Learn: Carbon accounting

Carbon Neutral vs Net Zero vs Climate Neutral

We know the language surrounding sustainability and climate action can seem complicated. A recent Fleishmann Hillard study showed that there is high confusion surrounding a majority of environment based claims. 

One of the main issues is that several similar terms are often used interchangeably, including carbon neutral vs net zero vs climate neutral, despite the distinct differences between the three concepts.

Here, we explain exactly what they mean and how they differ to help you better understand sustainability terminology and decide which language to use when setting targets for your business.

Note that you may still find differences in how other organisations define these terms (which causes the confusion in the first place!), but we’ve taken what we believe to be the most common and widely acknowledged definitions from industry experts.

Here’s a handy guide that summarises what you’re about to read:

Carbon neutral

To understand the difference between carbon neutral vs net zero, we must first look at the individual definitions of these terms.

The term carbon neutral describes an existing state when a company is compensating for all of its CO2 emissions. To achieve carbon neutrality, a business will calculate its carbon footprint, reduce their emissions where possible,  and purchase carbon credits and offsets that support projects removing or avoiding carbon. In doing this, the business compensates for its carbon emissions while using the baseline measurement to start reducing emissions. 

A carbon-neutral certification with the support of carbon credits represents immediate action that can be taken in the short term while businesses start to reduce emissions. It can often follow on directly from a business measuring their footprint as they implement reduction initiatives. These reduction actions can require significant investment and technological updates, so they continue on a  long-term.

Trace helps companies to measure, reduce, and offset their emissions by supporting businesses in creating actionable, targeted emissions reduction strategies. Once this step has been taken Trace awards a ‘carbon neutral’ badge that includes scope 3 emissions from a businesses supply chain. 

Check out this article for more information on carbon neutrality for businesses and how to become carbon neutral with Trace.


Net zero

The term net zero is used when talking about the future state of a business that is achieved through ambitious and specific reduction initiatives. Net zero refers to the end-state a business achieves when it has successfully reduced all avoidable greenhouse gas (GHG) emissions and is only using carbon credits to compensate for unavoidable emissions. At this point, the company is contributing zero incremental or additional GHG emissions to the atmosphere and can be said to produce net-zero emissions. The Science Based Targets initiative describes net zero for the private sector as the point at which 90 – 95% of a business’s value chain emissions have been eliminated. 

Net zero is a long-term strategy that requires a business to decarbonise its operations through efficiency, renewable energy, electrification, supply chain management, and any other relevant means. Improvements will need to be made in all operational areas from buildings and machinery to suppliers and waste disposal systems. The reduction strategies an organisation implements will rely heavily on what initially drove the baseline emissions.


Carbon neutral vs net zero

So, what is the difference between net zero vs carbon neutral?

For a start, carbon neutral refers only to carbon emissions, whereas net-zero is concerned with all greenhouse gases, including methane and nitrous oxide. Carbon credits can play a role in reaching both targets. However, it plays a more central role in achieving carbon neutrality and must only play a minor role in reaching net zero.

The main difference between the meaning of carbon neutral vs net zero is the timeframe and how the target is reached. Carbon neutrality is a short-term state that most companies can achieve almost immediately by measuring their current emissions, implementing meaningful reduction initiatives, and purchasing carbon credits to balance those emissions from their measurement. 

In comparison, net zero is a long-term goal achieved only when a company has set ambitious targets over a specified time frame to take all available action to reduce the majority of its emissions. Carbon credits are only utilised for the small remainder of unavoidable emissions. Often carbon neutrality is used as part of an organisation’s journey to net-zero.

Carbon neutral Vs Net Zero graph

Climate neutrality

Another term often tossed into the mix is "climate neutrality." Climate neutral, is a broader concept that encompasses not only the reduction and neutralisation of greenhouse gas emissions (net-zero)  but also considers the holistic impact of a business or organisation on the environment. In essence, climate neutrality extends beyond carbon dioxide (CO2) emissions and takes into account all significant contributors to global warming, such as the other greenhouse gases, the impact of your business supply chain on natural resources, and the impact of waste management practices. This comprehensive approach is more encompassing than carbon neutrality and net-zero and considers the entire scope of your organisation. 


Climate neutrality vs carbon neutrality

While carbon neutrality and net zero focus on specific aspects of emissions reduction and compensation, climate neutrality provides a more comprehensive perspective. It requires a business to evaluate its entire environmental footprint and take action to minimise its impact on the climate across the board. This means not only reducing emissions but also implementing sustainable practices in areas like resource consumption, waste management, and water usage.

Climate neutrality takes the principles of carbon neutrality and net zero and expands them to create a more holistic framework for environmental responsibility. It acknowledges that tackling climate change goes beyond just CO2 and requires a multifaceted approach to address all factors contributing to global warming. Climate neutrality takes more time, effort and investment to achieve – but we must all strive for it.

Carbon negative or positive

Carbon negative or positive is slightly better than carbon neutral (but not as good as net zero). It means that a business has purchased carbon credits that exceed the GHG emissions they produce - therefore they have started to remove more carbon from the atmosphere than they’re emitting. At Trace, we consider a company to be carbon positive when it has offset 150% of its emissions. In order to have an authentic and transparent carbon neutral or carbon positive claim, businesses must move towards implementing meaningful reduction strategies as part of their claim.

You’ve made it this far – starting is easy

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Is carbon neutral the same as net zero?

Carbon neutral and net zero are not the same. Carbon neutral means balancing out your CO2 emissions in the short term through starting emissions reduction and balancing emissions using carbon credits. Meanwhile, net zero is a longer-term state, achieved when 90 – 95% of all your GHG emissions are eliminated from your footprint and carbon credits are only used for unavoidable emissions.


What is the difference between net-zero and zero carbon?

Net zero means that a business or country is producing net zero greenhouse gas emissions, as it has reduced most of its emissions and offset the small remainder. In contrast, zero carbon means a service or product generates no CO2 emissions. 

An example might be a wind turbine that generates renewable electricity solely from wind and produces zero carbon emissions.


What is the difference between carbon neutral vs carbon negative/positive?

Carbon neutral means that a business or country has calculated its total carbon footprint and balanced 100% of its emissions with credits and started the reduction process. Carbon negative or positive (used interchangeably) is the state achieved when a company has offset at least 150% of its emissions through carbon credits, removing more CO2 than it generates.


Which terminology should I use for my business?

This depends on your overall goals. Before deciding on your terminology, you should first calculate your carbon footprint and consider what would be an ambitious but achievable emissions reduction target for your business.


Whatever you decide, you must be honest and transparent about your choices internally and externally. Report your progress and areas that still need improvement to avoid greenwashing and develop your reduction strategies to focus on the high emissions areas of your business footprint. 


Choosing the right partner to help you on your sustainability journey can be crucial to your success. Contact Trace today, and our experts will help you to calculate your emissions, choose the correct language for your business, and achieve your short and long-term goals. 

To learn more

Read more about companies on the journey to Net Zero

Lab 17

Lab 17 is carbon neutral

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Talaria Capital

Talaria Capital is carbon neutral

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Radish Events

Radish Events is carbon neutral

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