In the ever-evolving landscape of sustainable business practices, two terms frequently pop up, often interchangeably used but fundamentally different: Net Zero and Carbon Neutral. As we all strive to align our operations with more sustainable practices, understanding these concepts is crucial not just for compliance, but for driving meaningful change. Let’s dive into what each term means, why you might choose one over the other, and how you can achieve these ambitious goals.

What’s the Difference?

Carbon Neutral means that any CO2 released into the atmosphere from a company's activities is balanced by an equivalent amount being removed or offset. Think of it as balancing the books where every ton of carbon emitted is counteracted by a ton sequestered or offset through various means like planting trees or investing in renewable energy projects.

Net Zero takes it a step further. Achieving Net Zero means that a company actively removes or eliminates all its emissions, not just balancing them out with offsets. This includes direct emissions from operations and indirect emissions from the entire value chain, including suppliers and product use. Net Zero is about cutting emissions as close to zero as possible and then balancing out any residual emissions with negative emission technologies like carbon capture and storage.

Why Choose One Over the Other?

Choosing between Carbon Neutral and Net Zero often depends on your company’s vision, industry, and stakeholder expectations.

• Carbon Neutral is generally seen as a stepping stone towards the more rigorous Net Zero. It's often quicker to achieve and can be a great marketing tool in the short term. It suits businesses that are in the early stages of their sustainability journey or those in sectors where reducing emissions is exceptionally challenging.
• Net Zero is for those who are ready to commit to the long haul and aim for a deeper transformation of their operations and supply chain. It’s ambitious and sends a powerful message about a company’s dedication to fighting climate change. This commitment can boost your brand’s credibility and appeal to a growing demographic of environmentally conscious consumers.

Setting Science-Based Targets

In addition to Net Zero and Carbon Neutral many companies are also setting science-based targets. For many businesses Net-Zero may not be practical and thus setting a science based target can be a good alternative that shows your commitment to climate action. Setting a science-based target means aligning your company’s carbon reduction strategies with the goals of the Paris Agreement—to limit global warming to well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C. These targets are not arbitrary but are based on what the latest climate science says is necessary to meet these global challenges. Science-based targets are verified for a fee by a third party, the Science-Based Targets Initiative (SBTi). Check out the SBTi website for more information.

Strategies to Achieve These Goals

• Measure Your Emissions: You can't manage what you don't measure. Conduct a greenhouse gas inventory to understand where emissions are coming from within your operations and value chain.

Check out Tool Zero’s Emissions AI for a fast and easy way to calculate your value chain emissions.

• Reduce Energy Use: Implement energy efficiency measures across your operations. Switch to renewable energy sources, such as solar or wind, which can drastically cut your carbon footprint.
• Innovate Your Product Design: Design products with sustainability in mind—use less material, increase durability, and enhance recyclability.
• Engage Your Supply Chain: Work with suppliers to reduce their emissions by choosing more sustainable materials and processes or select local suppliers in order to minimize transportation emissions.
• Offset What You Can’t Reduce: Invest in environmental projects or carbon credits to offset remaining emissions. For Net Zero, focus on offsets that are truly additional and verifiable.
• Rethink Business Travel: Reduce travel emissions by investing in virtual meeting technologies and incentivizing less carbon-intensive travel methods among employees.

Conclusion

Whether you choose to aim for Carbon Neutral or Net Zero, the important thing is to start. Each step you take builds your company’s resilience and prepares it for a future where sustainability is at the forefront of business success. As leaders, we have the power to influence and enact change, not just within our operations but across our entire industry and beyond.

Remember, achieving these goals is not just good for the planet—it’s good for business. Let’s lead the charge in transforming our businesses to be engines of sustainability. After all, there’s no business on a dead planet.

Until next time, keep striving for those green goals!

Cofounder and CEO at Tool Zero

Chris Walton