Carbon insetting in fashion supply chains explained

September 26, 2023

A sustainable approach for fashion brands to reduce emissions

As the world continues to grapple with the urgent need to address climate change, industries across the board are exploring innovative ways to reduce their carbon footprints. One such industry taking significant strides is fashion.

With its vast global supply chains and substantial environmental impact, the fashion industry heavily contributes to greenhouse gas (GHG) emissions. 

Research from McKinsey shows that the fashion industry was responsible for 2.1 billion metric tons of greenhouse gas (GHG) emissions in 2018, about 4% of the global total and around the same quantity of GHGs per year as the entire economies of France, Germany, and the United Kingdom combined. 

As many fashion businesses acknowledge they must play a part in reducing emissions, carbon offsets have emerged as a compelling pathway towards achieving carbon neutrality. Carbon offsets provide an avenue for fashion brands to compensate for their GHG emissions by investing in projects that reduce or remove an equivalent amount of carbon dioxide from the atmosphere. 

Whilst offsets do have some impact on reducing carbon levels, they shouldn’t be considered a substitute for direct emissions reductions. The fashion industry won’t meet climate targets until brands start decarbonising their own value chains to include more nature-positive solutions and operations. 

A way to do so is by implementing carbon insetting, which is a new and innovative approach to carbon footprint reduction that entails working with various stakeholders within the value chain to identify emission reduction opportunities, hence tackling GHG emissions directly from the source. 

In this article, we will delve into the concept of carbon insetting, its benefits, how it’s been implemented in practice and how it compares to traditional carbon offsetting methods.

Understanding Carbon Insetting

Carbon insetting is a proactive strategy employed by organisations to mitigate their carbon emissions by investing in emission reduction projects within their own supply chains. Unlike carbon offsetting, which involves investing in external projects to compensate for emissions, insetting focuses on internal solutions that address emissions generated during the production and distribution processes. 

Implementing insetting allows businesses to connect the reduction of greenhouse gas (GHG) emissions and the sequestration of carbon to the landscapes from which they source their materials. This provides a meaningful opportunity for climate action, fostering the development of sustainable land use models that prioritise the protection and preservation of nature. 

By implementing insetting strategies, businesses can have positive impacts on people and local communities across their entire value chain. Insetting serves as a strategic mechanism to scale up the adoption of effective nature-based solutions, enabling businesses to achieve ambitious climate and sustainability goals while aligning their operations with the ecosystems they rely on.

Carbon Insetting Projects vs Interventions 

Carbon insetting strategies can be broadly classified into two categories: projects and interventions. Insetting projects involve targeted actions across a company's value chain that aim to generate reductions in GHG emissions and carbon storage, while simultaneously generating positive impacts for communities, landscapes, and ecosystems. 

Insetting interventions, on the other hand, are often centred around regenerative agriculture practices and agroforestry programs. These interventions focus on the conservation and restoration of natural carbon sinks, including forests, wetlands, coastal areas, and marine ecosystems. 

By implementing such interventions, companies not only achieve their corporate sustainability objectives but also enhance climate resilience and supply chain stability at the core of their operations. 

Insetting interventions effectively address Scope 3 emissions within a value chain, which are the indirect emissions generated from the production of the goods a company purchases or from the sale of their products. This holistic approach to insetting allows businesses to future-proof their operations, improve the quality of their raw materials, and contribute to a more sustainable future.

Carbon Insetting in Practice: GANNI case study

A fashion brand that began implementing carbon insetting in its supply chain is the Danish company GANNI, which began by partnering with Ramil, one of its suppliers in Portugal to install solar panels and improve biodiversity in the surrounding area

For this project, GANNI decided to partner with STRIX, a Portuguese biodiversity consultancy. After installing the solar panel, STRIX conducted a biodiversity assessment, of the flora and fauna in the area and began introducing native species of plants to attract insects, bird, and bat life. 

The biodiversity measures included the creation of log piles and the clearing of debris to install bat boxes and planting peach trees to attract pollinators. They also conducted a biodiversity workshop for the employees to explain the importance of biodiversity. 

GANNI’s carbon consultants, Plan A have estimated that the current installed capacity of the solar panels can bring a potential annual net emissions mitigation of approximately 8.3 metric tonnes of CO2eq, roughly 1.2% of Scope 2 emissions, which include indirect emissions from the generation of purchased electricity.

This project is the perfect example of carbon insetting in practice. This practice sees brands invest directly in decarbonising their own supply chain by partnering with suppliers to lower their emissions, supporting them in accessing more sustainable means of operations and creating benefits for the industry as a whole.

The Apparel Impact institute (AII) is another example of an organisation that works to enhance the sustainability of fashion supply chains through a collaborative approach that benefits the industry as a whole. Through the collection and analysis of supplier data, they identify, fund and scale proven solutions to accelerate positive impact in the industry. 

Through "Clean by Design" , their mill improvement program that reduces environmental impacts of textile manufacturing, they support manufacturing facilities in bettering their operational and environmental efficiency. The AII brings together multinational apparel retailers and fashion brands to assess and improve the environmental impact of their factories worldwide. This initiative focuses on implementing technological improvements to enhance the sustainability of supply chains, ultimately reducing the environmental footprint of the fashion industry.

Photo credit: GANNI

Benefits of Carbon Insetting

1. Localised impact

By investing in emission reduction projects within their supply chains, fashion companies can have a direct impact on reducing emissions in the areas where they operate. This approach enables them to address their own environmental footprint and contribute to the development of sustainable communities.

2. Holistic approach 

Insetting has multiple positive impacts. It not only helps businesses to reduce the GHG emissions of their operations, but it also increases carbon sequestration by re-establishing natural carbon sinks, increases soil health, restores local water cycles and reverses the loss of forests and biodiversity. 

Furthermore, it builds climate resilience, supports the livelihoods of local producers and strengthens communities. By focusing on internal solutions, carbon insetting encourages a comprehensive analysis of the supply chain to identify emission hotspots and opportunities for improvement. This approach enables companies to make targeted investments that lead to long-term emissions reductions.

3. Supply Chain Collaboration

Carbon insetting encourages collaboration among various stakeholders within fashion supply chains. From manufacturers and suppliers to retailers, the collective effort to reduce emissions fosters innovation, knowledge sharing, and the implementation of sustainable practices throughout the industry. 

Working in partnership with suppliers builds trust, brings greater transparency to supply-chain activities, and helps to identify emissions reduction opportunities that create shared value for everyone. 

Carbon insetting aligns sustainability efforts with the core business operations of fashion companies. It integrates emission reduction initiatives into the supply chain, fostering a culture of sustainability throughout the organisation and driving innovation in processes and technologies.

4. Climate adaptation and supply chain resilience

As well as reducing emissions, insetting can also build climate resilience within a company’s supply chain and help restore vital ecosystems on which the suppliers depend. 

Working closely with suppliers and implementing low-carbon and regenerative practices within a company’s value chain results in a wide range of positive impacts which help companies achieve their sustainability targets and deliver against commitments made on climate, nature and communities. 

Improved management of agricultural lands and natural resources leads to greater productivity and a more stable supply of raw materials, making companies’ value chains more resilient over the long term.

5. Long-Term Sustainability

Carbon insetting aims to identify and address the root causes of emissions within the supply chain. By implementing sustainable solutions, such as optimising transportation routes, adopting renewable energy sources, or investing in energy-efficient technologies, fashion companies can achieve lasting reductions in their carbon footprints. 

Insetting enables businesses to integrate their investment in nature into their sustainability strategies and goals. Improved agricultural practices, agroforestry, restoration and conservation allow companies to effectively address the climate crisis. 

Insetting projects help to protect, value and reverse the loss of nature, create regenerative processes in companies’ operations and demonstrate the business case for investing in nature. This allows businesses to integrate their investment in nature into their sustainability strategies and goals, providing a way to scale nature-based solutions across industries, sectors and geographies. 

Insetting enables companies to take a holistic and integrated approach to climate action through a connection to the communities and landscapes they source from. 

This addresses complex issues such as the drivers of deforestation, through implementing long-term sustainable agriculture and forestry practices, and builds much more sustainable land use models.

Carbon Insetting vs. Offsetting

Carbon offsetting refers to financial contributions made to a third party or organisation to create a positive environmental impact that will counteract a company’s own internal carbon emissions. 

Carbon offsetting is a mitigation strategy that’s more focused on compensating for carbon dioxide emissions already emitted, whereas carbon insetting is garnered towards a company reducing its internal carbon emissions. 

The benefits of carbon offsetting are that they help both direct and indirect carbon emissions, can be easily purchased, and can help to increase the use of renewable energy and improve energy efficiency. However, this method of emission reduction is more reactionary as it doesn’t tackle the root of the problem. 

Instead of financing an existing project elsewhere through offsetting, insetting projects are developed with partners along the value chain and are tailored for the operations and impacts of the company. Unlike offsetting, insetting currently does not require verification or certification against agreed global standards. 

Nevertheless, many insetting companies choose to work with an independent verifier or auditor to certify their results according to existing standards, as verification gives an insetting project more credibility. 

The main distinction between carbon insetting and carbon offsetting lies in their approaches to emissions reduction. Carbon insetting focuses on implementing internal methods to reduce emissions, while carbon offsetting involves seeking external means to compensate for excessive emissions. 

Both strategies, however, contribute to combating climate change and reducing emissions. Ultimately, combining carbon insetting and carbon offsetting is the most effective approach, as it allows companies to address emissions both within and outside their operations. Taking action through both insetting and offsetting is crucial for companies to make significant progress in combating climate change and committing to sustainability. 

Insetting can be used by companies in conjunction with offsetting. Carbon insetting enables companies to take ownership of their emissions and actively engage in reducing them. It provides greater transparency and ensures that emission reductions are tangible and measurable, compared to the sometimes ambiguous nature of carbon offsetting.

Insetting enables companies to harmonise their operations with the ecosystems they depend upon through investing in nature and tackling climate change within their value chains. This creates regenerative business models, supply chain stability and long-term sustainability.

Conclusion & Support

The fashion industry's adoption of carbon insetting marks a significant step towards sustainable practices and climate action. By investing in emission reduction projects within their supply chains, fashion companies can directly address their environmental impact and contribute to building a more sustainable future. 

While carbon offsetting still has its place, carbon insetting offers a more accountable, transparent, and comprehensive approach to reducing emissions. As the industry continues to evolve, a combination of both carbon insetting and offsetting can serve as a powerful tool in mitigating climate change and fostering a more sustainable fashion ecosystem. 

Sustainable Brand Platform supports fashion companies in reducing their carbon emissions by offering a data ecosystem in which fashion brands and manufacturers can easily exchange data, measure their emissions and collaborate together in executing their sustainability strategy.

Ready to work on your carbon emissions? Get in touch with us to see how our carbon footprint calculator measures your carbon emissions and benefit from our partner network for insetting and offsetting the calculated emissions.

Gaia Rattazzi
Gaia is a content creator from Italy and former SBP team member. She passionately advocates for sustainable and ethical fashion and writes for several fashion industry-related media with a solution-focused approach.

Continue reading

Ready to start?

Get in touch with us today to become part of a collaborative ecosystem for a data driven fashion industry.

Viale La Playa 15, 09123 Cagliari, Italy
IVA 11067270964
Subscribe to our newsletter