What Is the Difference Between Carbon Neutral vs Net Zero?

Nicole Lummis
April 22, 2024

‘Carbon neutral’ has been the focus of many public and private sector growth strategies for several years now but still suffers from vague definitions. So what exactly is carbon neutral vs net-zero?

The simple, common view is carbon neutrality and net-zero carbon emissions are essentially the same thing. They both describe a state where the amount of carbon emitted is balanced by the same amount being sequestered - or otherwise removed - from the atmosphere. 

However, there’s more to it than that. Carbon neutral should be applied to specific circumstances, such as the emissions and sequestration actioned by a business or organisation. Net-zero should be used to describe much larger groups, such as industries, governments or countries themselves. 

Today, businesses and organisations in both the private and public sector will find themselves increasingly under scrutiny for their impact on the environment, with sustainability being seen as a key selling point by many consumers.

Now and in the future, businesses and organisations will be constantly reminded of the need to reduce their environmental impact to remain in line with government mandates and the net-zero emissions by 2050 goal.

With this in mind, there will be an increasing amount of climate change terminology businesses and organisations must be aware of.

Climate Terminology for Businesses

The International Panel on Climate Change’s (IPCC) Special Report on Global Warming published in 2018 stating the average global temperature increase should remain under 1.5ºC to mitigate the worst potential effects of runaway climate change. The public and private sector will play a key role in achieving this. New terminology will be used in everyday business more and more, so it’s worth getting to grips with what this new terminology means.

  • Climate positive: Any activity that goes further than achieving net-zero carbon emissions, creating an overall positive benefit to the environment. For example, an organisation could begin sequestering more carbon than they create. 
  • Carbon negative: This is the same as ‘climate positive’ but directly mentions a negative level of carbon production.
  • Climate neutral: This is a catch-all term, referring to reducing all greenhouse gas (GHG) emissions alongside eliminating all other impactful behaviour, such as completely reducing waste that goes to landfill. 

In short, net-zero is where people, businesses, organisations or bigger entities stop adding to the amount of GHGs in the atmosphere.

It’s more than likely that terms such as these will be ascribed to services and products in both the private and public sector in the future. The critical question to answer now is why should businesses and organisations pursue carbon neutrality?

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Carbon Neutrality for the Private and Public Sector

Green business is good business - that’s a phrase more commonly heard today, from Wall Street to London. In the UK, in particular, the Build Back Better report details the emphasis on which the UK government is placing upon both the public and private sector. 

The UK government plans to implement a ‘Green Taxonomy’ which provides a ‘common standard for measuring firms’ environmental impact and will require firms to disclose the climate risks they face in line with the Taskforce’s recommendations on Climate-Related Financial Disclosures (TCFD).

This also ties in with the Government’s recent green paper on public sector procurement and contracts, entitled ‘Transforming public procurement’. Public sector organisations now look for evidence that tendering corporations can supply ‘social value’ within satisfying a contract. 

‘This includes the whole life costs and quality aspects and the economic, social and environmental aspects of a contract,’ the green paper states. ‘The Government wants to send a clear message that commercial teams do not have to select the cheapest bid and that they can design evaluation criteria to include wider economic, social or environmental benefits.’

‘We propose allowing buyers to include criteria that go beyond the subject matter of the contract and encourage suppliers to operate in a way that contributes to economic, social and environmental outcomes based on the ‘most advantageous tender’.’

As the procurement market represents around $300 billion worth of business, it’s an advantageous area for businesses to target and use as an incentive to pursue carbon neutrality. The hope is that improving procurement practices focusing on social and environmental value can drive economic benefits across every UK region.