Many businesses are familiar with carbon offsets – the idea of compensating for the impact of carbon emissions by investing in environmental projects such as reforestation. While carbon offsets are useful as a transitional measure to mitigate those emissions that can’t be avoided or reduced for now, insets are a new, collaborative approach that aims to directly reduce emissions produced within a company’s supply chain and operations, according to Alexis Bateman, former Director of the Sustainable Supply Chain Lab at the Massachusetts Institute of Technology.

SAF is widely seen as the most promising path to aviation decarbonisation, but limited production and a lack of widespread policy support mean SAF is currently much more expensive than conventional fuel. Usage of SAF amounts to less than 0.1% of total jet fuel consumption1.

Carbon insets: A new approach

“The new approach that is becoming more common is a carbon inset. Instead of purchasing those offsets in other parts of the world, we’d be insetting that within the actual production of SAF and the use of SAF in the supply chain,” Bateman said in an interview with Joel Makower, Editor of Greenbiz.com. “How can we use that investment to actually pay for the premium of SAF?”

Part of Bateman’s work focuses on how to account for the environmental benefits of insets, how insets can be shared across the value chain, and how to publicly report insets to show their impact. Bateman said air cargo will continue to be vital to the global economy, especially when it comes to the rapid movement of high-value goods, such as shipments of COVID-19 vaccines and other medical supplies. That means reducing aviation emissions will be a key part of corporate strategies to make their supply chains more sustainable, she said.

“No one's going to stop using air [cargo] to move goods. We need it for high-value, highly perishable goods reaching the market on time. That's not going to go away. We have to understand that we're still working within the bounds of traditional supply chains that we need to move goods around in expedient way,” Bateman explained.

Sustainability is a new competitive advantage

Companies are coming under increasing pressure from regulators, customers and investors to reduce the environmental impact of their supply chains, Bateman said, adding that this creates opportunities for suppliers to innovate as they compete for business.

“There's actually a business imperative that you need to report on that to really be a preferred supplier,” Bateman said. “There isn't an easy solution here. It's a challenging problem that we all have to overcome.”

While the breadth and complexity of today’s global supply chains mean there is no easy solution, smart companies can gain a competitive advantage by embracing new approaches to understand the impact of their supply chains, Bateman said.

“It’s a clean slate. You can start now and sometimes you can make your own rules. You can be the first mover. You can do things differently. There isn't a historical way of doing this. Getting an early understanding of how to account for your impacts and how you actually make those reductions is surely very strategic,” Bateman said.

“I'm an eternal optimist, so I think we're steadily on our way, but we're still at the bottom of the hill,” Bateman said. “In the last few years, people are calling us up, and saying, ‘Help us answer the hard problems,’ whereas historically, they didn't even want to talk about it. So that optimism that I've had over time is just continuing on that trajectory, because there are people ready to tackle the hard challenges whereas they were afraid to ask the questions a decade ago.”

Making Supply Chains More Sustainable: A Conversation with Alexis Bateman

Flightpath host Joel Makower recently spoke with Alexis Bateman, former director of the Sustainable Supply Chain Lab at the Massachusetts Institute of Technology, to discuss how companies can make their supply chains more sustainable.

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