Carbon Neutrality vs Net Zero
Carbon neutrality can be claimed today by offsetting current emissions. Net zero requires deep, science-based emissions cuts first — typically ~90% — with removals only for the residual.
'Carbon neutral' typically means residual emissions have been offset. 'Net zero' means residual emissions have been cut ~90% first, and only the true remainder is neutralised — via permanent removals.
Side by side
| Dimension | Carbon Neutral | Net Zero |
|---|---|---|
| Emphasis | Balance current-year emissions with offsets | Deep reduction first, then neutralise the residual |
| Standard | PAS 2060 (being retired), ISO 14068 | SBTi Corporate Net-Zero Standard |
| Offsets vs removals | Broadly accepts avoidance credits | Only permanent removals for the residual |
| Time horizon | Year-by-year claim | Long-term (typically 2050 or earlier) |
| Regulatory posture | Increasingly discouraged (EU Green Claims Directive) | Aligned with 1.5°C pathways |
Communicating a short-term offsetting programme — noting that regulators are tightening rules on standalone neutrality claims.
Setting a credible long-term target consistent with 1.5°C and lender / investor expectations.
Frequently asked questions
Can we call ourselves carbon-neutral in the EU?+
Under the incoming Green Claims Directive, generic 'carbon neutral' claims backed only by offsets will be restricted. A quantified transition plan is expected.
Both are sustainable-finance instruments, but they work differently: a Green Loan finances a specific green project; an SLL is general-purpose credit whose pricing moves with sustainability performance.
The CSRD is the EU directive; the ESRS are the technical standards it mandates. One creates the reporting obligation, the other tells you how to report.
Scope 1 and 2 are the emissions a company controls directly or via purchased energy. Scope 3 is everything else in the value chain — typically 70–90% of the total.