Buying carbon offsets is typically associated with balancing your carbon footprint. By financing a carbon emissions reduction, removal, or avoidance — such as capturing methane from a landfill or reducing logging activity so forests can sequester more carbon — you can help offset the impact of your existing emissions. However, the benefits of carbon offsets extend far beyond the impact on your own greenhouse gas emissions accounting.
These projects often deliver a range of social and environmental co-benefits that help the local communities where these projects operate. Granted, not all carbon projects help local communities, particularly those that are created without consulting local stakeholders. However, carbon credit buyers can look for projects that are transparent on community involvement and ideally find ones with Benefit Sharing Agreements (BSAs).
Here, we’ll examine some of the top ways that supporting transparent, inclusive carbon projects can benefit local communities:
Economic Benefits of Carbon Offsets
Carbon offsets are considered a form of carbon financing, as the money spent purchasing carbon offsets helps fund the carbon project. In fact, a marker of a high-quality carbon offset project is that the money generated from selling carbon credits makes the whole project viable.
This funding from the voluntary carbon market can then create direct and indirect economic benefits for local communities, such as through job creation and adding revenue to local economies.
A good example of this can be seen with the Klawock Heenya Improved Forest Management Project, where Indigenous Alaskans operate as the majority landowner through the Klawock Heenya Corporation (KHC). These local owners have equity in the company, and one of their goals is to develop a sustainable economy that creates opportunities for both community members and shareholders.
Some carbon projects have direct revenue-sharing agreements with local communities, even for those not involved with project operations, while others involve more indirect revenue benefits, such as if higher wages prompt more local spending.
Some projects also create economic benefits by lowering local costs. For example, some landfill gas capture projects not only prevent methane from entering the atmosphere but also generate renewable energy, which can lower local utility bills.
Terrapass offers carbon credits across a broad range of project types, such as Reforestation, REDD+, and Landfill Gas Capture. You can support a mix of projects and their associated benefits with a monthly subscription of carbon credits for just $8.50 per employee that offsets what many businesses emit, while also providing associated benefits to local communities in North America, South America and/or Asia.
Non-Carbon Environmental Benefits of Carbon Offsets
As the name suggests, the core benefit of carbon offsets is that one offset equals one metric ton of carbon dioxide-equivalent emissions avoided/reduced/removed, which helps address one of the top drivers of climate change. Yet this benefit also tends to coincide with other environmental benefits to local ecosystems.
For example, soil carbon credit projects improve soil health, such as by facilitating increased microbial activity. These richer soils can then retain more moisture, which could help reduce flooding risk and mitigate the effects of drought locally.
Also, a more biodiverse soil environment below ground generally supports greater biodiversity above ground. Farmers can more easily grow a variety of crops that also have environmental benefits like feeding pollinators. That then contributes to a positive cycle, whereby more pollinators enable more plant growth beyond the farms where these carbon projects take place. In turn, this improved plant growth can contribute to cleaner local air.
Health Benefits of Carbon Offsets
Carbon offsets also tend to create health benefits, often in connection with their environmental impact.
For example, offset projects that improve local air quality, such as through improved forest management (IFM), can then positively affect local residents’ health. Similarly, IFM tends to also support cleaner water, as increasing tree cover can expand the ability of trees to filter pollutants from storm runoff before it enters local waterways.
There can also be mental health and recreational benefits, such as by preserving opportunities for people to hike and swim in forests and lakes.
Other types of carbon offset projects, like renewable energy projects, can also add health benefits, such as by removing systems that run on fossil fuels and harm indoor air quality.
Also, ones like soil carbon projects can create nutritional benefits for local communities, as healthier soil can improve food security and nutrient density.
Our online carbon offset customers support the Terrapass Global Portfolio, which includes a diverse mix of projects spanning North America, Asia, and South America. These project types, such as Reforestation, Orphan Oil Well Closure, and Residential Solar Installation, provide many associated benefits, such as to the health and economies of the areas where the projects are located.
Businesses can also work with our team of sustainability experts to develop a custom carbon offset program based on your goals and values.
Social Benefits of Carbon Offsets
The social benefits of carbon offsets overlap with areas like food and economic security, but these projects can also support a wide range of other social goals, like gender equality, cultural preservation, and peaceful societies.
These may be lofty goals that require more than just carbon offsets, but these projects can provide positive steps in the right direction.
For example, a conservation project could provide a win-win solution for a government that may be trying to expand its economy and local communities that want to preserve their ancestral lands. Provided that the project is managed in a way that respects local traditions while providing a stable revenue stream, that could help avoid land disputes and civil unrest.
Moreover, projects with BSAs may include provisions to fund local education, which can support a more inclusive society, such as if it gives more young girls access to education in developing regions.
One example of a project with broad-based social goals is the Rimba Raya Biodiversity Reserve Project, which focuses on preserving tropical peat swamp forest in Indonesia, rather than converting the land into palm oil estates. As such, the project not only prevents GHG emissions from this conversion but supports all 17 UN Sustainable Development Goals (SDGs) by funding a wide range of initiatives, like building libraries, training community fire brigades, and distributing solar generators to village community centers.
Fund Carbon Projects That Align With Your Goals
As these examples of co-benefits show, buying carbon offsets gives you substantial ability to make a positive impact on the world, beyond the direct climate benefit of offsetting emissions.
Terrapass supports a broad range of carbon projects that you can explore to see how these align with specific SDGs and benefit local communities. From there, you might choose to purchase a carbon offset subscription that funds a mix of projects with broad co-benefits. Or, businesses with more specific corporate sustainability goals can work with our team to develop custom carbon offset programs.
By working with our team of sustainability experts, you can balance your carbon footprint while supporting positive outcomes in communities around the world. Reach out to see how you can expand your impact with high-quality carbon offsets.
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More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
Net zero is often described as a balancing act: cut what you can, account for the rest, and reach zero on the ledger. That framing is useful, but it leaves something out. It treats every tonne of carbon as interchangeable and every route to zero as equally sound, while the science tells a more specific story.
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