May 7, 2024

The Do's and Don'ts of Insetting

May 7, 2024

The Do's and Don'ts of Insetting

May 7, 2024

The Do's and Don'ts of Insetting

May 2024

The Do's and Don'ts of Insetting

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We caught up with Pedro Lafargue, Global Climate Action Manager at ofi to discuss the do’s and don’ts of insetting. ofi is a global food ingredients supplier, sourcing from a staggering 3 million farmers across 50 countries. Chances are, you’ve encountered ofi’s products in your local coffee shop or supermarket.

Pedro’s mission: setting up, implementing and scaling reduction initiatives across ofi’s supply chain, focusing on coffee, cocoa, spices hazelnuts and almonds. ofi’s coffee network alone spans over 20 countries, reaching remote farms, often operating in politically and economically turbulent countries, making relationship-building a monumental task.

But… here's the twist: this direct farmer connection is ofi’s secret weapon. It enables farmer engagement, traceability, high quality data and crucially, trust. Jealous? We are… ofi has been pioneering insetting initiatives that most of us can only dream of. However, not without its challenges. We will run through 'the good, the bad and the ugly' of launching and scaling insetting projects:

The accounting challenge

Despite running reduction initiatives for the last 7 years, Pedro acknowledges "they’re not ready to report on insetting projects”.

Why? The current lack of standardised accounting methods creates A LOT of confusion around how insets are conceived, accounted for, and attributed - relatable? For instance, what happens if your reduction initiative falls outside your immediate supply shed? What level of data is required to actually substantiate your reduction claims? How do you account for permanence with short-term contracts?

While the challenges are substantial, the opportunities are even greater. Here are Pedro's five golden rules for setting up a successful carbon insetting project:

  1. Collaboration is key: Early engagement is crucial. Encourage open discussions with partners (coffee roasters, manufacturers) to develop joint KPIs, budgeting strategies, and robust risk mitigation plans. Include your customers and relevant government bodies. Aligning with evolving government policies ensures your projects remain compliant and avoids future roadblocks.
  2. Segment your customer base and identify your champions: ofi categorises their customers into 3 buckets:
  • The sustainability champions: these customers are keen to work collaboratively, running pilot projects and looking at how to scale these across a large part of their value chain.
  • The cautious adopters: these customers are acting based on the GHG Protocol and what other peers are doing. They are more risk-averse. They may be open to adopting proven solutions but are hesitant to break new ground.
  • The output-driven: These customers prioritise the end result – low carbon products – and rely on suppliers to handle the implementation details.

Target your “sustainability champions” and leverage their willingness to co-invest and accelerate impact. When regulation has ironed itself out, approach the other customer tiers.

3. Don’t be a primary data purist: Don’t get bogged down in the pursuit of a perfect primary data set. Understanding the use cases for primary vs secondary data is key:

  • Primary data: Primary data is important when demonstrating and validating the investments in change e.g., when you improve the sustainability of a product. Primary data is also crucial for training secondary data models.

N.b.: Gathering primary data doesn't require you to visit every single farm. Develop a robust statistical approach to identify representative farmers and establish a baseline.

  • Secondary data: This shines during the initial "pre-feasibility" stage of identifying potential areas for insetting. You don't necessarily need accurate primary data to pinpoint target areas – understanding the risks, existing relationships, and emission hotspots is sufficient. Once you've narrowed down your focus areas, secondary data helps to assess the level of primary data required to delve deeper into segmentation and specific farmers.

4. Avoid falling into the “ESG all in one” data solution trap: look for interoperable, modular tools which can be seamlessly integrated. The reality is, that a one-size-fits-all approach for every company across varying contexts simply doesn't work. Your ideal ecosystem might include a mix of carbon accounting solutions, product labelling tools, insetting supply chain management platforms, project management solutions, and robust traceability features – all working in harmony.

5. Think of supply chain “projects”: Framing supply chain reductions as "projects" simplifies co-investment and project collaboration. Customers are more likely to embrace co-investment when they aren't burdened by the risks associated with ongoing on-the-ground primary data collection. Whilst you’re still experimenting and innovating, the investment in the short term may be very project-linked. Progressively it will be more linked towards the material being purchased e.g., units of coffee.

Check out ofi’s Sustainable Sourcing Strategy here.

Interested in hearing more? Listen to the full interview with Pedro in this podcast episode "How to set up carbon inset projects".

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