Carbon Neutral, Carbon Negative, and Net Zero: what's the difference?

It's become commonplace to see businesses and governments committing to become Carbon Neutral or Net Zero in their pledges to tackle climate change. Net Zero and Carbon Neutral are seemingly used interchangeably, and unfortunately often without explanation. This lack of clarity poses a reputational risk to those making a commitment, and threatens to undermine consumer confidence through greenwashing.

So, let's take a closer look to build a confident definition of what it means to be Carbon Neutral, Carbon Negative, or Net Zero.

Throughout this guide, we use ISO 14068-1 as our benchmark for Carbon Neutrality. Published in 2023, it is the current international standard for carbon neutrality claims, replacing the BSI's PAS 2060. Where requirements differ from older or looser interpretations of Carbon Neutrality, we've noted this.

But first, the key takeaway

We'll start with the take-home message. Here's the overarching distinction to keep in mind:

• A Carbon Neutral business has measured its carbon footprint, demonstrated a commitment to reducing emissions, and offset its residual footprint. It is an action taken now but, under ISO 14068-1, must be underpinned by a reduction plan.
• A Carbon Negative or Climate Positive business goes further – it offsets more than it emits, resulting in a net removal of carbon from the atmosphere.
• A business committed to Net Zero intends to significantly reduce its emissions and offset the residual. It is a stronger, long-term commitment.

As you can see, they involve quite different levels of commitment and resource to achieve. Read on to learn more about the fine-grained differences.

What do Carbon Neutral, Carbon Negative and Net Zero actually mean?

Formed in 1988, The Intergovernmental Panel on Climate Change is part of the United Nations. Its role is to assess and compile the science on climate change to inform government policy and international climate negotiations. Hundreds of climate scientists, selected for their expertise and to represent a diverse range of technical and socioeconomic views, volunteer their time to develop an understanding of the risks of climate change and opportunities for mitigation. It's an obvious place to start in understanding our definitions.

Here's an excerpt from the glossary of terms from the IPCC's Special Report on Global Warming of 1.5°C (2018):

Net Zero emissions are achieved when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period.

Carbon Neutrality is defined as equivalent to Net Zero, but for CO₂ emissions only.

Over time, these definitions have evolved to enable more effective and standardised action against climate change.

Net Zero means emissions reduction; Carbon Neutrality means offsetting

Based on the IPCC definitions, Carbon Neutrality and Net Zero can be achieved through two key levers: investment in carbon removal such as tree-planting and carbon capture technology; and reductions in absolute GHG emissions. The key question is: what mix of reduction and offsetting should be targeted? That's where the role of the SBTi becomes key.

The Science Based Targets Initiative is a United Nations-backed body that sets guidance on the rate at which businesses should reduce and remove GHGs. Its aim is to encourage a standardised approach to Net Zero – tackling the issue of emissions reduction vs. offsetting – that will achieve the goal of limiting global average temperature increases to 1.5°C above pre-industrial levels, as recommended by the IPCC. The SBTi is viewed as a gold standard Net Zero framework, and companies from H&M to Sainsbury's have set targets with the SBTi.

Net Zero as defined by the SBTi stipulates that businesses should reduce GHG emissions by 90% from their baseline year and offset the remainder through carbon removals, by no later than 2050. This is a long-term, ambitious commitment which requires serious work from businesses across their operations and supply chain, as well as changes across the economy such as the growth of renewable energy infrastructure. This brings us nicely to a key difference between Net Zero, per the best practice definition of the SBTi, and Carbon Neutral.

Net Zero focuses on long-term abatement. Carbon Neutrality means offsetting today.

It's possible to become Carbon Neutral relatively quickly once you’ve measured the carbon footprint of your business. The next step is to invest in climate action projects that offset the amount of carbon emitted.

What does Carbon Negative mean – and is it the same as Climate Positive?

Carbon Negative and Climate Positive are interchangeable terms for the same thing: a business that offsets more emissions than it produces, resulting in a net removal of carbon from the atmosphere.

Where Carbon Neutrality balances the books – emissions in, offsets out – Carbon Negative tips the scale in the other direction. A Carbon Negative business is, in effect, cleaning up more than its own mess.

In practice, this means investing in verified carbon removal projects (such as reforestation or direct air capture) at a volume that exceeds your total footprint. It's worth noting that Carbon Negativity is not a formal standard in the way Carbon Neutrality or Net Zero are – there is no equivalent of ISO 14068-1 or the SBTi framework governing the claim. That makes transparency and verification particularly important if you're making it.

For most businesses, Carbon Negativity is an aspiration beyond Carbon Neutrality, rather than a starting point. It signals a high level of climate ambition, though it should sit alongside – not replace – a genuine commitment to reducing emissions at source.

Carbon Neutrality accepts all types of offset; Net Zero accepts removal offsets only

There are two broad types of offsetting project:

Prevention/avoidance of GHGs - These projects implement changes that prevent an amount of carbon entering the atmosphere. For example, investing in a developing country’s wind power capacity means that the country will be less reliant on fossil-fuel based energy. These projects usually focus on green energy in some form – either at the national grid level (e.g. solar, hydro, wind) or local/domestic level (e.g. replacing gas cook stoves with electric).

Removal of GHGs - These projects actively remove carbon from the atmosphere, storing it for the long-term. They may involve the creation of nature-based carbon sinks (e.g. planting forests) or technology-based capture (e.g. using chemicals to capture CO2 from point sources, such as power plants, or the atmosphere).

Carbon removal has an immediate benefit, and reduces atmospheric carbon vs. preventing emissions. However, there are limitations. Natural sinks store carbon for a limited period (e.g. the lifetime of the tree) and tech-based methods such as direct air capture are in their infancy, therefore expensive and not able to operate at scale.

ISO 14068-1 introduced a clear hierarchy: businesses must first demonstrate genuine emissions reductions before offsetting any residual emissions, and must justify why further reductions were not achievable. Within that framework, Carbon Neutrality claims can be supported by investment in both avoidance and removal projects. The key is that projects are verified, ensuring the emissions impact is quantified and would not have happened in the absence of the investment.

Net Zero requires residual emissions to be offset using removal credits. This reflects Net Zero’s higher level of commitment and ambition.

Carbon Neutrality requires Scopes 1, 2 and material Scope 3; Net Zero requires Scopes 1, 2 and 3 in full

Under ISO 14068-1, Carbon Neutrality requires businesses to account for Scope 1 and 2 emissions as a minimum, but also any Scope 3 emissions that are material or significant to their footprint:

Scope 1 – emissions from sources your business directly owns or controls (e.g. gas combustion for an office’s central heating, or fuel combustion to power company vehicles).

Scope 2 – emissions from purchased energy (e.g. emissions generated to produce your office electricity).

Scope 3 – all other emissions from sources not directly owned or controlled (e.g. employees commuting to work or travelling for business, or emissions from your suppliers). Under ISO 14068-1, material Scope 3 categories must be included in a Carbon Neutral claim – not just for Net Zero.

Net Zero goes further still, requiring businesses to measure, track and set reduction targets across all Scope 3 emissions – not just those deemed material.

The key is to be transparent: state clearly what emissions categories you have included, and why.

In practice, measuring all Scope 3 categories is usually the most straightforward approach – and gives a more complete picture of your footprint. Modern carbon accounting platforms make this relatively easy, so there's little reason to exclude categories on grounds of materiality alone.

Carbon Neutrality - no longer just carbon

While CO₂ is the largest contributor towards climate change, other GHGs have an effect on warming too: for example, methane and nitrous oxide, which are more potent in their warming potential than CO₂ on a like-for-like basis, though less abundant. A carbon footprint measured in accordance with the GHG Protocol – the gold standard for carbon accounting – takes into account warming from 7 greenhouse gases expressed as a single CO2 equivalent figure.

Strictly speaking, Carbon Neutrality refers to offsetting carbon alone, whilst Net Zero encompasses all GHGs as required by the GHG Protocol. However, in practice most Carbon Neutral accreditation schemes (including Seedling’s) require businesses to offset all GHGs. This is in line with ISO 14068-1, a Carbon Neutrality Standard developed to replace the British Standards Institute's PAS 2060.

Summary: the best of both worlds

Carbon Neutral, Carbon Negative or Net Zero – which, ultimately, is best for your business? At Seedling, we believe that this is a false choice: the three are complementary, not competing.

Carbon Neutrality has (rightly) been criticised as being “too easy” – committing to Net Zero indicates a serious, long-term and science-based commitment to making difficult choices to help fight climate change. But it’s also “too easy” for a business to commit to a Net Zero target 30 years in the future and do very little now – the planet needs immediate climate action.

Under ISO 14068-1, Carbon Neutrality is a more credible commitment than it once was: it now requires a reduction plan, not just a cheque for offset credits. That makes the combination of Carbon Neutral today and Net Zero over the long term a genuinely robust strategy, rather than a way to kick the hard work down the road. For businesses with the ambition and the offsetting capacity, Carbon Negativity can sit on top of that as a further statement of intent.

Therefore, the optimal sustainability strategy marries all three. It combines material ongoing investment in climate action (Carbon Neutrality, year after year) with a genuine, long-term commitment to emission reduction (SBTi-aligned Net Zero) – and, where possible, goes beyond neutral to actively remove more than you emit.

Seedling is designed to make it easy for any business to adopt this strategy. Get in touch to find out more.