Insetting vs offsetting

Offsetting means buying credits from projects outside your business to compensate for your emissions; insetting means paying for cuts or removals inside your own value chain, such as with a supplier or haulier. As of 2026, an inset that is properly measured lowers the Scope 3 figure you report, while an offset never changes your inventory and is reported separately.

Updated 19 October 2026 by the Carbon Recycling team. Figures use the official UK government conversion factors and are checked against the current gov.uk guidance.

The short version

	Offsetting	Insetting
Where the project is	Anywhere, usually unconnected to your business	In your own value chain: suppliers, hauliers, farms, customers
What you get	A credit, retired on a registry	Lower emissions in your supply chain, usually without a credit
Changes your reported Scope 3?	No, credits are reported separately	Yes, if your data reflects the change
Main risk	Poor quality credits	Counting the same cut twice, or not being able to measure it

There is no single agreed definition of insetting, and different schemes and consultancies use it to mean slightly different things. So whatever you call it, describe what you actually did.

Why insetting shows up in your figures and offsetting doesn't

Your Scope 3 is your share of other companies' emissions: what your suppliers burn making your goods, what your haulier's lorries burn moving them. If you help a supplier cut those emissions, and your calculation uses data that reflects it, your Scope 3 goes down. That is a real reduction in your inventory.

A credit works differently. The GHG Protocol's Land Sector and Removals Standard, published in January 2026, says credits are quantified differently and reported separately from the emissions in your inventory, and can't be used directly in it. You can use credits towards a separate compensation or contribution target, but not to make your Scope 1, 2 or 3 smaller. Our post on offsets versus removals covers how credits fit with net zero.

A worked example

A haulier moves 150,000 tonne-km of goods a year for you by HGV. At the 2026 government factor of 0.10356 kg CO2e per tonne-km, that is 15.53 tonnes CO2e in your Scope 3, category 4.

You agree with the haulier to consolidate deliveries and fill lorries better, so the tonne-km needed to move the same goods falls by 20%. Your category 4 figure drops to 12.43 tonnes, a saving of 3.11 tonnes a year, and it shows in next year's footprint.
If instead you bought 3.11 tonnes of credits from an unrelated project, your category 4 figure would stay at 15.53 tonnes, with the credits in a separate line.

The inset also tends to keep paying back: fuller lorries carry on saving fuel every year. The haulier saves money too, which makes the change easier to agree.

The catch: your data has to be able to see it

Many small firms estimate Scope 3 from spend, using the government's multipliers. That's a fine place to start, but a spend-based figure only moves when your spend moves. If a supplier halves its emissions and charges you the same, your spend-based estimate won't change. To see an inset in your figures, you need activity data, such as tonne-km or fuel, or the supplier's own emissions allocated to you. Our posts on spend-based Scope 3 and asking suppliers for carbon data explain both routes.

Avoid counting it twice

If a project in your supply chain is also issuing credits, someone else may buy them and claim the same tonnes. The GHG Protocol asks companies that track targets with their inventory to avoid double counting with credited reductions. In practice:

ask whether the project issues or sells credits for the same reduction;
if it does, don't claim the tonnes both as a cut in your inventory and as a credit you hold;
keep a short record of the project, the data and who else is counting it.

The rules are still moving

Standards bodies are working out how to recognise value chain action properly. The SBTi's Corporate Net-Zero Standard V2.0, in effect from 31 January 2027, adds a hierarchy that puts direct, activity-level reductions first, and only allows action across shared supply systems where there are structural limits. The GHG Protocol consulted between March and June 2026 on new optional reporting statements, including one for the real-world impact of actions inside and outside the value chain, and published its feedback summary in September 2026. Neither has settled every detail, so expect the guidance on insetting claims to firm up over the next year or two.

What to say about it

Describe the project and its measured effect: "In 2026 we worked with our haulier to consolidate deliveries, cutting the road freight in our Scope 3 by about a fifth." Avoid calling it an offset or using it to support a carbon neutral claim. The Competition and Markets Authority's Green Claims Code expects claims to be accurate and substantiated, and our post on net zero and carbon neutral wording explains the words to be careful with.

How Carbon Recycling helps

Carbon Recycling records road freight in tonne-km and a supplier's own allocated emissions against the right Scope 3 category, so a cut made with a supplier or haulier shows in your next year's footprint. On the Growth plan you can send supplier data requests: suppliers reply through a secure link without an account, and you decide whether to accept their figures. Your Carbon Reduction Plan then shows the reduction against your baseline. We don't sell offsets or credits.

Frequently asked questions

What is insetting?

Funding or carrying out emission cuts or removals inside your own value chain, for example with a supplier, a haulier or the farms you buy from, rather than buying credits from unrelated projects. There is no single official definition, so say exactly what you did.

Is insetting better than offsetting?

Usually it is more useful, because a cut in your value chain lowers the Scope 3 figure you report and tends to last. An offset doesn't change your inventory at all. But insetting only counts if the cut is real, measured and not also sold to someone else as a credit.

Does insetting reduce my Scope 3?

Yes, if your Scope 3 is calculated from data that reflects the change, such as tonne-km, fuel or a supplier's own figures. If you estimate Scope 3 from spend, a supplier's cut won't show until you switch to better data.

Can I buy insetting credits?

Some schemes sell credits from projects in particular supply chains. Treat them like any other credit: check the standard, the registry and that the same reduction isn't also counted in your own inventory. Counting it twice is the main risk.

Is insetting allowed in a Carbon Reduction Plan?

A PPN 006 plan reports your emissions as measured. If a project with a supplier cut your Scope 3, that shows in the figures and you can describe the project as a reduction measure. Credits bought from outside your value chain are not counted as reductions.

Plastic Packaging Tax: what it is and how it links to carbon
The 2026 rate, who registers, the April 2027 changes and where plastic packaging sits in your Scope 3 footprint.
Packaging EPR: what small producers have to report
Who counts as a small producer under packaging EPR, what to report by 1 April, the fees, and how the data links to your carbon footprint.
ISO 14064-1 explained: do you need it?
The ISO greenhouse gas inventory standard in plain English: its six categories, how it compares with the GHG Protocol, and when you need it.

All posts on this topic →

Get your figures and reports done in an afternoon

Add a year of bills and Carbon Recycling produces your footprint, PPN 006 Carbon Reduction Plan and SECR report, with every figure traced to its government factor. Prices are on the pricing page, from £59 a month + VAT.

Start free trial See prices

14 days free. No card needed.