Net Zero – Carbon Neutral Jargon Buster

The difference between Net Zero and Carbon Neutrality is poorly understood. Being carbon neutral just means that you have measured your footprint and you are doing some verified offsetting to try and mitigate that. Firms can be certified for carbon neutrality across scope 1 and 2 only (which, for many companies, is less than 10% of their carbon footprint) and so, doesn’t reflect a full picture of the reductions required.

Net Zero requires a massive carbon reduction across the whole business value chain. For many companies this will be a significant challenge to achieve in the next 10 years – but it’s the goal that we all have to hit by 2050.

If you want to understand more, read this really accessible blog article by James Cummins which goes into much more detail.

There are a lot of different terms describing the journey to sustainability and some of these contradict one another. In the table below, we attempt to untangle the jargon.

TermTypical definition
GHGGreen House Gases that retain heat energy within the atmosphere and drive climate warming. GHGs include carbon dioxide (the most common gas emitted by humans), methane, nitrous oxide, and fluorinated gases.
Carbon FootprintThis is the total amount of greenhouse gases (GHGs) emitted by a person, organisation, product, event, country or other entity. A carbon footprint results from the production, use, and end-of-life of a product or service (e.g. fossil fuels, food, manufactured goods, materials, and transportation).
OffsettingThis refers to a reduction or avoidance of emissions to compensate for other emissions being produced. Best practice carbon offsets are those that use carbon-reduction activities like renewable energy projects or carbon removal technology projects.
Climate NeutralBalancing GHG emissions with an equivalent amount of emissions offsets that avoid or remove emissions.
Net Zero Carbon/ Carbon NeutralBalancing carbon emissions with an equivalent amount of carbon offsets that remove carbon emissions from the environment. The focus here is on carbon emissions from fossil fuel burning (rather than the wider set of GHG emissions from agriculture, land use or refrigerants).
Net Zero EmissionsTo reduce company-wide and value- chain GHG emissions in line with limiting warming to well below 2°C or 1.5°C, and to balance any remaining emissions by removing GHG emissions from the atmosphere.
Net Negative EmissionsTo go beyond achieving net zero emissions so that an organisation has the net effect of removing GHG emissions from the atmosphere.
Scope 1 EmissionsThese are direct GHG emissions that occur from sources that an organisation controls or owns, such as emissions associated with fuel combustion in boilers, furnaces, and vehicles.
Scope 2 EmissionsThese are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility that generates them, these are considered GHG emissions for the organisation that purchases them because they are a result of the organisation’s energy use.
Scope 3 EmissionsThese indirect emissions, also known as value chain emissions, often represent the majority of an organisation’s total GHG emissions. Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly impacts in its value chain — for example, the goods a business purchases or consumer disposal of its products, or transport-related activities in vehicles not owned or controlled by the business.

With acknowledgement to RIO (2021) 10 Steps to Net Zero and HSBC (2021) Net Zero: An Introduction for Business