Carbon Insetting:
The 'Inside Out' Approach

90% of a company's climate impact originates from its supply chain. However, many businesses do not operate their own production facilities therefore they often outsource their production. This means they have limited control or knowledge of the emissions produced within their entire supply chain.


Other than using alternative materials or modifying manufacturing processes, a new and innovative approach to carbon footprint reduction is called carbon insetting which focuses on reducing GHG emissions directly from the source and monitoring the overall supply chain management for other emission reduction opportunities.

Not to confuse insetting with offsetting, the latter consists in paying off carbon emissions  from elsewhere as a contribution to mitigating the climate crisis, and is a practice that many companies have adopted to continue polluting without actually lowering their own carbon footprint. Carbon offsetting should not be used
as a method to buy a way out of the issue of unavoidable greenhouse gas emissions. In fact, carbon offsetting can be seen as merely a financial transaction between the purchaser and the offset provider. 

Insetting, on the other hand, takes place by working with various stakeholders within the value chain to identify emission reduction opportunities, rather than taking a reactive stance post-pollution through financial means. This concept fosters more than just a collaborative carbon footprint reduction, as it encourages stakeholders to build a more resilient supply chain that is more sustainable and provides greater benefits for the surrounding communities.

For example, within the fashion industry, the majority of emissions lie with the indirect GHG emissions from upstream activities such as the sourcing and cultivation of raw materials. Since they are usually outsourced it means brands are not in control of their indirect emissions and becomes problematic when trying to setup carbon insetting programs. Instead, the focus should shift towards prioritizing the reduction of greenhouse gas emission in the manufacturing stage. For example, this includes creating carbon storage capabilities and utilizing more green energy. For companies, this is a long-term strategic investment designed to achieve their sustainability goals but also it represents an investment in creating permanent sustainable practices within its supply chain, whilst also creating long term positive impact for communities and the wider ecosystem.

As carbon insetting is still a relatively young concept, there are no official certifications and can only be verified by independent auditors. To begin a carbon insetting project, screening of the supply chain should take place to identify carbon emissions hotspots and it’s often at one’s source of energy. After mapping out areas for improvement, businesses should collaborate with stakeholders through knowledge sharing and developing projects targeted to reduce emissions. This may include conservation through agroforestry and regenerative agriculture practices, which in the long run will build supply chain resilience for the business while improving the quality of raw materials and keeping future costs of carbon abatement low.

Carbon insetting will become an embedded practice to actively decarbonize the supply chain. Businesses that embrace carbon insetting will win as an environmental leader and create long-term competitive advantages in improving their supply chain efficiencies. More than just a transactional relationship, carbon insetting activities factors the whole ecosystem and local communities – from farmers to customers, and will help build trust and project greater transparency in supply chain activities for a carbon-free future.

Copenhagen, Denmark
Producing Carbon Compensate Clothing

Since 2016, Denmark-based fashion brand Ganni has been mapping out the carbon footprint of its entire value chain. Yet instead of offsetting, the brand works with third parties to carbon compensate clothing by supporting UN-approved clean energy projects. In the mission of carbon insetting, the  Scandinavian brand now vows to work directly with its suppliers and place investments in hotspots where carbon emissions can be mitigated. In evaluating its supply chain, Ganni will no longer work with tier 1 or tier 2 suppliers that use coalgenerated heat or energy by 2025. In a trial, the brand will build a solar plant in partnership with its longtime cotton t-shirt supplier and further support them in transitioning to renewable energy and electricity. Ganni also developed a circular business model from packaging to instore interior materials, as well as using recycled fabrics to reduce waste. The brand will be exploring next-generation fabrics and phase out virgin animal leather. Carbon insetting is a long-term investment project where the brand will evaluate its success by measuring on-site carbon and biodiversity before and after implementation before scaling with other suppliers.

Lausanne, Switzerland
Carbon Neutral Coffee Capsule Industry

Every cup of Nespresso coffee is carbon neutral, achieved after more than a decade of interventions across its value chain to reduce and remove carbon emissions from the atmosphere. Nespresso has committed itself to become a carbon insetting business by tackling emissions from its supply chain all throughout its product’s life cycle and beyond, further investing in agroforestry projects and improving farmers’ livelihoods. The company has replaced fossil fuels and powers its operations with renewable energy, uses biogas in manufacturing, sources low-carbon materials, and optimizes logistic processes to lessen greenhouse gas emissions. Most notably, Nespresso plants trees in and around its coffee farms and invests in high-quality insetting projects. Aside from creating natural carbon sinks from tree planting, they have also been
implementing pollination protection, biodiversity monitoring, and improving water provisions. Through a Nespresso training program, smallholder
farmers are also encouraged and funded to practice regenerative agriculture practices in that to boost productivity and diversify farmers’ incomes. 

London, United Kingdom
Committed To Become Climate Positive

British luxury brand Burberry has committed itself to become climate positive by 2040 and introduced a carbon insetting project within its business to  decarbonize their supply chain. The brand is also on the trajectory of reducing its operational emissions by 95% in 2022, and is already carbon neutral in the Americas region and ongoing in its EMEIA and UK operations. In supporting its carbon regeneration project, it has created a regeneration fund to finance activities in tackling its environmental impact and to deliver regenerative agriculture practices within its own supply chain. The project will focus on farm-level training to improve carbon capture and storage, alongside biodiversity, ecosystem restoration, and supporting the livelihood of local producers. Burberry will be working alongside NGOs and green groups, including Pur Projet, an organization that helps companies compensate for their carbon emission through insetting and agroforestry. The project will firstly implement regenerative farming practices starting from its Australian wool producers and develop initiatives to improve carbon capture in soil, improve watershed and soil health, reduce dryland salinity and promote biodiverse habits. 

Paris, France
Carbon Insetting Projects By Luxury Conglomerate

Kering, the French luxury conglomerate known for its brands from Gucci to Balenciaga, is also recognized as a global sustainable leader. Already on the pathway to becoming net-zero; the group have regular offsetting practices, and have embraced carbon insetting as part of its environmental accounting, starting by monitoring emissions from raw material sourcing in its supply chain. Gucci has already been offsetting all greenhouse gas emissions from its own operations and supply chain with forest conservation projects as the carbon-neutral luxury house continues to source more sustainable raw materials to supplement its sustainable manufacturing and sourcing to reduce their carbon emissions. An environmental profit and loss tool was developed to measure and quantify the environmental impact of activities, covering carbon emissions, water consumption, air and water pollution, land use, and waste production along its supply chain. Kering’s current goal seeks to convert one million hectares of farms and rangelands into regenerative agriculture by 2025 to restore and regenerate ecosystems whilst improving sourcing practices. 

Organic Valley
Wisconsin, USA
Low-Carbon Dairy Brand

Organic Valley, a low-carbon dairy brand, is launching a carbon insetting  program through onfarm carbon reduction strategies and regenerative practices. While the brand has already eliminated 440 million pounds of chemicals off the land, further powered by 100% renewable electricity, its insetting program will focus on creating a carbonneutral food system while supporting farmers with climate-smart farming practices. Organic Valley is one of the first major dairy producers to recapture all emissions on farms. The carbon insetting project will include tree plantings, improved manure management, renewable energy, energy efficiency, and enhanced grazing and cropland practices. Manure management will produce less methane and increase feed efficiency, while other practices will help sequester or draw carbon from the atmosphere to lock into the soil. The company is investing in farm owners to help make improvements with climate-smart farming practices to eventually reach carbon neutrality and beyond, without reliance on carbon offsetting.

Copenhagen, Denmark

Outdoor clothing and gear brand Patagonia has been a strong advocate for carbon reduction and is strengthening its environmental commitment through carbon insetting. The brand will be setting up a joint funding mechanism where other small brands can partner with Patagonia to invest and benefit from green factories together. In Patagonia’s goal of achieving carbon neutrality by 2025, the brand will be reducing emissions from its own supply chain through green energy projects, switching to recycled and renewable energy inputs. In 2019, nearly threequarters of  all materials used in Patagonia productswere made from recycled fabrics. The brand is further developing new materials that are biobased and biodegradable, and exploring using low-emission dying techniques. Further investment in carbon sequestration projects to remove carbon is also taking place, including regenerative organic agriculture in nutrition soil to store carbon and reforestation projects to grow more trees. 

Carbon Looper
By H&M Foundation X Hong Kong Research Institute Of Textiles and Apparel

H&M Foundation and The Hong Kong Research Institute of Textiles and Apparel (HKRITA) have come together to develop the ‘Planet First’ program, with aim of supporting game-changing solutions that will benefit the fashion industry by combating the rapid rise in atmospheric carbon dioxide and global temperature, and transform the planet. Carbon Looper is the latest supported program.


(From left to right) Christiane Dolva, Strategy Lead Planet Positive at H&M Foundation, Martin Wall, Executive Chef at Fotografiska and Edwin Keh, CEO at HKRITA.

(Image Courtesy: H&M Foundation)

Atmospheric carbon dioxide has rapidly increased in volume in recent decades, and according to NASA, will cause global temperatures to rise by 4.5 degrees Celsius by 2100. To combat this matter, H&M Foundation and The Hong Kong Research Institute of Textiles and Apparel (HKRITA) have come together to develop the ‘Planet First’ program, with aim of supporting game-changing solutions that will benefit the fashion industry, and transform the planet.

Running from 2020 to 2024, the partnership is seeking innovative technologies that will have a profound impact on the climate and those that will contribute to a planet positive fashion future. The privately-funded H&M Foundation will be donating USD12 million the Hong Kong government Innovation and Technology Fund matched by resulting in a total estimated budget of USD100 million over the five-year span. The Carbon Looper is the latest project that has shown a promising breakthrough in the ‘Planet First’ program, where a cellulosic yarn has been developed to capture carbon dioxide from surrounding air. 

Each kilogram of Carbon Looper can absorb on average 17 to 44 grams of carbon dioxide. Captured carbon dioxide is released upon low-temperature heat and was trialed to feed plants in greenhouse. Carbon Looper garments can be reused to provide an infinite loop of carbon due to their sequestering properties. The production process itself also generates no toxic reagents and consumes little energy without the need for any special equipment, therefore can be scalable industry-wide. If commercialized, consumers can help reduce carbon dioxide levels in the atmosphere through everyday garments. This can dispel the myths and show that fashion can have a positive effect on climate. The first supply of these carbon absorbing garments will be trialed at the photography museum Fotografiska Stockholm. Sharing the same mission of raising environmental awareness and creating positive change, servers at its in-house gastronomic restaurant will be wearing its engineered aprons and the collected carbon dioxide will be released back into Fotografiska’s hydroponic garden.

H&M Foundation Global Change Award (GCA)


Known as the ‘Nobel Prize of Fashion’, the Global Change Award by the H&M Foundation, is a challenge that looks for early-stage and disruptive innovations that can help transform the fashion industry into a planet positive one.

The H&M Foundation, established in 2013, is a non-profit funded by the Stefan Persson family, founders and main owners of the H&M Group. Fostering collaboration and innovation, the foundation finds, supports and shares solutions that address some of the world’s most urgent challenges.

The Global Change Award (GCA) awards five early-stage innovations each year.
The winners share a million Euros grant and embark on the yearlong GCA Impact
Accelerator program created by H&M Foundation, Accenture, KTH Royal Institute of  Technology, and The Mills Fabrica — a programme that is tailored to meet the needs of each team to help them develop and scale their innovations for impact.

The 2022 Global Change Award takes a holistic approach to seeking innovative
materials, ground-breaking recycling techniques, and disruptive supply chain
solutions that can reinvent the fashion and textile industry and help transform
it into a planet positive one.

The Winners of GCA 2022


Planet positive viscose and lyocell made from carbon dioxide emissions


AI pest management solution for smallholder cotton farmers


Bio-based laundry solution that prolongs garment life and restores to new.


Using regenerative agriculture to make a plant-based fiberfill


Circular recycling process for elastane and polyester blends

Global Change Award

The GCA Impact Accelerator programme supports the scaling of the winning ideas through innovation, business, tech and investor readiness. The Mills Fabrica will provide industry access and mentor through investment opportunities to help winning ideas scale at speed, and refine concepts through a commercial lens to achieve real impact in today’s industry.

"The Mills Fabrica will provide the GCA winners with our ‘impact accelerator’ support, including investment readiness and peer portfolio synergies as well as industry exposure, ecosystem network and collaboration opportunities."


Founder of The Mills and Group Managing Director of Nan Fung Development Ltd.