As climate pledges increase, many organisations are committing to cutting emissions. However, terms like carbon neutral and net zero are often used as if they mean the same thing — and they don’t.
Both approaches aim to reduce environmental impact, but they take different routes to get there. Understanding the distinction is key for businesses that want to avoid greenwashing and build credible sustainability strategies.
This guide explains what each term means, how they differ, and what to consider when setting your company’s climate targets.
What Does Carbon Neutral Mean?
Being carbon neutral means balancing the amount of carbon dioxide (CO₂) emitted with an equivalent amount that is removed or offset. A company, product, or event can call itself carbon neutral if the emissions it generates are matched by investments in activities that counteract those emissions — not by eliminating them altogether.
Most organisations start by calculating their emissions and then purchasing offsets such as renewable energy credits or tree planting projects. While this compensates for emissions, it doesn’t necessarily drive reductions at the source.
Carbon neutral claims typically cover Scope 1 and Scope 2 emissions (direct emissions and purchased energy). Some companies include parts of Scope 3, but this is less common.
For many businesses, carbon neutrality is an entry point into climate action. Still, the concept has faced criticism when companies rely heavily on offsets without making meaningful internal reductions.
What Does Net Zero Mean?
Net zero goes beyond carbon neutrality. It requires cutting greenhouse gas emissions across the entire value chain and only using offsets for residual emissions that cannot be eliminated.
To reach net zero, reductions must cover Scopes 1, 2, and 3 — everything from on-site fuel use and purchased electricity to supply chain activities, product use, and business travel. Because Scope 3 often makes up the largest share, net zero requires systemic changes, not just surface-level adjustments.
Offsets are still part of the equation but play a limited role. Current net zero standards require that they be high-quality, permanent removals such as carbon capture or verified nature-based solutions.
The Science Based Targets initiative (SBTi) states that companies must cut 90–95% of emissions before relying on offsets for the rest. Net zero, therefore, represents a long-term, science-driven commitment to measurable reductions.
Carbon Neutral vs Net Zero: Choosing the Right Path
Although often used interchangeably, carbon neutral and net zero represent different levels of ambition. Carbon neutrality focuses on balancing emissions, usually through offsets. It’s suitable for organisations looking for quick wins, but it doesn’t always require significant internal changes.
Net zero, on the other hand, is the recognised benchmark for credible climate leadership. It demands deep reductions across operations and supply chains, with only minimal use of verified offsets. More companies are aligning with net zero targets to meet rising expectations from regulators, investors, and customers.
What About Climate Positive?
Some organisations are aiming beyond net zero by becoming climate positive (or carbon negative). This means removing more carbon from the atmosphere than is emitted.
To achieve this, businesses must first minimise their own footprint, then invest in projects that actively remove additional carbon — such as reforestation, soil carbon storage, or direct air capture technologies.
While still relatively rare, climate positive strategies are gaining attention from companies that want to lead the way and demonstrate impact that goes beyond compliance.
Taking the First Step
Whether your organisation chooses carbon neutrality, net zero, or climate positive, the most important thing is to begin.
The UK’s Net Zero Strategy sets a target of cutting emissions by 2050. Businesses that align with this roadmap not only support climate goals but also strengthen their resilience against future regulation.
The first step is understanding your footprint. Measuring Scope 1, 2, and 3 emissions gives you the data needed to act. From there, set measurable targets, implement a reduction plan, and track progress.
You don’t need to tackle everything at once, but you do need reliable data and the right tools. Solutions like ClearVUE.Business help organisations monitor emissions, identify energy waste, and build credible strategies for long-term climate action.
This article appeared in the September 2025 issue of Energy Manager magazine. Subscribe here.