The difference between carbon neutral and net zero targets

difference between carbon neutral and net zero

Carbon is becoming a popular topic, and it is not surprising in a time when we desperately need to reduce and remove emissions from the atmosphere to achieve environmental sustainability. As a result of this, a range of terms are being used, like carbon negative, carbon neutral and net zero. In this article, we examine the difference between carbon neutral and net zero.

With so many different terms, it can be a bit confusing to know which is the best approach for your organisation. It is also essential to highlight that currently, there are no universally agreed definitions for these terms.

Climate commitments remain fully voluntary, and there is no legally binding, standardised regulatory framework. Continue reading to learn what carbon neutral and net zero mean according to the latest information and how they differ. 

What is carbon neutral?

Carbon neutral is one of the latest buzzwords, with so many businesses pledging to be carbon neutral by 2030, 2050, and so on. It essentially involves companies calculating their carbon emissions and compensating for what they have emitted through carbon offsetting. Businesses that are becoming carbon neutral are taking steps to remove the equal amount of carbon to what they are emitting through their business activities. They are doing this by investing in carbon sinks which absorb CO2. 

Carbon sinks include our oceans and forests, and they store carbon from the atmosphere. Investment into the health of these carbon sinks is known as offsetting. The practice of offsetting carbon allows businesses to balance out their emissions. Most businesses that strive to become carbon neutral will first work at reducing their emissions. Then, they will set their sights on carbon offsetting programmes. Generally, when a business purchases a carbon offset, the funds are then used to support an existing emissions reduction project. 

These offsetting programmes provide a range of benefits and focus on a broad number of issues such as biodiversity conservation, reforestation, and empowering communities most affected by the impacts of climate change. There is a range of different interpretations of what it means to be a carbon-neutral business. Companies with high ambitions will generally measure all of their emissions, including from their own activities (scope 1 and scope 2) and from their bigger value chain (scope 3). 

What is net zero?

Net zero is quite similar to climate neutral, which explains the confusion regarding what exactly they mean. Moreover, many people think the terms are synonymous. However, net zero is much grander in scale than climate neutral. Becoming net zero means going beyond just removing carbon emissions. Instead, it includes all greenhouse gas emissions in the atmosphere. 

For instance, nitrous oxide, methane, and other various hydrofluorocarbons. The main thing climate neutrality and net zero have in common is that both require businesses to remove the equivalent amount of what is being released into the atmosphere. The transition to net zero is also occurring on a worldwide scale and requires the involvement of governments and the public and private sectors. 

Businesses setting net zero targets, in essence, must commit to reducing greenhouse gas emissions by at least 90 percent by a specific target date. This date is generally no later than 2050. The remainder of the emissions must be neutralised with removal credits. An organisation will only be considered net zero when they reach this point. This approach to reducing emissions was set up by the Science-Based Targets Initiative (SBTi), the leading industry target-setting body.  

The SBTi defines a net zero target for corporate organisations as achieving a scale of value-chain emission reductions that are consistent with the current temperature limit of 1.5 degrees celsius with no or limited overshoot. Additionally, to be net zero means neutralising the impact of any kind of residual emissions that remain unfeasible to be removed by eliminating an equivalent amount of carbon dioxide from the atmosphere.

These targets carry a promise of climate action that is directly aligned with the Paris Agreement and limiting warming. There are several advantages of setting a net zero target for businesses. For instance, increased investor confidence, the ability to create competitive advantage and drive innovation, increased resilience, and improved brand reputation and credibility. 

Key differences between carbon neutral and net zero

Now that you have a better understanding of what it means to be carbon neutral and net zero let’s look at the key differences between each. Both terms refer to balancing emitted greenhouse gas emissions by either removing or avoiding emissions. However, the big difference between both is that one focuses on offsets or compensated emissions.

Businesses can become carbon neutral by monitoring and measuring their emissions and then balance them by offsetting them and financing projects beyond their value chain. They can do this without even focusing on reducing their own emissions. By contrast, net zero encourages companies to be much more meaningful in reducing their value chain emissions by not permitting financial emissions. 

Additionally, net zero does not focus solely on carbon but also on all greenhouse gas emissions, so it is a much more impactful approach. Net zero is also governed by real standards set by The Science Based Targets Initiative. In essence, companies who work to become carbon neutral can compensate for their emissions with offsets, whereas net zero requires reducing your emissions through improving efficiency and availing of green technologies. 

Under net zero, a company’s targets must also align with the 1.5 degrees celsius warming scenario. Going for this claim also requires external verification. Under the SBTi’s guidelines, a net zero target also must include scope 1, 2, and 3 emissions of a business. By contrast, with climate neutrality, focusing on these emissions is encouraged but not a mandatory requirement.

In addition, carbon-neutral claims can refer to a service or product rather than applying to an entire organisation. The approach to residual emissions is also quite different, as specific greenhouse gas removals are mandatory for net zero targets and carbon offsets are considerable enough for climate neutrality pledges. Despite which approach you take, it is essential to know the different language so you can be transparent about what your business is doing and not accidentally engage in greenwashing.

Some other important definitions to be aware of

As mentioned previously, there are lots of different terms these days for organisations to explain how they are tackling their carbon emissions. Just as it is important to have an understanding of carbon neutral and net zero, you should also note other terms like carbon negative, carbon positive, carbon-free, and climate positive. 

Carbon negative essentially means reducing your carbon to less than neutral. It means a company will offset or remove more carbon than they produce. Carbon negative is a higher ambition approach than carbon neutral for this reason. EY recently announced they were carbon negative, for example. Climate positive or carbon positive is often considered synonymous with carbon negative.

This can refer to having a positive effect on the planet through being net negative. For example, improving food security and restoring biodiversity as a result of being net negative. It basically refers to your emissions being less than zero and having zero impact on the planet because you are not emitting and net reducing greenhouse gas emissions. 

Carbon-free then relates to organisations, products, and services. It refers to an organisation, product or service that does not emit any carbon across its entire supply chain or value chain. It is a high level of ambition, and there are currently no known carbon-free products. Google, however, has announced they hope to become carbon-free within the next decade. 

In relation to timescale, carbon negative and carbon neutral generally occur right away, while net zero targets usually have a future date by which they should be achieved, and carbon-free is also achieved in the future. With carbon-negative, no emissions reductions are required, and carbon-free means having no emissions at all. 

The most important thing when making climate commitments is to outline exactly what you mean by the commitment and be transparent about your progress in achieving these goals. It is very likely governments will begin to regulate and require climate commitments in the future to assist with achieving worldwide climate objectives. 


Before you decide what approach you would like to take to tackle your emissions, it is important to understand the current language. There are so many different terms now, and it’s bound to be confusing, especially for those businesses that are only learning about sustainability.

Carbon neutral and net zero are built on the same ideas but still have vast differences. The main one is that compensations are not accepted with net zero targets, and they follow a standard. Additionally, being carbon neutral does not mean you have to reduce emissions. 

In terms of the first steps, you should begin by measuring your scope 1, 2, and 3 emissions and then decide how you would like to proceed based on that. If you decide to set a net zero target, you must consider the feasibility and what is necessary to meet this before committing. 

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