Carbon Neutral

Carbon neutral describes a state in which the greenhouse gas (GHG) emissions produced by a company, product, or activity are balanced by an equivalent amount of carbon offsetting or removal. The net result is zero additional carbon entering the atmosphere from that source.

Achieving carbon neutrality typically follows a two-part approach: 

• The first is reducing emissions as far as possible through operational improvements, energy efficiency, switching to renewable energy, and supply chain changes. 
• The second is offsetting the residual emissions that cannot yet be eliminated, using verified carbon credits that represent either avoided emissions or carbon removed from the atmosphere.

Carbon neutral and net zero are related but not interchangeable:

• Carbon neutral means emissions are balanced through offsetting, with no prescribed minimum level of reduction required.
• Net zero sets a higher bar. Under the Science Based Targets initiative (SBTi), companies must first reduce Scope 1, 2, and 3 emissions by at least 90% before any offsetting. Residual emissions must be addressed through permanent carbon removal rather than avoidance credits.

A company can be carbon neutral today and still fall well short of a credible net zero standard. Understanding the distinction between carbon neutral and net zero matters when evaluating the strength of any climate commitment.