Net zero vs. climate neutral: a guide for businesses
Direct answer
Net zero means you first reduce your own emissions deeply across the whole value chain, following the pathway of the Science Based Targets initiative, and only then permanently remove the unavoidable remainder. Climate neutral means you balance your emissions with compensation, which is possible using credits without deep reduction. Net zero therefore sets harder requirements for genuinely lowering emissions.
- Clear definition
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- Practical next steps
Net zero vs. climate neutral: scattered information versus Energy Intelligence
Companies want to show they are tackling their climate impact, but the terms get mixed up. One supplier promises climate neutral delivery, a competitor a net zero target for 2040. For a buyer or business owner that is confusing, because the two promises mean very different things. Climate neutral says something about today's balance; net zero says something about how deeply you really cut your emissions. Since regulators started acting against misleading sustainability claims, the difference also matters legally.
- Net zero requires deep reduction of your own emissions across the whole value chain first; only the unavoidable remainder is permanently removed or stored.
- Climate neutral can be reached by balancing emissions with compensation, even without strongly reducing the emissions themselves.
- The Dutch regulator ACM and the European Commission scrutinise climate neutral claims that rely mainly on compensation, because they can mislead.
Insight
Traditional approach
Information is scattered across portals, documents, invoices or separate spreadsheets.
Modern approach
Data, context and interpretation are brought together into a clear decision picture.
Decision-making
Traditional approach
Choices are made based on averages, assumptions or occasional analyses.
Modern approach
Scenarios, KPIs and current measurement data make the trade-off more concrete and repeatable.
Follow-up
Traditional approach
Actions often stay non-committal or disappear into separate reports.
Modern approach
Follow-up actions, monitoring and reporting are linked to the same energy data.
What is the difference between net zero and climate neutral?
Climate neutral, called carbon neutral in international standards, means a company balances its remaining emissions with an equal amount of compensation, for example credits from forestry or storage projects. The standard ISO 14068 encourages reduction, but allows compensation to carry much of the claim. Net zero instead emphasises reduction. The Science Based Targets initiative asks companies to cut emissions deeply across the whole value chain, in line with the Paris Agreement. Only the unavoidable remainder may then be neutralised by permanently removing or storing carbon. With net zero, compensation therefore does not replace reduction.
- Climate neutral is about balance: setting emissions against an equal amount of compensation.
- Net zero is about reduction: down as far as possible first across the whole value chain, in line with Paris.
- With net zero only the unavoidable remainder may be permanently removed or stored.
- Climate neutral is defined in ISO 14068; net zero mainly follows the Science Based Targets initiative.
Why is net zero considered more robust?
With a climate neutral claim that relies mainly on compensation, a company's own emissions stay high. The balance then comes from credits, whose quality varies widely. A tree planted now only stores carbon years later and may still burn. That is why regulators scrutinise such claims. The Dutch regulator ACM has five rules of thumb for sustainability claims: be correct, clear, specific and substantiated. The European Commission is tightening requirements on environmental claims through the Green Claims Directive. Net zero is seen as more robust because reducing your own emissions comes first and compensation is limited to the remainder. That is easier to verify and less exposed to accusations of greenwashing.
- A climate neutral claim can hide high own emissions behind compensation.
- The quality and permanence of credits vary widely and are hard to verify.
- The ACM requires correct, clear, specific and substantiated sustainability claims.
- The European Commission is tightening environmental claims via the Green Claims Directive.
Which claim may your company make?
Start from what you actually do. If you only lower emissions on paper through credits, do not use the term net zero, because it promises deep reduction. If you compensate the remainder and call that climate neutral, be specific: state which part you reduced yourself and which part you compensate. Avoid vague blanket claims without evidence, because the ACM has confronted companies over them. Energy supplier Eneco, for example, stopped using the vague slogan 'Faster climate neutral' after action by the ACM, because consumers could not tell what the company actually did. If you want to set a net zero target, choose a path aligned with the Paris Agreement and have it independently assessed. In short, choose the term that matches what you can demonstrably do.
- Only use net zero if you genuinely cut your own emissions deeply, not merely compensate.
- If you call something climate neutral, state separately what you reduce and what you compensate.
- Avoid vague blanket claims: Eneco dropped the slogan "Faster climate neutral" after ACM action.
- Have a net zero target independently assessed against a recognised, Paris-based pathway.
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