What Is The Difference Between Carbon Neutral And Net Zero?

published Mar 24, 2023
2 min read

Climate change is a global crisis that continues to cause widespread disruptions and consequences such as increasing temperature and abnormal weather events. As such, switching to environment-friendly operations and initiatives has never been more critical for businesses.

Companies are constantly pressured to control their carbon footprint and implement green operations. As companies showcase their sustainability efforts, confusing terms like carbon neutrality and net zero are being thrown into the mix. And when everyone is using different words to describe their sustainability goals, it can be challenging to understand who’s doing what.

This article aims to remove the confusion between these two industry terms, defining each and pointing out their differences.

Carbon Neutral And Net Zero: An Overview

As the conversation about global warming and climate change grows louder, the industry introduces more buzzwords that describe a company’s sustainability efforts. Carbon neutral and net zero are the most common terms used interchangeably by businesses, politicians, and scientists driving climate conversion.

Both initiatives have the same goal—to remove harmful emissions from the planet’s atmosphere and minimise the effects of climate change and global warming. In short, carbon neutrality and net zero efforts aim to do good for the planet. But that’s where the similarity ends. The scale, effort, period, and kind of emissions removed from these initiatives differ.

Understanding Carbon Neutral

Carbon neutral means that through a combination of activities reducing your carbon emissions, your business can offset the same amount of carbon emission you emit during your operations.

From its name, carbon neutral means neutrality in terms of the carbon your business produces and offsets. Technically, your goal is to offset an equal amount of emission to that which your business created.

To be carbon neutral, most businesses work on reducing unnecessary emissions and their carbon footprint. Any carbon left is canceled out by purchasing carbon offset credits. These credits are tradeable certificates or ‘rights’ linked to activities that help lower the amount of carbon dioxide in the atmosphere.

Understanding Net Zero

Net zero is a more comprehensive initiative than just being carbon neutral. It refers to the commitment to reducing all greenhouse gas emissions (not just carbon) as much as possible. It is often used to describe a state of business where your company doesn’t emit any new greenhouse gas into the atmosphere.

To achieve this, you should eliminate virtually all possible emissions in your business to almost zero and purchase carbon offset credits to balance out the hard-to-decarbonise emission reductions in your operations.

As such, net zero is a more significant movement. While some giant corporations promise to be fully net zero until a specific year, individual companies, especially smaller ones, may find it challenging to be ultimately net zero. After all, it’s not easy to justify that your business can eliminate most of your emissions. Also, the type of offset (carbon removal vs. carbon reduction offsets) needed to be net zero isn’t widely available.

Carbon Neutral Versus Net Zero: Key Differences

By now, you should have a general idea of how the two terms differ. To further clarify, here are critical variances between carbon neutrality and net zero.

1. Scope

A carbon neutral initiative covers emissions under Scopes 1 and 2, your company’s direct emissions. This can be the emissions produced by your operations and product manufacturing. On the other hand, the scope of a net zero initiative includes Scope 3, which comprises your business’s entire value chain, from products and supply purchases to their end-of-life treatment and disposal.

2. Standard And Certifications

To be considered carbon neutral or net zero, businesses should meet the necessary standards and certifications. Companies are certified carbon neutral when they receive the PAS 2060 certification. To be net-zero, organisations should meet the requirements of the SBTi Net-Zero Standard.

3. Offset

Both carbon neutral and net zero efforts require purchasing offset credits to balance your business’s emissions. However, they use different types. A carbon-neutral initiative requires carbon reduction offset credits, including projects like solar energy generation. Meanwhile, a net zero business must purchase carbon removal offset such as direct air capturing.

4. Duration

Net zero is a long-term goal that will take businesses years or decades to achieve. Meanwhile, going carbon neutral allows you to fight against climate change right away and is much easier for most companies to achieve.


Carbon neutrality and net zero operations are two of the most common climate pledges made by companies around the world today. While both terms aim to make organisations more sustainable, one pledge is more comprehensive than the other.

To recap, carbon neutrality aims to offset only a business’s carbon emission, whereas net zero means eliminating all greenhouse gases from a company’s operation. Through this article, you have a better understanding of these terms, allowing your company to use the right words to describe your sustainability goals and prevent the circulation of misleading information.