Food Insetting and Offsetting: From Reduction to Residual

At a Glance · Food Insetting and Offsetting

A large part of a food company’s emissions arises on the farms and in the forests from which its raw materials are sourced, and the rules adopted in 2026 now count only the reductions and removals made there, so that the credits the sector has bought sit outside the targets they were often meant to support.

The companies moving fastest are already paying farmers, running regenerative programmes and recording supply-chain removals, while treating purchased credits as a separate and smaller programme for residual emissions, and the full report sets out how a company can follow the same path end to end.

The SBTi’s FLAG Guidance, revised in March 2026, counts reductions and removals within a company’s own value chain towards its FLAG target and excludes credits bought outside it, the GHG Protocol Land Sector and Removals Standard admits removals to an inventory from January 2027 only where they are traceable to the sourcing region and monitored, the SBTi Corporate Net-Zero Standard V2 keeps purchased credits outside targets, and since 27 September 2026 the EU has prohibited product claims of neutral or reduced impact that rest on offsetting.^1,2,3,4

The four instruments draw the same line around the value chain, and consumer law, customers’ requests for supplier data and tighter credit quality rules add to the evidence a food company needs for its reductions, removals and claims.

Insetting counts only where a supply-chain project exists, can be traced to the sourcing region and is recorded so that the farmer, the processor, the brand and its customers do not each claim the same tonne, which is why Fonterra’s farm incentives, co-funded by Mars and Nestlé, show the recording question as clearly as any project.⁵

Peers are moving at scale, with PepsiCo reporting regenerative agriculture on 4.7 million acres at the end of 2025, FrieslandCampina paying member farmers €228 million in 2025 through Foqus planet, and Mars deducting about 42,000 tonnes of supply-chain removals from Scope 3 in 2024, while EcoVadis and Kearney find that only 7% of companies engage their suppliers on carbon.^6,7,8,9

The free report includes twelve peer programme profiles and all 88 food companies with science-based targets, with their credit use and credit types.

The registries tracked by Climate Decode Market Watch attribute 32.0 million credits to the 295 food, beverage and agriculture companies with the largest credit use from January 2021 to June 2026, and of the 9.2 million retired in companies’ own names since 2022, renewable energy accounted for 32.3%, industrial gas projects for 22.7% and REDD+ for 17.7%, with removal types at 7.4%.¹⁰

Every retirement on a public registry names the buyer and the project, and Nestlé, Mars and Arla have withdrawn or lost carbon neutral and net zero claims since 2023, so that quality, reputation and what may be said about a credit have become the questions for the residual programme rather than its volume.¹¹

The full report sets out a five-step path, in which a company measures FLAG and Scope 3 emissions from its own data, builds its reduction plan plant by plant and region by region, develops or joins insetting programmes that can be traced and recorded once, sizes and screens its residual credit programme, and reports reductions, removals and credits on separate lines.

The report also sets out how the clean fuel markets of Canada, California, the United States and the EU reward biomethane from manure and food waste, fleet fuel switches and residue feedstocks, so that a digester or a fleet conversion can earn a compliance value as it reduces emissions. Climate Decode carries that path on one set of emission data, with TerraNova for reductions across Scopes 1, 2 and 3, supply-chain and risk mapping, insetting and clean fuels, and Canopy for residual emissions, due diligence and procurement.

Climate Decode Platform

TerraNova carries reductions, supply-chain mapping and insetting, and Canopy carries the residual programme, on one set of emission data.

Climate Decode · Free Peer Benchmark

See how your company compares with its food peers

A free benchmark of credit use against the 295 companies in the report, the reductions targets still require and a due-diligence view of credits already held, with a demonstration of TerraNova and Canopy.

Notes and sources

This article summarises public documents, registry data and companies’ own published reporting for information only, and does not constitute investment or legal advice.