Net zero vs carbon neutral: what's the actual difference?
Net zero and carbon neutral are often used as if they mean the same thing. They do not — and the difference matters significantly if you are making sustainability claims about your business or evaluating someone else's.
Net zero and carbon neutral are often used as if they mean the same thing. They do not — and the difference matters significantly if you are making sustainability claims about your business or evaluating someone else's.
Carbon neutral: the lower bar
Carbon neutral means that your carbon dioxide emissions are balanced by an equivalent amount of carbon dioxide being removed or offset elsewhere. If you emit 100 tonnes of CO₂ and you buy 100 tonnes of verified carbon credits, you can call yourself carbon neutral for that scope of emissions.
Carbon neutrality does not require you to have reduced your emissions first. It does not necessarily cover greenhouse gases other than CO₂. And it does not specify the quality of the offsets used — in theory, cheap REDD+ credits at $3 per tonne could be used to support a carbon neutral claim, even if those credits are of questionable additionality.
This flexibility is why carbon neutrality has been used by some organisations to make sustainability claims without meaningful underlying action — and why the term has come under increasing regulatory scrutiny.
Net zero: the higher bar
Net zero is generally understood to require more than carbon neutrality. Under the Science Based Targets initiative (SBTi) Net-Zero Standard — currently the most widely adopted framework for corporate net zero — companies must:
- Set near-term science-based emission reduction targets (typically 50% by 2030)
- Set a long-term net zero target covering all three emission scopes
- Reduce emissions by at least 90% before applying any carbon removals
- Neutralise the remaining 10% with permanent carbon removals — not avoidance credits
Net zero also typically covers all greenhouse gases, not just CO₂ — including methane, nitrous oxide, and refrigerants, each converted to CO₂ equivalent (CO₂e).
| Term | Requires emission reduction? | Offset quality requirement | Regulatory status (UK/EU) |
|---|---|---|---|
| Carbon neutral | No — can offset at current level | No minimum standard | Under scrutiny — CMA Code applies |
| Net zero (SBTi) | Yes — 90%+ reduction required first | Permanent removals only for residual 10% | Most credible current standard |
| Climate positive / carbon negative | Yes — removals must exceed emissions | High quality removals required | No standard definition — use with caution |
The regulatory dimension
In the UK and EU, the use of environmental claims is increasingly regulated. The UK Competition and Markets Authority (CMA) published updated Green Claims Code guidance in 2021, and the EU Green Claims Directive — adopted in 2024 — requires that environmental claims be substantiated by lifecycle analysis and third-party verification before they can be used in marketing.
Under the EU Green Claims Directive, a claim of "carbon neutral" that relies on offset credits without underlying reduction activity could be treated as a misleading commercial practice. UK regulation is moving in the same direction.
Regulatory risk
Using "carbon neutral" or "net zero" claims in marketing without the underlying evidence to support them is increasingly a legal risk, not just a reputational one. The EU Green Claims Directive requires third-party verification of environmental claims. UK legislation is heading in the same direction.
Carbon negative and climate positive
Carbon negative means removing more carbon from the atmosphere than you emit — becoming a net carbon sink. Microsoft has committed to being carbon negative by 2030, meaning its total removals will exceed its total emissions across all scopes.
"Climate positive" is sometimes used to mean the same thing, but it has no standard definition and should be treated with caution without a clear methodology disclosure. Some companies use "climate positive" to mean "net zero plus contributing to sector-wide decarbonisation" — which is a broader claim than simply carbon negative.
What should your business use?
If you are measuring and reporting your emissions and have a credible reduction pathway, "working towards net zero with a science-based target" is both accurate and defensible. Avoid claiming "carbon neutral" or "net zero" status until you have the evidence base to support it.
If you are buying offsets to neutralise specific emissions — a product, a delivery, a service — be explicit about what is being offset, what credit was used, which registry retired it, and what the credit type was. Vague claims of "carbon offset delivery" without this information are increasingly likely to attract regulatory attention.
Key takeaway
Carbon neutral = emissions balanced by offsets, no reduction requirement. Net zero = deep reductions (at least 90%) plus high-quality permanent removals for the rest. The gap between these two definitions is significant — and regulators in both the UK and EU are tightening the rules around which claims businesses can make without evidence.