Carbon Neutral vs Net Zero: Explaining the difference

Tackling climate change is a hot topic right now. More and more companies are pledging to become Carbon Neutral or Net Zero, and with these bold statements being used with increased frequency we've decided to dig a bit deeper and find out what each of these terms actually mean.

So what actually is the difference between 'Carbon Neutral' and 'Net Zero'? Each are sometimes used interchangeably but both represent very different approaches to tackling climate change.


Carbon neutral means balancing greenhouse gas (GHG) emissions by offsetting or removing from the atmosphere the equivalent of carbon for the amount produced.

A way this can be achieved is through carbon credits. The credits serve as permission to emit carbon dioxide or other GHG in exchange for offsetting the effects of those emissions- and supporting GHG-reduction initiatives such as renewable-energy projects.

Carbon offsetting is extremely important because it is addressing climate action in some of the most vulnerable and important habitats in the world.

Becoming carbon neutral does not necessarily mean a commitment to reducing a companies overall GHG emissions. A carbon-neutral business needs only to offset the GHG emissions they produce.


A commitment to net zero however means actively reducing your organisations GHG emissions with the goal of balancing the emissions produced to the emissions removed from the earths atmosphere.  A company has to reduce their emissions by 90% minimum, then remove the remaining before being able to claim net zero status.

For example, if a fashion company produces and sells an item of clothing, that organisation could become carbon neutral by buying enough credits to offset any emissions that have resulted directly from the production and sale of that item, e.g. the energy to power sewing machines, production machinery and fuel to transport the item to the warehouse, shop or customer's door.

Achieving net-zero carbon, the same organisation would need to reduce the volume of GHG emitted through the overall process, from sourcing raw materials to creating the item, to its delivery to the end consumer, and in some instances how it would need to be disposed of at the end of its life. This might include both upstream and downstream emissions. Rather than buying credits to offset the carbon emitted, the organisation would need to actively reduce/remove the emissions by employing strategies such as switching to electric power, sustainable sourcing of material, switching to biofuel for transportation etc etc. They would then also invest in projects that remove from the atmosphere the carbon dioxide produced during the manufacturing process.

Ultimately, becoming Net Zero is harder to achieve but is a more circular approach to combat climate change long term.


Even respected news outlets and world leaders occasionally confuse carbon neutrality and net-zero, or use them interchangeably. And businesses that seek carbon neutrality, rather than net-zero carbon, have sometimes been accused of ‘greenwashing’ (presenting their achievements as more environmentally friendly than they actually are) – even when their efforts at addressing climate change are genuine.

The better the level of understanding of these terms, the better we can forecast and adjust strategies accordingly. Becoming carbon neutral is a great start for any company but it will only be a matter of time before most organisations are also expected to provide a roadmap for their move to become Net Zero in the future.



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