Carbon Neutrality
Carbon neutrality means that an organization's net greenhouse gas emissions equal zero, achieved by balancing emitted carbon with an equivalent amount of carbon offsets or removals. Unlike net zero, carbon neutrality does not require deep absolute reductions first and can be achieved primarily through offset purchases.
Carbon neutrality has been a popular corporate commitment, but it faces increasing scrutiny as stakeholders and regulators distinguish between genuine emission reductions and offset-based claims.
Under PAS 2060 (the BSI standard for carbon neutrality), an organization must measure emissions, reduce them where possible, and offset the remainder through verified carbon credits. The standard requires annual re-certification and a published Carbon Management Plan.
The distinction between carbon neutrality and net zero is critical. Carbon neutrality allows offsetting 100% of emissions without mandatory reduction percentages. Net zero (per SBTi) requires 90–95% absolute reductions before any offsets or removals can address residual emissions.
The EU has moved to restrict "carbon neutral" claims for products and organizations through proposed regulations, arguing that offset-based claims mislead consumers. Companies are increasingly transitioning from "carbon neutral" commitments to science-based reduction targets with SBTi validation, which are seen as more credible and ambitious.
For practical purposes, organizations should focus on measured reductions as the primary strategy and treat offsets as a complement — not a substitute — for decarbonization action.
Frequently asked questions
What is carbon neutrality? +
Carbon neutrality means balancing emitted greenhouse gases with an equivalent amount of offsets or removals, resulting in net-zero emissions. Unlike the SBTi net-zero standard, carbon neutrality does not require specific minimum reduction percentages before offsetting.
Related terms
Net Zero
Net zero means reducing greenhouse gas emissions as close to zero as possible, with any remaining residual emissions balanced by an equivalent amount of carbon removal from the atmosphere. The SBTi Corporate Net-Zero Standard requires at least 90–95% absolute emission reductions before carbon removals can be used.
Carbon Offsets
Carbon offsets are verified emission reduction or removal credits purchased by an organization to compensate for its own greenhouse gas emissions. One carbon offset represents one tonne of CO₂e reduced or removed from the atmosphere through a project elsewhere, such as reforestation, renewable energy deployment, or methane capture.
Greenwashing
Greenwashing is the practice of making misleading or unsubstantiated claims about the environmental benefits of a product, service, or corporate practice. It ranges from vague language ('eco-friendly,' 'sustainable') without supporting evidence to selective disclosure that highlights positive actions while concealing negative impacts.
SBTi (Science Based Targets initiative)
The Science Based Targets initiative (SBTi) is a partnership between CDP, WRI, the UN Global Compact, and WWF that defines and validates corporate greenhouse gas reduction targets consistent with the Paris Agreement goal of limiting warming to 1.5°C above pre-industrial levels.
Decarbonization
Decarbonization is the process of reducing greenhouse gas emissions across an organization's operations and value chain through energy efficiency improvements, fuel switching, renewable energy procurement, process changes, supply chain engagement, and technology adoption. It is the operational work that turns reduction targets into real emission cuts.