Is your business aiming for carbon-neutral or net-zero?

As businesses implement their sustainability strategies, we confirm the difference between carbon-neutral and net-zero and how to achieve these targets

According to research by Edie, just under a third (29%) of businesses have strategies in place to reach net-zero carbon targets. Of these companies, around 56% have declared budgets to decarbonise their operations.

We’ve heard the words carbon-neutral and net-zero used in many instances relating to businesses in different industries. Depending on the aim of a company’s sustainability strategy, these terms can be used to describe a target set by any business. But, it’s important to know the difference between them to understand where your business is heading. 

What is meant by ‘net-zero’? 

By definition, net-zero means to completely negate greenhouse gas emissions produced from human activity, by reducing emissions and implementing solutions to absorb carbon. 

From a business perspective, leaders will look to actively reduce energy consumption from non-renewable sources, such as fossil fuels, and ensure that their initial energy sources come from clean and renewable processes, ie switching from coal energy to wind energy. But, there are certain measurements and considerations to take place before a company can declare itself, or a particular process, net-zero

Net-zero incorporates all emissions involved within a process, including Scope 1, 2, and 3. Setting a net-zero target commits a business to ensure that its entire supply chain is free from emissions. If a company sources components from an overseas supplier, it would need to ensure that the production and the transportation of those components are carried out with zero emissions. Firms can also go beyond this and implement initiatives for carbon sequestration, helping to accelerate their net-zero strategies as well as their physical impacts on the environment. 

Carbon-neutral is not net-zero

For a business to be declared carbon-neutral, there are fewer barriers in terms of technology and industry. Carbon-neutral is defined by Oxford Languages as making or resulting in no net release of carbon dioxide into the atmosphere, especially as a result of carbon offsetting.

Essentially this means that businesses can reach their carbon-neutral targets by investing in carbon offsets. This provokes the discussion about how corporations ensure carbon offsetting is sustainable and many organisations will hunt down quality carbon offsets. Also, carbon-neutrality may not necessarily take into account Scope 3 emissions, meaning that businesses are not actively involved in assessing the granular processes within their supply chains. 

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