Learn: Carbon accounting

Carbon Neutrality: What Does Being Carbon Neutral Mean

You’ve probably heard the phrase ‘carbon neutral’ in relation to climate change. This term is used when a business, brand or event offsets its emissions to the point where its carbon footprint can be considered ‘neutralised’ or balanced out.

Carbon neutrality has an important part to play in the fight to achieve the target of the Paris Agreement and limit global warming to 1.5°C. If you want to understand more about carbon neutrality and how to become a carbon neutral business, read on for everything you need to know.

What does carbon neutral mean?

Some definitions of carbon neutral refer to an individual or company reducing their greenhouse gas (GHG) emissions – and many climate-conscious businesses do indeed do this as part of their carbon neutral journey.

However, reducing emissions is not strictly necessary for an organisation to become carbon neutral, as long as they have ‘offset’ their emissions. This is done by funding projects in other parts of the world which avoid, reduce or store carbon – such as investing in renewable energy projects to produce carbon neutral electricity.

To be credible, these projects must be verified by well-respected external organisations, such as VCS or Gold Standard. Check out our article on carbon offsetting for more information.

A business achieves carbon neutrality once they have purchased verified carbon credits equal to or above the amount of carbon they emit (1 carbon credit = 1 metric tonne of carbon removed, prevented or stored). They can then be said to have compensated for or ‘neutralised’ their emissions.

However, they are still emitting greenhouse gases, so this should not be seen as the end goal. Instead, carbon neutrality should be viewed as the first, important step on the journey to ‘net zero’, where operational changes are made to prevent at least 90% of a business’ emissions.

Ideally, the ultimate destination of this journey should be ‘climate positive’, where your business benefits the climate through regenerative action and removing CO2 from the atmosphere. How great would that be? 

What is carbon neutral certification?

Carbon neutral certification is an official acknowledgement of carbon neutrality. The ACCC has strict rules around trade marking certifications of carbon neutral standards. 

One example of certification is the Climate Active Carbon Neutral Certification. This is awarded by the Australian Government’s Carbon Neutral Program to organisations who can sufficiently demonstrate they have achieved carbon neutrality, via an official audit. 

Achieving Climate Active Certification is a rigorous process and can be a barrier for SMEs wanting to improve their environmental impact. At Trace, we believe the important thing is to do the work, so we focus on helping you to become carbon neutral, rather than to achieve certification.

Don’t worry – we still provide you with badges to display if you want to let customers and employees know about your carbon neutral status. We’re sure you’ll want to shout about it!

How to be a carbon neutral business

A business becomes carbon neutral when it has offset all its carbon emissions. This involves purchasing carbon credits, which support verified emission reduction projects. To make this easier, you may want to enlist the help of a broker, or a specialist company such as Trace.

The first step is to measure your carbon footprint, a process through which Trace can guide you. You will need to consider everything from the energy used in your factories and built environment, to the transport emissions from your staff, to the transportation of your goods and services. 

We will then work out a plan of action for reducing these emissions. This may involve anything from switching to LED lightbulbs in your offices to full-scale refurbishments and technology updates.

In the meantime, we’ll calculate how many tonnes of carbon you still need to offset to reach carbon neutrality. We will then purchase the required carbon credits on your behalf and award you with your carbon neutral status.

Head to how to become a carbon neutral business for more information, or contact us – we’re always happy to answer any questions.

You’ve made it this far – starting is easy

Join our community of climate-conscious business leaders and take responsibility for your carbon footprint with trace today.

Carbon neutral vs net zero

If you’re wondering about the difference between net zero and carbon neutral, or whether there is a difference, the answer is yes – but a subtle one.

Exact definitions of these terms vary and ‘carbon neutral’ and ‘net zero’ are sometimes used interchangeably. However, the most widely accepted definition of net zero is that it means there are no incremental emissions released into the atmosphere, with any unavoidable emissions being balanced out by offsets, leaving net zero emissions.

Carbon neutrality is generally considered to be the first step on a business’s journey to net zero. With carbon neutrality, a business could technically make no effort at all to reduce their emissions, and simply offset 100% of them (although this is not the course of action we recommend!).

In contrast, to achieve net zero, a company must implement the necessary changes to prevent 90-95% of their emissions and offset only the tiny (<10%), unavoidable remaining amount. Carbon neutrality is the short-term solution, whilst net zero is the long-term goal – succeeded only by climate positivity.

For more information, check out our article on carbon neutral vs. net zero.

What are some carbon neutral companies?

Examples of current carbon neutral companies include Australia Post, Coles, Commonwealth Bank, Jetstar, OVO Energy and Qantas. These companies are among the hundreds that have so far achieved the government’s Climate Active certification.

Some popular events are also certified carbon neutral – for example, Adelaide Festival and Melbourne Fashion Week. Another interesting case study is the City of Sydney, which was the first Australian government body to achieve certified carbon neutral status, in 2011.

And of course, there are many businesses who have achieved carbon neutrality with Trace!

How does carbon neutral fit with B Corp certification?

B Corp is a prestigious certification awarded to companies that meet high standards of accountability, transparency and performance concerning their environmental and social impact. There are currently over 400 certified B Corps in Australia. 

The process to achieve B Corp certification is rigorous. Part of the assessment is an environmental survey in which you will be asked about your GHG emissions, including how you measure, report, reduce and offset emissions.

By completing the process of calculating your carbon footprint and becoming carbon neutral, you will be well-placed to answer these questions, and it can help you gain the necessary points to qualify. Although not a requirement, B Corps are certainly encouraged to become carbon neutral.

Discover more about the link between carbon neutrality and B Corp certification, or contact Trace today to discuss your company’s journey to carbon neutral and start taking climate action!

Read more about companies on the journey to Net Zero

Lab 17

Lab 17 is carbon neutral

Learn more

Talaria Capital

Talaria Capital is carbon neutral

Learn more

Radish Events

Radish Events is carbon neutral

Learn more

Actions for individuals