It's become commonplace to see businesses and governments committing to become Carbon Neutral or Net Zero in their pledges to tackle climate change. Net Zero and Carbon Neutral are seemingly used interchangeably, and unfortunately often without explanation. This lack of clarity poses a reputational risk to those making a commitment, and threatens to undermine consumer confidence through greenwashing.

So, let's take a closer look to build a confident definition of what it means to be Carbon Neutral or Net Zero.

But first, the key takeaway

We'll start with the take-home message. Here's the overarching distinction to keep in mind:  

• A Carbon Neutral business has measured and offset its carbon footprint. It is an action taken now and does not necessarily entail reducing emissions.
• A business committed to Net Zero intends to significantly reduce its emissions and offset the residual. It is a stronger, long-term commitment.

As you can see, they involve quite different levels of commitment and resource to achieve. Read on to learn more about the fine-grained differences.

Definitions from the IPCC

Formed in 1988, The Intergovernmental Panel on Climate Change is part of the United Nations. Its role is to assesses and compile the science on climate change to inform government policy and international climate negotiations. Hundreds of climate scientists, selected for their expertise and to represent a diverse range of technical and socioeconomic views, volunteer their time to develop an understanding of the risks of climate change and opportunities for mitigation. It's an obvious place to start in understanding our definitions related to climate-science.

Here's an excerpt from the glossary of terms from the IPCC's Special Report on Global Warming of 1.5°C (2018):

Net Zero emissions are achieved when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period.

Carbon Neutrality is defined as equivalent to Net Zero, but for CO₂ emissions only.

Over time, these definitions have evolved to enable more effective and standardised action against climate change.

Net Zero means emissions reduction; Carbon Neutrality means offsetting

Based on the IPCC definitions, Carbon Neutrality and Net Zero can be achieved through two key levers: investment in carbon removal such as tree-planting and carbon capture technology; and reductions in absolute GHG emissions. The key question is: what mix of reduction and offsetting should be targeted? That's where the role of the SBTi becomes key.

The Science Based Targets Initiative is a United Nations backed body that sets guidance on the rate at which businesses should reduce and remove GHGs. Its aim is to encourage a standardised approach to Net Zero, tackling the issue of emissions reduction vs. offsetting, that will achieve the goal of limiting global average temperature increases to 1.5°C above pre-industrial levels as recommended by IPCC. The SBTi is viewed as a gold standard Net Zero framework, and companies from H&M to Sainsbury's have set targets with the SBTi.

Net Zero as defined by the SBTi stipulates that businesses should reduce GHG emissions by 90% from their baseline year and offset the remainder through carbon removals, and by no later than 2050. This is a long-term, ambitious commitment which requires serious work from businesses across their operations and supply chain, as well as changes across the economy such as the growth of renewable energy infrastructure. This brings us nicely to a key difference between Net Zero, per the best practice definition of the SBTi, and Carbon Neutral.

Net Zero focusses on long-term abatement. Carbon Neutrality means offsetting today.

It's possible to become Carbon Neutral as soon as you’ve measured the carbon footprint of your business. The next step is to invest in climate action projects that offset the amount of carbon emitted. You might also become Carbon Negative or Climate Positive – interchangeable terms – by offsetting more CO2 than you emit.

Carbon Neutrality accepts all types of offset; Net Zero accepts removal offsets only

There are two broad types of offsetting project:

Prevention/avoidance of GHGs - These projects implement changes that prevent an amount of carbon entering the atmosphere. For example, investing in a developing country’s wind power capacity means that the country will be less reliant on fossil-fuel based energy. These projects usually focus on green energy in some form – either at the national grid level (e.g. solar, hydro, wind) or local/domestic level (e.g. replacing gas cook stoves with electric).

Removal of GHGs - These projects actively remove carbon from the atmosphere, storing it for the long-term. They may involve the creation of nature-based carbon sinks (e.g. planting forests) or technology-based capture (e.g. using chemicals to capture CO2 from point sources, such as power plants, or the atmosphere).

Carbon removal has an immediate benefit, and reduces atmospheric carbon vs. preventing emissions. However, there are limitations. Natural sinks store carbon for a limited period (e.g. the lifetime of the tree) and tech-based methods such as direct air capture are in their infancy, therefore expensive and not able to operate at scale.

As a result, it's common practice for Carbon Neutrality claims to be supported by investment in offsetting projects that avoid / prevent GHGs too. The key is that projects are verified, ensuring the emissions impact is quantified and would not have happened in the absence of the investment.

Net Zero requires residual emissions to be offset using removal credits. This reflects Net Zero’s higher level of commitment and ambition.

Carbon Neutrality requires Scope 1 and 2 emissions only; Net Zero requires Scopes 1, 2 and 3

For Carbon Neutrality, it’s strictly necessary to offset only your Scope 1 and 2 emissions:

Scope 1 – emissions from sources your business directly owns or controls (e.g. gas combustion for an office’s central heating, or fuel combustion to power company vehicles).

Scope 2 – emissions from purchased energy (e.g. emissions generated to produce your office electricity).

Net Zero goes further, requiring businesses to measure, track and set reduction targets for their Scope 3 emissions:

Scope 3 – all other emissions from sources not directly owned or controlled (e.g. employees commuting to work or travelling for business purposes, or emissions from your suppliers).

However, many Carbon Neutral schemes (including Seedling’s) require businesses to offset some Scope 3 emissions. They key is to be transparent, stating clearly what emissions categories you have chosne to offset.

Carbon Neutrality - no longer just carbon

While CO₂ is the largest contributor towards climate change, other GHGs have an effect on warming too: for example, methane and nitrous oxide which are more potent in their warming potential than CO₂ on a like-for-like basis, though less abundant. A carbon footprint measured in accordance with the GHG Protocol (the gold standard for carbon accounting), takes into account warming from 7 greenhouse gases in a measure called CO₂ equivalent.

Strictly speaking, Carbon Neutrality refers to offsetting carbon alone, whilst Net Zero encompasses all GHGs as required by the GHG Protocol. However, in practice most Carbon Neutral accreditation schemes (including Seedling’s) require businesses to offset all GHGs. This is in line with PAS 2060, a Carbon Neutrality Standard developed by the British Standards Institute.

Summary: the best of both worlds

Carbon Neutral or Net Zero – which, ultimately, is best for your business? At Seedling, we believe that this is a false choice: both are critical and, in fact, complementary.

Carbon Neutrality has (rightly) been criticised as being “too easy” – committing to Net Zero indicates a serious, long-term and science-based commitment to making difficult choices to help fight climate change. But it’s also “too easy” for a business to commit to a Net Zero target 30 years in the future and do very little now – the planet needs immediate climate action!

Therefore, the optimal sustainability strategy marries the two. It combines material ongoing investment in climate action (Carbon Neutrality, year after year) with a genuine, long-term commitment to emission reduction (SBTi-aligned Net Zero).

Seedling is designed to make it easy for any business to adopt this strategy. Get in touch at hello@seedling.earth to find out more.