Carbon neutrality and climate neutrality: what are they and how do they differ from net zero?

Carbon neutral, climate neutral, net zero, zero emissions — new terms appear faster than their meanings settle, and it is easy to get lost. Sometimes two of them mean the same thing in one document and something different in the next. A customer questionnaire, an investor and your marketing team may each use a different one.

• Carbon neutrality: emissions balanced to zero; first cut them, then remove carbon yourself, and only then offset the rest.
• Climate neutrality: in company communication the same thing; in EU law, the target for the whole EU by 2050.
• Net zero: at least 90% of emissions cut at source; carbon credits you buy do not count.
• Zero emissions: no emissions within a given boundary, with no balancing at all.

Carbon neutral, climate neutral, net zero: what does each term mean?

A common claim is that carbon neutrality covers only CO₂, while climate neutrality covers all greenhouse gases. ISO 14068-1 does not support this split. It uses the word "carbon" as a collective term for all greenhouse gases expressed in CO₂ equivalent. So the two terms do not differ in the gases they cover. They differ in who uses them, and in what context.

In climate reports, all these gases are converted to CO₂ equivalent: carbon dioxide, methane, nitrous oxide and fluorinated gases. Each gas warms the climate to a different degree. A tonne of methane weighs dozens of times more in the balance than a tonne of CO₂. This is why we measure the climate impact in one common unit.

Three names are mixed up most often:

1. Carbon neutrality: a term defined in a standard. It applies to a specific subject: a company, a product, a service, a building or an event. It has a definition, a procedure and can be verified by an independent party.
2. Climate neutrality: a term from climate policy. In the European Climate Law, it means a balance between emissions and removals across the whole EU by 2050. Companies mostly use it as a synonym for carbon neutrality.
3. Net zero: a target state, not a way to balance current emissions. The key difference from neutrality: net zero requires you to remove emissions at source and to cover the rest with permanent removals, not credits.

Zero emissions is a separate idea. A zero-emission process or vehicle emits nothing within a stated boundary. There is no balancing here, only no emissions. An electric bus has zero emissions where it is used. But making and charging it causes emissions. So a zero-emission claim always needs a stated boundary.

"Climate neutral" means nothing without a subject, a period and a way of balancing. Always say what the claim covers: the whole company or one product, and for which year. Also say what part of the balance comes from cuts and what part from offsets.

Where did the idea of neutrality come from? From Kyoto to Paris

Neutrality is not a marketing idea. It follows from the arithmetic of the climate. Carbon dioxide from burning fossil fuels stays in the atmosphere for centuries. Natural sinks, such as forests, oceans, soils and inland waters, absorb only part of what we emit. The level of greenhouse gases in the atmosphere has risen since the industrial revolution, and human activity sets the pace. To stop global warming, cutting emissions is not enough. The flow must fall to net zero: as much greenhouse gas must be removed as goes into the atmosphere.

The road to this principle led through three points:

1. The Kyoto Protocol (1997): the first binding emission limits for developed countries and the start of emissions trading.
2. The Paris Agreement (COP21, 2015): the goal to keep warming well below 2 °C above pre-industrial levels, aiming for 1.5 °C. It also calls for a balance between emissions and removals of greenhouse gases in the second half of the century.
3. IPCC reports: they show that keeping to 1.5 °C needs global neutrality around 2050. This date stands behind the EU and company targets we read in strategies today.

So a single company's neutrality makes sense only when it follows this logic. First, real cuts in carbon dioxide emissions at source. Only then, removing carbon from the atmosphere. The reverse order, offsets first and climate action maybe later, does not change the balance of the planet. It only changes the company's report.

What does ISO 14068-1 require?

ISO 14068-1:2023 ("Climate change management — Transition to net zero — Part 1: Carbon neutrality") is the first international standard of its kind. It sets out what you must do to claim carbon neutrality. It replaced the British specification PAS 2060, which BSI withdrew on 30 November 2025. No new PAS 2060 certifications have been issued since 1 January 2025.

So under this standard, neutrality is a system, not a statement. It is not a slogan, but a documented process. The standard sets it out in a sequence that you cannot shorten:

• subject and boundaries: whether neutrality covers an organisation, a product, a service or an event, and what is in scope;
• carbon footprint: under ISO 14064-1 for an organisation and ISO 14067 for a product, including significant emissions in the value chain;
• carbon neutrality management plan: with time-bound targets in line with climate science, that is, with the pathway that follows from the Paris Agreement;
• cutting emissions and increasing removals within your own boundaries, which comes before anything else;
• offsetting residual emissions: only what you could not remove;
• report, claim and verification: the claim must be documented and open to checks by a third party.

The key rule of this standard: offsetting comes last. A company that buys credits instead of cutting emissions does not meet ISO 14068-1, even if the sums come out at zero.

The road to carbon neutrality step by step

In practice, a company goes through six stages. The first three are analysis. The next three are investment and reporting.

1. Calculate your carbon footprint. Without an inventory of Scopes 1 and 2 and the significant categories of Scope 3, there is nothing to talk about. The starting point is a corporate carbon footprint under the GHG Protocol, and for a product, a product carbon footprint.
2. Set a base year and a target. The target should follow a science-based pathway, not what you happen to be able to cut. The most common framework is SBTi target submission.
3. Build a reduction plan. A list of actions with costs, deadlines and owners. We describe it in our article on how to reduce your company's carbon footprint.
4. Cut emissions. Use less energy and cut direct emissions in Scope 1. Switch to renewable energy, or sign contracts for power from renewable sources. Change your products and your supply chain. This stage takes years and costs money. It decides whether your neutrality claim is credible.
5. Offset the rest. Only the emissions you could not avoid, and only with credits that meet quality requirements (see below).
6. Document and verify. Write a report with data, assumptions and boundaries. Add independent carbon footprint verification, so that the numbers hold up with customers and regulators.

Companies that set ambitious targets and meet them on time usually combine three things:

• reliable sustainability reporting;
• investment in process and product innovation;
• a timeline in which carbon neutrality has a specific date, not a "long-term view".

Without these three elements, a claim falls apart at the first question about data.

Offsetting emissions: where are its limits?

Offsetting means funding cuts or removals outside your own boundaries and claiming their effect. In itself, it is nothing wrong. The problem starts when it replaces cuts instead of adding to them.

A carbon credit is a unit equal to one tonne of CO₂ equivalent that a specific project avoided or removed from the atmosphere. Independent programmes issue and record credits, most often Verra and Gold Standard. Credits trade on the voluntary market, outside the ETS. For a neutrality claim, the type of credit you buy is decisive:

• avoidance credits: the project prevents an emission. Examples are a wind farm instead of a coal plant, methane capture at a landfill or better stoves;
• removal credits: the project removes CO₂ from the atmosphere and stores it, for example planting forests, storing carbon in soil, biochar or direct air capture.

Only the second type can neutralise the residual emissions that net zero requires. We describe project types, price ranges and the difference between certified and uncertified credits in carbon offsetting in a nutshell.

Whatever its type, a credit makes sense only if it meets four conditions:

1. additionality: the cut would not happen without the money from the credit;
2. permanence: the effect lasts, and the risk of reversal, such as a forest fire, is covered;
3. no double counting: the host country and the buyer do not both claim the same tonne. In international trade, corresponding adjustments under Article 6 of the Paris Agreement prevent this;
4. independent verification: a third party checked the amount cut or removed; the seller did not just declare it.

Climate standards separate two things that marketing often merges into one. Offsetting means reduction credits bought on the market. Neutralisation means that you remove CO₂ from the air for good, as much as your residual emissions. Storing it deep underground is one way. Net zero under the SBTi requires neutralisation. We describe it in our article on the SBTi Corporate Net-Zero Standard version 2.

What share of your balance do you close with offsets? If the answer is "most of it", this is not a road to neutrality but a way to buy it. And in the EU, calling a product neutral on this basis is now banned in consumer communication.

What does EU law ban, and from when?

Directive (EU) 2024/825, known as EmpCo, on empowering consumers for the green transition, changes the rules for talking about neutrality. EU countries must apply its bans from 27 September 2026. Some countries transposed it late: in Poland, for example, the bans apply from 27 September 2027. Three changes concern this article directly:

1. A ban on neutrality claims based on offsets. Slogans such as "climate neutral product", "climate friendly" or "zero climate impact" are banned in all circumstances if they rely on offsets.
2. A ban on vague green claims that you cannot back with proof of top environmental results. This also covers the word "eco" next to neutrality.
3. A ban on your own sustainability labels that are not based on a certification scheme and do not come from a public authority.

What does this mean in practice? You do not have to drop your neutrality claim, but you have to rebuild it. You may still talk about what your company really did. This means the size of the cuts, the base year, the targets and the share of renewable energy. What goes is calling a product neutral because you bought credits for it. We show how to do this in our guide on how to avoid greenwashing.

EmpCo does not apply in the UK. But the Green Claims Code of the Competition and Markets Authority (CMA) also requires claims to be truthful, clear and backed by evidence. Since April 2025, the CMA can fine a company up to 10% of its global turnover for breaking consumer law.

What is climate neutrality? EU targets for 2030, 2040 and 2050

The EU timeline gives the word "neutrality" its second meaning. It is worth knowing, because new duties for companies follow from it. The overall framework is the European Green Deal, a programme in which climate neutrality by 2050 is the main goal, and other policies serve it:

• 2030: a net cut of at least 55% compared with 1990, set in the European Climate Law, Regulation (EU) 2021/1119;
• 2040: a net cut of 90%, added by an amendment, Regulation (EU) 2026/667 of 11 March 2026. Up to 5 of these 90 percentage points may come from high-quality international credits; the rest must be achieved inside the EU;
• 2050: EU climate neutrality, that is, net zero emissions by 2050: a balance between emissions and removals across the whole EU.

The task is measured in billions of tonnes per year. So the road to climate neutrality in the EU is above all about low-carbon energy sources, not about moving balances between countries.

The 2030 targets were turned into sector rules in the Fit for 55 package. It includes reform of the EU ETS and the new ETS2 for buildings and road transport. It also includes the carbon border adjustment mechanism (CBAM), emission standards for vehicles and targets for renewable energy. This package affects companies directly. It changes allowance prices, reporting duties and what customers in supply chains expect.

For a company, climate neutrality usually starts with the two levers that carry the most weight in industry. The first is a change in the energy mix it uses, since energy production causes most Scope 2 emissions. The second is technical progress in the production process itself. Offsetting cannot replace either of them.

EU targets are targets for countries, not for companies. But a company that runs its own decarbonisation strategy follows the same rhythm. Supporting the transition and emitting less and less is now a condition for staying in supply chains. It is not a sustainability programme for show.

Carbon neutrality, net zero and zero emissions: a comparison

The table sets out the four terms side by side:

The table shows why it is risky to use these words as synonyms. The same sentence, "we are neutral", means one thing when an ISO standard stands behind it. It means something else when an invoice for carbon credits stands behind it.

How do you talk about neutrality without greenwashing?

A neutrality claim is an environmental claim, so the same rules apply as to any other. It must be true, specific, documented and verifiable. Four rules are enough:

1. State the subject and the boundary. "Our head office is carbon neutral in Scopes 1 and 2 for 2025" can be verified. "We are neutral" cannot.
2. Separate cuts from offsets. Say how many tonnes you removed from your balance through changes, and how many you covered with credits. This one number decides whether the whole message is credible.
3. Do not present the future as the present. A target for 2035 is a target, not a result.
4. Keep the evidence at hand. The carbon footprint report, the method, the credit documents and, ideally, the verifier's statement.

ISO 14021 sets out the rules for self-declared environmental claims. We check claims against it in our environmental claims verification service. You will find a catalogue of typical misuses in our article what is greenwashing.

Frequently asked questions

Do you want to check whether your neutrality claim will hold up?

We calculate the corporate carbon footprint and the product carbon footprint, build a decarbonisation strategy and handle SBTi target submission. Independent carbon footprint verification checks the final results, and a green claims audit checks your messages.