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Sustainability Explained: Net-Zero vs. Carbon Neutral

The private sector plays a crucial role in the fight against climate change and the number of businesses willing to change their way of thinking and operating is increasing day by day.

Businesses are using terms like “carbon neutral” or “net-zero” to describe their climate goals, but the lack of clarity in communicating these terms has led to a lot of confusion.

Sustainability comes with its own terminology and it’s essential to properly use these terms. Often used interchangeably, these terms represent different approaches and it’s important to be able to communicate accurately.

We hear many companies claiming they have achieved “net-zero” or have become “carbon neutral”, or even both. Even real estate practitioners trying to map out their targets and initiatives related to climate action often struggle to understand the sustainability adjectives and terminology. So, what’s the difference between “carbon neutral” and “net-zero”? What are we setting out to achieve?

Carbon Neutral

Carbon neutral means a company commits that the amount of carbon dioxide (CO2) emitted is balanced by an equivalent amount being removed. To achieve this goal, the first step businesses need to take is to reduce their carbon footprint. Since it’s impossible to generate zero-carbon emissions, businesses can balance their emissions through offsetting. This can be achieved by joining a carbon offsetting scheme and investing in projects designed to reduce current and future emissions.

In practice, businesses need to start working on the first goal – to drastically reduce their carbon footprint – and then offsetting what’s left.


Net-zero refers to achieving the overall balance between the emitted greenhouse gas emissions and the greenhouse gas emissions absorbed from the atmosphere over a specific period. Achieving net-zero means reducing all GHG emissions as much as possible and offsetting only the essential emissions that cannot be reduced. Net-zero can also be described as the point in time where we stop contributing to global warming.

In simple terms:

  • The starting point is carbon neutral

  • The journey is to achieve net-zero

What is the difference between Carbon Neutral and Net-Zero?

Both terms have similarities, however net-zero has much broader coverage. Carbon neutral refers to balancing only CO2 emissions, while net-zero refers to all greenhouse gas emissions such as carbon dioxide, methane, nitrous oxide, etc.

Additionally, carbon neutral and net-zero serve different scopes. Carbon neutral means you can still produce emissions. Carbon neutral only covers your company’s direct emissions - GHG Scope 1 and 2. Carbon neutral on its own is not enough to keep global temperatures below a 1.5° increase.

Net-zero is a long-term goal which we all need to achieve if we want to keep global temperature rises under 1.5°. Carbon neutral and net-zero also have unique standards and certifications and require different kinds of offsets.

Working together toward Net-Zero

Sustainability and climate terminology can be confusing, but the less we understand the less we are likely to take action. No matter where you are on your journey, we can help you take the next step. Our #NetZeroKnowHow FREE GUIDE will provide your organisation with useful information to achieve net-zero carbon. Subscribe and get your free copy of our guide.

If you have any questions, please get in touch with our team.

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