Food Companies Try ‘Insetting’ to Combat Climate Change
Today’s newsletter looks at what “insets” are and how food companies are testing the concept to reduce their indirect emissions.
Want more food news delivered to your inbox? Get the new Business of Food newsletter, a weekly look at how the world feeds itself in a changing economy and climate, from farming to supply chains to consumer trends.
By Yinka Ibukun
For firms operating in the global agri-food sector, indirect emissions have long been a known unknown. Big food conglomerates typically don’t trace their produce back to an individual small farm in Africa or Asia where it was harvested, and they therefore have no oversight over the emissions generated there.
Yet regulators are increasingly calling on companies in the the sector, the world’s biggest emitter after fossil fuels, to take responsibility for their full supply chain. Data show indirect emissions — known as Scope 3 — may account for as much as 90% of the overall carbon footprint in the agri-food industry. That’s making it impossible to overlook.
This is where “insets” come in. The concept is similar to offsets where companies buy credits from a third party’s emissions-reduction projects to show their commitment to decarbonization. The difference is insets are generated from mitigation projects developed and funded by a company within its own supply chain.
The idea is being tested by international food giants from Nestle SA in Switzerland to Olam Agri Holdings in Singapore.
Julie Greene, chief sustainability officer at Olam Agri, said the company is now looking more at insets than offsets as a way to better prove its progress on reducing emissions.
“Our first priority is to sell low-carbon products,” she said. “We want to make sure we are reducing our footprint.”
The carbon offset market has been rocked in recent years by accusations of greenwashing. The Science Based Targets initiative, the leading authority for measuring corporate climate action, has historically not allowed for offsets to be used to meet corporate climate targets. Even though some industry groups have argued for their inclusion.
Companies in theory have more control and visibility over an inset project than over an offset one. A study by Conservation International found that by focusing on 20 commodities alone, insetting could reduce emissions on agricultural lands by as much as 4 billion tons of CO2 equivalent a year. That represents about 8% of all global anthropogenic greenhouse gas emissions in 2023.
Paying for your own emissions-reduction project is generally more expensive than buying offsets, which may limit the uptake of insetting. But agri-food companies often have other reasons for making sustainable investments in their value chain, beyond just meeting their climate targets.
Projects that improve water availability, for example, can have direct benefits for a company’s bottom line. Denmark’s Carlsberg A/S is just one brewer putting money behind research into climate resilient crops as droughts and heat waves threaten water availability and barley yields.
In practice many companies have been supporting insetting projects for years, but putting a label on the work and quantifying the difference it’s making has become more important to get internal buy-in. It’s also seen as a way to better communicate climate action and risks to outside stakeholders and customers. Today many businesses are either backsliding on climate goals or being told by regulators to walk back exaggerated sustainability claims.
“Companies are going to be limited in what they can justify if they’re saying we’re doing this just to meet our climate goals,” said Elijah Innes-Wimsatt, director of corporate climate solutions at Conservation International.
“The case [for insetting] can be much stronger when these actions ensure the resilience of their supply chain against increasingly intense climate shocks.”
For unlimited access to climate and energy news, please subscribe.
“One thing we are confident about in the future is that dry periods will be drier and wet periods will be wetter. That’s not good for agriculture.”
Timothy Searchinger
A senior research scholar at Princeton University and a senior fellow at the World Resources Institute
Some crops will do better than others in a warming world. A study examining crop yields for six staples finds that while all are set to decline, rice has a better chance thanks to its traits, the climates it’s grown in and adaptation options.
The Republican-led US Senate’s passage of legislation to eliminate incentives for clean energy means homeowners likely have until the end of the year to install solar panels, batteries and heat pumps before costs soar.
The bill must still be reconciled with the House of Representatives version and signed into law by President Donald Trump. But the Senate action has dashed advocates’ hopes that it might restore some Inflation Reduction Act (IRA) subsidies, or at least give people more time to claim a 30% tax credit on the five-figure cost of installing rooftop solar and home battery storage systems. The Senate bill terminates those subsidies, along with a $2,000 tax credit for buying heat pumps, after Dec. 31 and repeals a $7,500 tax credit for the purchase of some electric vehicles after Sept. 30. A loophole that allowed carmakers to pass that savings to customers who lease EVs also would end then.
“The repeal of the credits takes away an option for households to gain not just climate friendly appliances but appliances and systems that effectively enabled them to cut their energy bills,” said Ari Matusiak, chief executive officer of Rewiring America, a nonprofit that advocates for community electrification.
Read the full story on Bloomberg.com.
China’s vast clean-energy industry has spearheaded a BRICS solar-power boom, with the bloc accounting for more than half of global generation last year, energy research firm Ember said in a new report.
It’s time to learn from the mistakes made in the name of climate finance, as it becomes increasingly clear that flagship issues such as emissions reductions have alienated local communities and fueled political tensions, according to Daniel Hanna, Barclays Plc’s group head of sustainable and transition finance.
Extreme heat is becoming more intense and frequent due to climate change, testing the limits of the human body. Thousands of people across the world die each year from excessively high temperatures. What makes it so dangerous? Read Bloomberg Green’s explainer on the impacts of heat on Bloomberg.com.
When the UK handed the Labour party a parliamentary majority last July, it promised to build a new state owned energy company called Great British Energy. It’s almost exactly one year since its creation, and GB Energy now has a budget of £5.8 billion to get the organization off the ground. It sounds like a lot of money, but is it? And what exactly will the organization do with all of it? On Zero this week, Akshat Rathi spoke to Dan McGrail, interim CEO of GB Energy, to find out the answers. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.