Reducing greenhouse gas (GHG) emissions is an urgent issue, and various initiatives are underway worldwide to achieve carbon neutrality. Mitsui O.S.K. Lines (MOL) is also actively engaged in various low-carbon and decarbonized businesses. This article focuses on “carbon insetting,” providing an explanation and introduction to this concept.
In the first half of this article, we feature insights from Mr. Nagata, a consultant at South Pole—a leading company in carbon project development and sustainability consulting. He explains the definition of carbon insetting, the differences between carbon insetting and carbon offsetting, and the significance of implementing carbon insetting initiatives, along with examples from various industries.
In the second half, MOL’s carbon insetting program manager focuses on the logistics and shipping industries, explaining the history, challenges, and future outlook of Book and Claim—a keyword that has recently attracted attention—along with MOL’s specific initiatives.
（Contributed by Mr. Nagata, South Pole）
Carbon insetting refers to GHG reductions or carbon removals within a company’s supply chain.
Currently, there is no internationally unified definition, but South Pole uses the following definition:
“A GHG reduction or carbon removal project directly linked to the supply chain or production region.”
A term, distinct from, although similar to “carbon insetting” is one widely known as “carbon offsetting.” The most significant difference between offsetting and insetting is whether the reduction or removal of GHG takes place within the company’s own supply chain or outside the supply chain.
In the case of offsetting, a company offsets its own emissions by purchasing and retiring carbon credits from decarbonization projects. However, these projects are most often implemented in locations that have no connection to the company’s own supply chain. For example, a Japanese automobile manufacturer may purchase credits from a reforestation project in India that is entirely unrelated to its own supply chain.
On the other hand, carbon insetting is characterized by GHG reductions or carbon removals that are implemented within the company’s own supply chain. This means that the amount of reduction or removal can be reflected in the company’s Scope 3 emissions. For example, a Japanese dairy manufacturer may introduce methane-reducing feed at a dairy farm in Hokkaido from a company that supplies its raw materials, and count the resulting GHG reductions as part of its own Scope 3 emission reductions.
GHG emissions from corporate activities are classified as direct emissions from company facilities (Scope 1), indirect emissions from purchased electricity and other sources (Scope 2), and indirect emissions across the entire supply chain, such as procurement, transportation, and employee commuting (Scope 3).
For many companies, Scope 3 accounts for the largest share of their total emissions. According to one study, Scope 3 emissions are, on average, 26 times greater than the company’s own emissions (Scope 1+2) [CDP and Boston Consulting Group, 2024]. In other words, reducing Scope 3 emissions is an unavoidable challenge when addressing climate change.
Properly understanding Scope 3 enables companies to identify suppliers and raw materials with high GHG emissions. Through engagement, this leads to greater awareness and action toward emission reduction, as well as improved risk management. As a result, it helps build investor trust and enhances the company’s ESG rating.
Nevertheless, at present, less than 10% of companies are working together with their suppliers to reduce GHG emissions, and only 3% are requesting SBT targets from their suppliers [CDP and Boston Consulting Group, 2024]. The complexity of supply chains makes it difficult to ensure traceability, and there are significant hurdles in collecting data from suppliers, as well as balancing the effort and cost involved. Consequently, decarbonization efforts that involve suppliers remain a considerable challenge.
Examples of carbon insetting can often be found in the food, beverage, and apparel sectors, such as those by Nestlé [Nestlé, 2025] and Kering [KERING, 2025]. However, carbon insetting itself is a mechanism that can be utilized not only in agriculture and food, but across all sectors.For instance, in the construction industry, the introduction of low-carbon materials such as low-carbon cement and recycled steel is expanding; and in the transportation sector, the use of sustainable aviation fuel (SAF) and low-carbon fuels is becoming more widespread. Furthermore, in the financial sector, there is a growing movement to reduce Scope 3 emissions by decarbonizing entire investment portfolios.
In recent years, more companies have been seeking to transform their own supply chains rather than relying on carbon offsetting. Of course, this is not something that can be accomplished overnight, but with the deadline for climate action approaching, now is the time for companies to work together with suppliers and partners to actively pursue decarbonization.
（Prepared by Mr. Miyata, General Manager of the Zero-Emission Shipping Strategy Team in the Corporate Sustainability Division at Mitsui O.S.K. Lines, Ltd.）
Of the total global GHG emissions, the logistics industry accounts for approximately 10%, and international shipping alone makes up about 2.5%. To promote decarbonization in the logistics and shipping industries, logistics and shipping companies are working together with their customers—cargo owners—to introduce low-carbon fuels. This is a representative example of carbon insetting in the logistics and shipping industries. However, in order to overcome industry-specific barriers and accelerate these initiatives, the use of Book and Claim is essential.
Logistics companies, shipping companies, and cargo owners working to introduce low-carbon fuels for decarbonization face the following three main barriers.
To overcome these barriers, utilizing Book and Claim can be an effective approach.
First, logistics and shipping companies can create low-carbon transport services by using low-carbon fuels in their own transport equipment. Next, by utilizing Book and Claim, the environmental value of these low-carbon transport services can be allocated to cargo owners who pay premium rates, regardless of whether their cargo was actually transported using equipment powered by low-carbon fuels. This flexibility of Book and Claim enables the logistics and shipping industries to overcome their unique barriers and accelerate decarbonization efforts.
Starting with these examples, as of 2025, logistics companies —especially shipping and air transport companies— have begun to offer carbon insetting and Book and Claim-related services one after another.
Such market developments have a significant impact in demonstrating the value and feasibility of Book and Claim. However, there are also voices pointing out risks. In many cases, these are “proprietary initiatives,” meaning services independently developed by each company for their own customers, resulting in differences in GHG accounting practices and commercial terms from company to company. This variability among services is said to create uncertainty in the carbon insetting market and may slow the growth in demand.[GLOBAL MARITIME FORUM, 2023]
One example of how variability among services can create uncertainty is the question of what boundaries are acceptable for “insetting.” By utilizing Book and Claim, the environmental value of low-carbon transport services created by one shipping company using low-carbon fuels can be allocated to cargo owners who use transport services provided by another shipping company operating vessels powered by fossil fuels. However, this raises several questions.
These questions are not accounting questions, as they are not related to double claiming. Instead, they are commercial questions.
With the progress of collaborative actions, variability among proprietary initiatives can be resolved, and consistency can be achieved by harmonizing GHG accounting practices and commercial terms. This is expected to lead to greater acceptance of carbon insetting and Book and Claim in the market, expansion of demand, and acceleration of the transition to low-carbon fuels.
A concrete example of the outcomes of collective actions is the “Voluntary Market Based Measures Framework for Logistics Emissions Accounting and Reporting (MBM Framework)” published by the international NPO Smart Freight Centre in June 2023.す [Smart Freight Centre, 2023]。
Furthermore, the questions regarding the acceptable boundaries of “insetting” mentioned above can be answered by interpreting Chapter 7 of the MBM Framework. For more details, please feel free to contact MOL.
MOL is actively contributing to collective actions aimed at developing the carbon insetting and Book and Claim market in the logistics industry.
The importance of carbon insetting is steadily increasing as we work toward carbon neutrality. In the decarbonization of the logistics industry, leveraging the Book and Claim approach can be a powerful option. However, successful implementation requires a clear understanding of deliverables from frameworks such as the MBM Framework and other collective actions, as well as strong partnerships with industry stakeholders.
As a leading company in this field, MOL is committed to driving market development and contributing to our customers’ Scope 3 emission reductions.
Mr. Nagata from South Pole has noted that “ensuring traceability remains challenging due to the complexity of supply chains, along with hurdles in collecting data from suppliers and balancing efforts and cost. Engaging suppliers in decarbonization is still a high barrier.”
By leveraging the BLUE ACTION NET-ZERO ALLIANCE, you can overcome these challenges and put decarbonization into practice.
If you are interested in MOL’s carbon insetting and Book and Claim program, BLUE ACTION NET-ZERO ALLIANCE, please feel free to contact us.
References
Maersk to offer customers carbon-neutral transport . (20 Jun 2019)