Carbon Neutral vs. Net Zero: Emissions Reduction Plans Explained

As a new wave of climate management initiatives surface, it’s essential to define and distinguish carbon neutral vs. net zero greenhouse gas (GHG) emissions goals.

While carbon neutrality focuses on neutralizing carbon emissions, net zero initiatives focus on the neutralization of all greenhouse gasses.

According to the UN, businesses, institutions, and entire countries are racing to create and implement net zero initiatives that go beyond carbon neutrality.

Although these terms are often used interchangeably, understanding their differences is an important step to making sound business decisions that reflect accurate environmental, social, and governance (ESG) performance metrics.

What’s the Difference Between Carbon Neutral and Net Zero?

The main difference between carbon neutral and net zero sustainability efforts is that net zero can include some solutions for existing greenhouse gasses and proposes strategies to reduce the amount of GHG emissions produced in the first place.

Net zero objectives focus on generating internal solutions, like reducing the amount of emissions produced, in addition to external solutions, like carbon removal projects. Carbon neutrality efforts, on the other hand, are solely focused on developing sustainable carbon offset programs that neutralize current emissions levels.

Carbon Offsets and Their Relationship to These Definitions

The goal of carbon offsets is to counteract emissions by removing carbon from the atmosphere. If the carbon offset program is a success, the amount of carbon removed from the atmosphere should offset the amount of carbon produced.

Entities planning to become carbon neutral can implement carbon offset programs through the use of artificial or natural carbon sinks, carbon capture technology, reforestation efforts, and by following the general recommendations from the Science Based Targets initiative (SBTi).

The SBTi recommends that entities should limit their dependence on carbon removals and instead integrate long-term decarbonization efforts into their climate action strategy.

>> Read our carbon offset guide to learn how to vet projects and purchase carbon offset programs directly from project owners.

What Does It Mean To Be Carbon Neutral?

According to the SBTi, carbon neutrality is achieved when an entity’s carbon emissions are balanced by carbon removals.

Although carbon neutral positions do not necessarily lead to carbon emission reductions, carbon neutrality sheds light on the potential of carbon offsetting as a temporary tool for the present while climate action technology continues to evolve.

Being carbon neutral does not mean your operations will produce zero emissions, but it does mean that you are choosing to lead by example and walking with a lighter carbon footprint.

Carbon Neutral Examples

Among the hundreds of companies taking the pledge to become carbon neutral by 2050, a few of the heavy hitters include:

• Apple by 2030.
• BP by 2050.
• Delta Airlines by 2030.
• FedEx by 2040.
• Ford by 2050.

Each of these entities has agreed to submit regular carbon accounting reports and implement carbon offset programs to counteract their current emissions levels. ESG initiatives like carbon neutrality are not without fault, however. They come with pros and cons that you should consider before making the carbon neutral pledge.

Pros and Cons of Carbon Neutral Pledges

When well-known brands take a stance against pollution, it encourages organizations to follow suit and make sustainability innovations the new normal. However, climate neutral pledges can also distract other businesses and the general public from understanding the source of the problem.

Here are a few of the most common considerations and concerns that are currently associated with carbon neutrality. Let’s start with the pros of pledging carbon neutrality:

• Pledges facilitate carbon accounting on a regular basis, increasing climate action awareness and responsibility at the corporate level.
• Taking steps toward emissions accountability is the starting point that companies need to begin further implementing more sustainable practices and policies.
• Carbon offsetting is a supplementary option for sectors that cannot fully decarbonize by 2050.

The following carbon neutral concerns are potential growth opportunities for entities eager to go beyond carbon neutrality:

• Critics claim that more regulation is needed in order to prevent the spread of misinformation and hold large corporations accountable for their emissions.
• This strategy can entice organizations to avoid meaningful efforts to reduce emissions since entities can continue to produce greenhouse gasses undisturbed.
• Carbon neutral strategies only focus on reducing carbon, avoiding the reduction of other greenhouse gas emissions.

The issues around carbon neutrality largely stem from the lack of entities pledging to cut emissions within their current business model, opting instead to remain carbon neutral vs. carbon free.

What Is Net Zero?

The SBTi defines net zero as the goal of removing the same amount of all GHG emissions as the amount produced by an entity. Organizations with science-based targets (SBTs) aimed at achieving net zero need to first reduce emissions by 90-95%.

While carbon neutrality focuses only on carbon emissions, net zero efforts take climate action a step further by focusing on neutralizing every type of greenhouse gas emission (including carbon dioxide, methane, nitrous oxide, nitrogen trifluoride, and fluorinated gasses).

The purpose of net zero emissions is to effectively decarbonize the atmosphere and lower global temperatures. The Paris Agreement suggests that all countries need to achieve net zero by 2050 to avoid irreversible damage.

>> In our "Race to Net Zero" joint webinar with Bain & Company, learn how technology can help you tailor your decarbonization journey to the needs of your organization and operations.

Net Zero Examples

The Science Based Targets initiative works with over 3,000 companies that are actively employing emissions reduction strategies. Here are a few big names that have already joined forces:

• Etsy was the first e-commerce platform to neutralize shipping emissions.
• JetBlue Airways has achieved carbon neutral domestic flights.
• Logitech shares carbon impact details on its product packaging.
• Microsoft is carbon neutral and plans to be carbon negative by 2030.
• Uber has committed to using zero-emission vehicles by 2040.

All the signatories of the SBTi pledge agree to regular carbon reporting and must implement quantifiable GHG elimination strategies. As more entities join the net zero movement, however, the efficacy of this lofty goal is also attracting doubt.

The Net Zero Standard created by the SBTi encourages all entities to go beyond their value chain and implement scope 1, 2, and 3 emissions reduction strategies.

Pros and Cons of Net Zero Pledges

The degree of change required to successfully become a net zero entity has left many companies pursuing carbon neutral over net zero emissions goals.

Although these changes can be difficult to implement, research suggests that more companies are ready to make the commitment. Here are the main benefits a net zero climate action plan can offer you:

• Net zero strategies target all GHG emissions and can create a bigger climate action impact than carbon neutrality.
• Net zero pledges boost a company’s competitive edge by giving stakeholders and customers a transparent view into their sustainability efforts, a factor that influences consumer purchases and investment decisions.
• Carbon neutrality efforts can be included in net zero strategies, like the integration of alternative energy reserves into your business model or the temporary addition of carbon offset programs.

Let’s take a look at the net zero cons to understand possible reasons why some entities are hesitant to pledge net zero:

• Net zero strategies can be difficult to attain since net zero goals invite entities to reimagine their value chain. For companies that are new to climate action initiatives or have a full portfolio of robust enterprises, this shift can be challenging.
• This strategy is still struggling to achieve global application, and critics suggest that achieving net zero by 2050 is unrealistic.
• Some entities falsely claim net zero targets without dramatically reducing GHG emissions, effectively greenwashing the organization's sustainability efforts.

This net zero tracker shows that over 90 countries have documented and shared an official net zero target. Roughly the same amount of countries, however, have yet to take a step toward net zero emissions or express interest in climate positivity.

What Does Climate Positive Mean?

A climate positive approach means going a step beyond carbon neutrality by removing additional carbon emissions outside of the entity's value chain, creating an overall positive impact on the environment.

The climate positive concept is already being backed by companies around the globe. Max Burger’s climate positive burger is showing the rest of the world that delicious food can be good for the environment. The North Face created a climate positive hat made from wool harvested at a farm that eliminates more carbon than it produces.

What Is Carbon Zero?

A carbon zero entity is one that uses alternative energy sources from which no carbon is emitted. Solar power and wind energy, for example, would be considered carbon zero energy reserves.

Carbon-free energy resources like these have become key players in the fight against global warming and the pursuit of becoming climate positive. Car

Although carbon zero efforts are not yet attainable for every company in the world, making carbon zero lifestyle choices is becoming easier for the average consumer.

How To Create a Carbon Neutral or Net Zero Goal

The United Nations has declared that a stable temperature of the earth necessitates more ambitious climate action. Creating a carbon neutral or net zero goal is an attainable way to combat climate change on an individual and collective level.

The first step is to calculate your organization’s current emissions. From there, you can build out an effective plan of action aimed at reducing your carbon footprint and potentially decreasing other GHG emissions in the process.

Attempt to mirror The Paris Agreement when crafting your climate action goals by making them measurable, sustainable, and capable of improvement. Ideally, your goals should be flexible enough to integrate new technology that can catalyze climate action plans.

The takeaway? Be as transparent as possible with your emissions levels so that you can develop practical solutions to reduce emissions wherever feasible.

Engaging with climate action plans usually involves combing through large amounts of emissions data and sharing reports with stakeholders, the government, and your entire organization.

After you determine if carbon neutral vs. net zero emissions goals are attainable for your organization, learn how you can begin tracking your carbon footprint and more with Persefoni’s complete carbon accounting software. The software is Greenhouse Gas Protocol compliant and does not require technical expertise to get started.