More businesses than ever are committing to reducing their carbon footprint—but are they aiming for Carbon Neutrality or Net Zero? The distinction isn’t just a matter of terminology; it’s a game-changer for climate impact.

Amid increasing regulatory pressure and rising stakeholder expectations, companies must ensure their carbon commitments are credible, transparent, and impactful. Misuse of these terms can lead to greenwashing, eroding trust and derailing sustainability progress.

So what’s the difference?

  • Carbon Neutrality (PAS 2060) allows companies to offset emissions through carbon credits.
  • Net Zero (ISO 14068) focuses on deep decarbonization before offsetting any remaining emissions.

This blog breaks down why this clarity matters, how the two approaches differ, and what businesses should do next to align with meaningful climate goals.

Why Clarity on Carbon Targets Matters

Using “Carbon Neutral” and “Net Zero” interchangeably may seem harmless, but the consequences can be serious:

  • Credibility & Reputation – Transparent, science-based targets earn trust from customers, employees, and investors.
  • Regulatory Compliance – Governments and industries worldwide are tightening emissions regulations—vague commitments won’t cut it.
  • Long-Term Impact – Companies that focus on real reductions (rather than relying solely on offsets) drive measurable environmental benefits.

Businesses that clearly distinguish between Carbon Neutrality and Net Zero can set more effective climate strategies, avoid misleading claims, and ensure genuine contributions to sustainability.

How Carbon Neutral and Net Zero Differ

Breaking it down clearly, here’s what sets Carbon Neutral and Net Zero apart—and why both are significant yet distinct climate milestones.

Carbon Neutral

Definition: Being Carbon Neutral means balancing the amount of greenhouse gases (GHGs) emitted with an equivalent amount removed from the atmosphere, typically through offsetting measures.

  • Approach: This is achieved through purchasing carbon credits (investing in projects like reforestation or renewable energy) to offset emissions from activities like production, travel, or operations.
  • Key Standards: Governed by PAS 2060, businesses must follow strict documentation to demonstrate credible claims of Carbon Neutrality. The process involves quantifying current emissions, offsetting them fully, and committing to maintaining neutrality over time.

Example: A company calculates it emits 5,000 metric tons of CO₂ annually. By investing in verified carbon offset projects (like wind energy in developing regions), it effectively neutralizes its carbon footprint.

Carbon Neutrality prioritizes balancing emissions today, offering a practical starting point for reducing environmental impact.

Net Zero

Definition: Achieving Net Zero goes a step further. It requires reducing greenhouse gas emissions to as close to zero as possible, with only minimal reliance on offsets for any residual emissions that cannot be eliminated.

  • Approach: Net Zero demands substantial reductions across Scope 1 (direct), Scope 2 (indirect), and Scope 3 (value chain) emissions. Absolute decarbonization comes first, and offsets are reserved for emissions that are truly unavoidable.
  • Key Standards: Aligned with ISO 14068, Net Zero underscores a “reduce first, offset later” methodology. It pushes companies to address emissions at their source, making deep, systemic shifts in their operations.

Example: A manufacturing company transitions to renewable energy, enhances energy efficiency, and develops low-carbon products to reduce total emissions by 80%. For the remaining 20%, it invests in trusted carbon removal technologies like direct air capture.

Net Zero represents a bold, long-term commitment to reshaping operations and supply chains to create a truly sustainable business model.

The Key Difference

While Carbon Neutrality is primarily about offsetting emissions, Net Zero is about reducing emissions as much as scientifically possible before any offsetting occurs. Both approaches are valuable but serve different roles in an organization’s sustainability journey.

What Businesses Should Do Next

For organizations planning their sustainability roadmap, the next steps hinge on understanding where they currently stand and what they aim to achieve. Here’s a strategic approach to move forward effectively.

  1. Assess Your Current Carbon Footprint

Start by conducting a comprehensive carbon audit using lifecycle carbon accounting to assess where your emissions are coming from. This will help you identify your Scope 1, 2, and 3 emissions and potential focus areas for reductions.

  1. Define Science-Based Targets

Partner with initiatives like the Science-Based Targets Initiative (SBTi) to set realistic and measurable carbon reduction goals. These targets ensure your roadmap aligns with global climate action goals like the Paris Agreement.

  1. Decide Between Carbon Neutral or Net Zero

Your choice should depend on:

  • Industry-Specific Feasibility: Some sectors (e.g., tech) may have fewer direct emissions and can aim for Net Zero faster. Others, like heavy industry, might need an interim Carbon Neutral milestone.
  • Regulatory Environment: Consider compliance requirements in your region or industry for emission reporting and reduction.
  • Scalability and Resources: Companies with smaller budgets may initially focus on Carbon Neutrality before scaling up to Net Zero.
  1. Implement a Holistic Sustainability Plan

Focus on emission reductions before offsetting. Combine innovative technologies (like renewable energy investments and energy-efficient equipment) with behavioral changes (such as waste minimization and transitioning to circular processes).

  1. Communicate Transparently

Educate stakeholders on your commitments, progress, and challenges. Use recognized standards like PAS 2060 for Carbon Neutrality or ISO 14068 for Net Zero to validate your claims and avoid greenwashing.

  1. Leverage Expert Guidance

Navigating this space can be complex. Collaborate with sustainability consultants, like IMC, to design tailored strategies and ensure compliance with evolving standards.

Conclusion

Understanding the difference between Carbon Neutral and Net Zero isn’t just a technical distinction—it’s the key to implementing effective climate actions with integrity.

By fully grasping these terms and working towards accurate, science-based targets, businesses can:

  • Build credibility while avoiding greenwashing.
  • Stay compliant with global regulatory frameworks.
  • Make a meaningful contribution to the planet’s future.

Whether your organization is just starting its sustainability journey or accelerating toward Net Zero, following internationally recognized standards like PAS 2060 and ISO 14068 offers the clarity and structure needed for success.