the supply chain- Scope 1 (direct), Scope 2 (energy), and where possible Scope 3 (the full value chain upstream and downstream).
Second, reduce. Before insetting or offsetting, reduce what you can at source. Switching to lower-emission suppliers, changing materials, improving logistics efficiency. The emissions that don't exist don't need to be removed or compensated for.
Third, inset. For remaining emissions within the supply chain, fund insetting projects- regenerative farming practices with suppliers, renewable energy adoption upstream, sustainable packaging transitions - that directly address the emissions profile of the business's actual activities.
Fourth, remove and offset. For residual emissions that can't yet be eliminated, fund high-quality removal- ideally permanent, verifiable removal through technologies like DAC- as a complement to insetting, not a substitute for it.
The Bigger Picture
Carbon insetting addresses a real weakness in how climate action has been done commercially for the past two decades. Paying someone else to theoretically undo something you did doesn't change the underlying system.
The businesses likely to be most credible on climate in the years ahead are those building it into how they source, make, and move things- not those managing their emissions on a spreadsheet, separated from the operations that generated them. Insetting is what that looks like in practice: not a bolt-on, but a redesign.
Euporium contributes 1 EUR from every order to Climeworks carbon insetting programs.