Published

2 years ago

June 30, 2024

Alice Rush

New Rules: How to Implement and Communicate Climate Strategy for Companies

2023 was a big year for climate action.  We saw major announcements of new global governance and regulations across the world:

In the US, California passed SB-253 Climate Corporate Data Accountability Act and AB-1305 Voluntary carbon market disclosures.
In Europe, the European Commission released its Proposal for a Directive on Green Claims.
Globally, new rules for the quality and use of carbon credits were issued ICVCM (The Integrity Council for the Voluntary Carbon Market) and VCMI (The Voluntary Carbon Markets Integrity Initiative), both receiving significant praise from global leaders at the most recent COP28.

At Terrapass, we’re excited by these developments. The world recognizes the need to significantly scale all climate solutions including voluntary carbon markets.  For this we must have globally aligned standards. This came together on multiple fronts in 2023.

So, what does this mean for sustainability professionals and everyday consumers?

For everyday consumers this is great news. These regulations ensure that any climate accomplishments promoted by a business will be supported with details that clearly show how those claims were achieved. The rules also ensure that companies are actively working to reduce their own carbon emissions in addition to offsetting their remaining emissions. Please visit Terrapass for more information about your personal or small business carbon footprint.

For sustainability professionals the list of new rules and regulations might seem daunting, but it is also good news.  This is a sign of a maturing industry. Policy and consumer experts are contributing their expertise to help make climate action impactful and understandable to both sustainability professionals and everyday customers.

Historically, professional sustainability terms like carbon neutral and net-zero often made their way into marketing and product messaging.  Consumer advocates rightly recognized that everyday customers can’t evaluate these phrases on their own.  Additionally, vague phrases like green, eco, and sustainable are often used to promote sustainability without any supporting information. Consumer advocates also recognized that customers must be able to see why a product is green.  These new regulations in California and Europe ensure that climate communications are always factual and transparent. They ensure that companies can promote their sustainability accomplishments with confidence and that customers have information to evaluate those accomplishments.

New global governance, VCMI in particular, ensures that companies apply sustainability solutions in the most effective way.  Terrapass has long promoted the principle of 1. Calculate, 2. Conserve, and 3. Offset in our sustainability guidance to customers. This approach prioritizes:

First, understand where carbon emissions are in your business,
Second, disclose your plan to reduce the carbon emissions of your business and regularly report progress, and
Third, balance your remaining emissions with carbon credits that fund global emission reduction projects.

When companies describe their climate strategy, they sometimes combine these different elements into one term like “carbon neutral.” Phrases like this do reflect an important environmental achievement. However, they hide the distinction between your company’s emission reductions vs. global emission reductions funded through carbon credits.  Emission reduction and offsetting must be separate elements of your sustainability strategy and they should also be separate elements of your climate communications. Key elements for your climate communications include:

Steps and priorities:

Measure your carbon emissions, reduce emissions on a science-based trajectory, and disclose your progress publicly.
Address your remaining emissions by funding high-quality carbon credits that help reduce greenhouse gases globally.

Tell two different stories in your climate communications:

Business Emission Reduction: Our carbon footprint was 5,000 mT in 2023, a reduction of 500 mT vs. 2021 and 5% ahead of plan.
Global Climate Contribution: We purchased 5,000 mT of carbon credits in 2023 to fund global carbon reductions equal to our remaining emissions.

Other considerations:

Climate communications should be factual, specific and detailed; provide evidence of all environmental claims made.
Talk about carbon credits as a way to balance your remaining emissions by funding global carbon reduction.
Talk about carbon credits as a way to support other global sustainability goals (UN SDGs) when applicable.
Avoid using vague, generic terms like green, eco, climate friendly, sustainable, etc. that are not substantiated.
Avoid terms that combine your company’s emission reduction and carbon offsetting into one phrase like carbon neutral, climate neutral, etc.

Highlights from each of the new rules and regulations are provided below. Please contact a Terrapass sustainability advisor to help your company navigate its specific needs.

California SB-253 Climate Corporate Data Accountability Act

For entities with total annual revenues in excess of $1,000,000,000 that do business in California:
- Starting in 2026: Report Scope 1 and Scope 2 greenhouse gas emissions
- Starting in 2027: Report Scope 3 greenhouse gas emissions
- Other requirements:
  - For the reporting entity’s prior fiscal year
  - Reporting is due annually on a date to be determined by the state board.
  - Reporting follows the Greenhouse Gas Protocol
  - Reporting entity must obtain an assurance engagement, performed by an independent third-party assurance provider, of the entity’s public disclosure as provided.

California AB-1305 Voluntary Carbon Market Disclosures

Entities operating in California and making climate-related claims:
- Must publicly disclose information documenting how the claim was determined to be accurate or accomplished, and the measurement of interim progress.
- Applies to claims of net-zero emissions, carbon neutrality or similar, as well as claims of significant reductions in greenhouse gas (“GHG”) emissions,
Entities operating in California and using voluntary carbon credits to support a climate-related claim.
- Must publicly disclose detailed information related to the credits purchased, the underlying offset projects and any independent verification of the climate-related claims made.

EU Green Claims Directive

Applies to EU companies and non-EU companies making environmental claims aimed at EU consumers.
Aims to eliminate greenwashing across EU markets by setting out detailed rules for how companies should market their environmental impacts and performance. It targets “vague, misleading or unfounded information on products’ environmental characteristics. “
The current list of commercial practices that are banned in the EU is updated to include generic environmental claims – such as ‘environmentally friendly’, ‘natural’, ‘biodegradable’, ‘climate neutral’ or ‘eco’ – unless they can be properly evidenced.
On the use of carbon credits specifically, the Green Claims Directive allows companies to make “carbon neutral” claims supported by carbon credits, but only if the carbon credits are disclosed correctly: 
- Clearly state that carbon credits are being used to offset emissions.
- Disclose sources of emissions and amounts addressed with carbon credits.
- Identify carbon offset project types and distinguish between Reduction and removal offsets (requested, not required)

ICVCM (The Integrity Council for the Voluntary Carbon Market)

New global quality standards for voluntary carbon credit projects; “regulatory-like”
Program will be fully implemented over the course of 2023-2024.
- Rules for each carbon credit Category (Methodology/Project Type) were released in June 2023
- CCP-Eligible Programs (Registries) and CCP-Approved Categories (Project Types) will be announced in 2024.
Not a one-time rule, standards will continuously evolve.
- First revision process for the CCPs in 2025, aimed at implementation starting in 2026.
ICVCM points to VCMI for guidance on how businesses should use carbon credits.

VCMI (The Voluntary Carbon Markets Integrity Initiative)

VCMI was established in 2021 to help ensure that voluntary carbon markets make a significant, measurable, and positive contribution to achieving the Paris Agreement goals.
The VCMI Claims Code addresses market integrity on the demand side by guiding companies on:
- How they can credibly make voluntary use of carbon credits as part of their climate commitments, and
- The associated claims they can make regarding the use of those credits.
The VCMI program should be followed together with ICVCM rules for high-integrity carbon credits.

Note: The above article provides introductory information only. Every organization must independently evaluate these rules and regulations, and determine specific actions needed for its own compliance.

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Carbon Footprint

Insetting vs Offsetting: Which Actually Counts Toward Your Scope 3 Targets

Published

7 days ago

August 12, 2026

Alice Rush

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.

Carbon Footprint

Net zero needs nature: a carbon credit guide

Published

1 week ago

August 11, 2026

Alice Rush

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.

Carbon Footprint

Deforestation in Malawi: causes and solutions

Published

1 week ago

August 10, 2026

Alice Rush

Malawi has lost a striking share of its forests over the past three decades. Woodlands that once covered well over a third of the country now cover less than a quarter, and the pressure on what remains is increasing. Behind those figures sit two practical questions: what is driving the loss, and what reverses it?