Is Beyond Value Chain Mitigation the new compensation?

For a long time, climate neutrality and carbon offsetting were the primary tools for companies to reduce or compensate for their emissions. But with growing demands for transparency, credibility, and above all, the reduction of Scope 3 emissions – those across the entire value chain – a new approach is rapidly gaining relevance: Beyond Value Chain Mitigation (BVCM).

So, what exactly does Beyond Value Chain Mitigation entail? Is BVCM truly the new compensation – a replacement for traditional offsetting? And where does the buzzword insetting fit into this picture? This article explores the current debate, explains the fundamentals, compares offsetting, insetting, and BVCM, and provides actionable recommendations for companies seeking to future-proof their climate strategies.

The Current Debate

The question of whether Beyond Value Chain Mitigation (BVCM) is becoming the new compensation is gaining significant traction – and for good reason. Companies are under increasing pressure to make their climate strategies more credible, effective, and future-oriented. This debate is fueled by sustainability experts, ESG-focused investors, NGOs, and regulatory initiatives demanding greater transparency and real reductions across the entire value chain.

Traditional carbon offsetting is facing growing scrutiny. Offsetting – purchasing carbon credits to compensate for emissions – is often perceived as an “alibi measure.” While it may balance emissions on paper, it rarely drives genuine reductions. Critics point to a lack of transparency, limited traceability, and questionable project quality. Moreover, offsetting alone does little to transform business models or supply chains.

This is where insetting comes into play. Insetting refers to climate measures implemented within a company’s own value chain. Examples include investing in sustainable suppliers, regenerative agriculture, or energy-efficient processes – all aimed at reducing emissions at the source. Insetting closes a critical gap between offsetting and more ambitious measures by enabling direct improvements within core operations.

Historically, many companies have relied on a mix of offsetting and insetting. However, another gap remains: emissions beyond the company’s immediate value chain, which are hard to address through conventional measures. This is where Beyond Value Chain Mitigation (BVCM) steps in. BVCM focuses on real, measurable reductions and transformative changes beyond the company and its suppliers. This approach goes beyond simply purchasing carbon credits. It involves strategic selection of projects with clear, measurable impact and long-term engagement. Early adopters are already implementing ambitious BVCM strategies, signaling a paradigm shift. However, the term is still frequently used interchangeably with traditional offsetting, which risks diluting its meaning.

Will BVCM truly become the “new compensation,” or will it remain a complementary pillar? Time will tell. What’s certain is this: The debate highlights a growing demand for accountability, transparency, and meaningful climate action – moving away from simple compensation toward deep, systemic change.

Offsetting vs. Insetting vs. Beyond Value Chain Mitigation

Offsetting – Balancing emissions outside your value chain

Offsetting, often referred to as carbon compensation, involves balancing unavoidable emissions by purchasing carbon credits or supporting external projects like afforestation or renewable energy initiatives. These projects typically occur outside the company’s own value chain. While this can help achieve climate neutrality in the short term, it faces heavy criticism: the true impact of projects is often hard to verify, and permanent reductions are not always guaranteed.

Insetting – Climate action within your value chain

Insetting shares the same principle as offsetting but focuses on the company’s own supply chain. Initiatives may include transitioning production processes to renewable energy, introducing regenerative agriculture, or investing in energy efficiency. These measures not only improve emissions performance but also strengthen supplier relationships and boost value chain resilience.
 

Beyond Value Chain Mitigation – Creating impact beyond your sphere of influence

BVCM refers to voluntary measures that go beyond a company’s direct operations and supply chain, delivering measurable additional climate benefits. This includes technology transfer in developing countries, supporting partners in reducing emissions, or investing in circular economy innovations. The essence of BVCM is to view external projects not merely as “carbon credits” but as strategic, measurable, and long-term engagements. BVCM aims for real emission reductions and transformative change – far beyond what offsetting can achieve.
 

The three approaches at a glance

While offsetting primarily seeks to balance emissions through external projects, insetting and BVCM focus increasingly on tangible reductions. The following table illustrates how their goals, methods, and impacts differ.

Real-World Examples Provide Clarity

Using typical real-world examples, the differences between traditional offsetting, insetting, and Beyond Value Chain Mitigation become clear. This helps illustrate how these approaches differ in impact, scope, and long-term significance.
 

Typical real-world examples

For Carbon Offsetting (Compensation)

• Afforestation projects in South America: Companies purchase certified carbon credits from large-scale reforestation areas, often without direct project oversight.
• Funding hydropower or biogas plants in developing countries: Supporting renewable energy projects that reduce emissions elsewhere, without direct company involvement.
• Flight emission offsets: Paying to compensate for business travel emissions without changing travel behavior or processes.
   

For Carbon Insetting

• Supplier development: An automotive company works closely with suppliers to reduce energy consumption, for example, by switching to renewables.
• Sustainable sourcing: A textile company supports suppliers in adopting sustainable fibers like organic cotton or recycled materials.
• Efficiency programs: Implementing energy-saving and waste-reduction initiatives across production and logistics to cut Scope 1 and 2 emissions.
   

For Beyond Value Chain Mitigation (BVCM)

• Technology transfer: An energy provider promotes the use of energy-efficient technologies (e.g., clean cookstoves) and measures actual reductions on site.
• Carbon removal projects: Funding solutions like Direct Air Capture that permanently remove CO₂ from the atmosphere.
• Innovation funds: Investing in start-ups developing low-carbon materials or recycling processes that reduce emissions across entire industries.

One Example, Three Perspectives: A Reforestation Project in South America

Offsetting approach

The company buys certified carbon credits offsetting 10,000 tons of CO₂, investing in external projects without direct control over execution or local conditions.
 

Insetting approach

The company collaborates with local partners or suppliers to implement reforestation initiatives directly linked to its supply chain, restoring land tied to raw material sourcing. This reduces emissions within its value chain while promoting biodiversity.
 

BVCM approach

The company ensures long-term carbon storage of 10,000 tons over 20 years, supports biodiversity, and applies advanced monitoring such as drones and field studies. The project creates social value through job opportunities, watershed protection, and community training. BVCM thus delivers climate, ecological, and social benefits far beyond simple carbon offsetting.

Why Offsetting alone is no longer enough

Offsetting can help neutralize unavoidable emissions in the short term, but it has long faced criticism: many projects lack transparency, and their climate impact is uncertain or temporary. Some even fail entirely when reforested areas are later cleared.

Another limitation: Offsetting typically addresses only Scope 1 and 2 emissions, ignoring Scope 3 – which often accounts for up to 90% of a company’s footprint.

Regulatory pressure is adding to the challenge. Frameworks like the EU Taxonomy, CSRD, and new IFRS standards demand verifiable evidence of real reductions across the value chain. Pure offsetting no longer meets these requirements, pushing companies toward insetting and BVCM.

How Envoria supports companies

Envoria provides an all-in-one software solution for ESG and financial reporting, enabling companies to implement Beyond Value Chain Mitigation (BVCM) transparently, traceably, and auditably.

• The Emissions Management module captures, analyzes, and manages Scope 3 emissions reliably.
• The Supply Chain Management module fosters collaboration across the value chain.
• Strategy and risk management modules integrate climate action into corporate planning.
• KPI management ensures CSRD compliance, and the EU Taxonomy module guarantees regulatory alignment in sustainable finance reporting.

Together, these modules make BVCM, insetting, and offsetting measurable and auditable, enhance transparency for stakeholders and auditors, and enable a holistic, credible climate strategy that transcends corporate boundaries.