Learn: Carbon accounting

Carbon Neutrality: What Does Being Carbon Neutral Mean

You’ve probably heard the phrase ‘carbon neutral’ in relation to climate action. This term is used when a business, brand, product, or event is measuring, reducing, and neutralising their carbon footprint through reduction initiatives and the purchase of carbon credits.

What does carbon neutral mean?

In the past, some definitions of carbon neutrality focused primarily on measuring and then offsetting emissions through the purchasing of carbon credits, allowing businesses to "neutralise" or balance out  their carbon footprint by investing in projects that reduce or store carbon elsewhere in the environment. However, it's essential to recognise that carbon neutrality isn't solely about offsetting emissions. It encompasses a broader approach that includes reducing emissions where possible and minimising environmental impacts.

Utilising carbon credits as businesses and society transition to net-zero can be an important tool to ensure immediate action is being taken while long term goals are being worked towards.

To make an authentic carbon neutral claim an organisation should not only offset their carbon footprint in the short term, but also concurrently work towards reducing carbon emissions in the long term. In the interim to net zero, carbon neutrality is often achieved 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 - while implementing reduction initiatives. 

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.

However, when a business uses carbon credits to neutralise their emissions, they are still emitting greenhouse gases, so achieving carbon neutrality in this way should not be seen as the end goal. Instead, carbon neutrality can be viewed as a complementary process that allows a business to take immediate action while they measure and reduce their footprint as they work towards a net-zero future, where operational changes have been made to prevent at least 90% of a business’ emissions in the long-term.

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 a globally recognised acknowledgement of an organisation’s commitment to measuring, reducing, and neutralising its carbon footprint. Certification processes and requirements vary by region but they all share the common goal of verifying an entity’s carbon neutrality claims. 

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. 

Regardless of the region, achieving carbon neutral certification signifies a commitment to environmental responsibility and transparency. It provides stakeholders with confidence that an organisation's carbon neutrality claims are well-founded and backed by credible evidence. This global recognition underscores the importance of reducing greenhouse gas emissions and mitigating climate change on a broader scale.

Most countries will also have strict guidelines on the advertisement of carbon neutral claims. 

Advertising Standards for Carbon Neutral Claims

Carbon neutral claims are also monitored by strict global and regional advertising standards. These standards play a critical role in ensuring transparency, accuracy, and authenticity in the way organisations communicate their carbon neutrality efforts and the reduction initiatives that come from these claims. 

The standards have also been established to prevent deceptive exaggerations or false claims about an entity's environmental credentials. One widely recognized set of guidelines is the International Organization for Standardization's (ISO) ISO 14021:2016 standard. It provides clear criteria and recommendations for making environmental claims in marketing and advertising materials, including those related to carbon neutrality. Organisations adhering to these guidelines ensure that their carbon neutral claims are accurate, substantiated, and not misleading.

Most countries will also have regionally recognised guidelines on the advertisement of carbon neutral claims. In the UK, the Advertising Standards Authority (ASA) and the Committee of Advertising Practice (CAP) monitor and regulate environmental claims, including carbon neutrality assertions, through their Advertising Codes. And for example, the ACCC in Australia has strict rules around trademarking certifications of carbon neutral standards. 

These global advertising standards are crucial in maintaining trust and integrity in carbon neutrality claims made by organisations worldwide. Adhering to these standards not only ensures that organisations communicate their environmental efforts accurately but also contributes to the broader goal of addressing climate change by promoting responsible environmental practices on a global scale.

How to be a carbon neutral business

Becoming a carbon neutral business involves more than just offsetting emissions. It includes measuring your carbon footprint, reducing emissions through various strategies, and using offsets for the remaining emissions via verified carbon credits.

The process should start with measuring your carbon footprint (a process which Trace can help you with) by considering everything from energy usage to transport emissions. Once your carbon footprint is known, you can use this data to create a plan to reduce your carbon emissions, which could involve changes like adopting energy-efficient technologies or improving transportation practices. As making changes and reducing emissions takes time, we also offer you the chance to take immediate climate action through  purchasing  carbon credits to offset your carbon footprint.  If you decide to offset 100% or more of your carbon footprint, then you receive a  carbon neutral status for 12 months while you work to reduce your business footprint. 

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

Carbon neutral vs net zero

While 'carbon neutral' and 'net zero' are sometimes used interchangeably, there is a difference. Carbon neutrality is an immediate, short-term response to your organisation’s carbon footprint. Net-zero, on the other hand, is the future state of the organisation where 90-95% of their baseline  emissions have been reduced at the source and carbon credits are only used to neutralise the remaining unavoidable emissions. 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 carbon credits, leaving net-zero emissions.

Carbon neutrality can be considered to be a supplementary step during a business’ journey to net zero. With carbon neutrality, a business must still make a reasonable effort to reduce year-on-year, but does not require the level of accountability, goal setting, and reporting of a net-zero strategy. 

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 action, whilst net zero is the long-term goal. 

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 as carbon neutral – for example Melbourne Fashion Week and Glastonbury Festival.

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 certification recognizes companies meeting high standards of environmental and social impact accountability. By becoming carbon neutral, businesses can contribute to their B Corp certification assessment, demonstrating their commitment to reducing emissions and environmental responsibility.  There are currently over 7000 certified B Corps around the world.

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 neutrality and start taking climate action!

Overall, the concept of carbon neutrality has evolved to encompass emissions reduction, impact minimisation as well as emissions offsetting. It can be used to support an organisation’s transition to net-zero but is not a long term goal. Businesses should embrace this broader perspective on carbon neutrality and take concrete steps to reduce their carbon footprint while considering carbon credits as part of a comprehensive climate action strategy.

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.

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