Introduction
As climate action becomes a priority for businesses, customers and regulators, many organisations are looking for practical ways to reduce their environmental impact. Two terms often used in this area are carbon neutrality and net zero. Although they are connected, they are not the same.
Carbon neutrality usually means measuring the greenhouse gas emissions associated with an organisation, product, service or activity, reducing those emissions where possible, and balancing any remaining emissions through credible carbon removals or offsets.
Net zero is a longer-term and more ambitious goal. It requires deep reductions in greenhouse gas emissions across an organisation’s operations and wider value chain, with only unavoidable residual emissions neutralised. Carbon neutrality can form part of the journey towards net zero, but it should not replace meaningful emissions reduction.
Strategies for Achieving Carbon Neutrality
Achieving carbon neutrality begins with understanding where emissions come from. Businesses should measure their greenhouse gas emissions, usually expressed as carbon dioxide equivalent, or CO₂e. They should then set a baseline year, identify the main sources of emissions and create a practical reduction plan.
A credible carbon neutral roadmap usually includes the following steps.
1. Measure Greenhouse Gas Emissions
The first step is to calculate emissions from business activities. This may include energy use, transport, purchased goods and services, waste, business travel and supply chain activity.
Many organisations measure emissions across Scope 1, Scope 2 and Scope 3:
- Scope 1 emissions are direct emissions from sources owned or controlled by the organisation, such as fuel used in company vehicles or on-site heating.
- Scope 2 emissions are indirect emissions from purchased electricity, heat or cooling.
- Scope 3 emissions are wider value chain emissions, such as supplier activity, employee commuting, business travel, waste and product use.
For many businesses, Scope 3 emissions can be the largest part of their overall footprint, so they should be included where relevant and where reliable data is available.
2. Reduce Emissions First
Carbon neutrality should not rely mainly on offsetting. Businesses should prioritise reducing emissions at source. This can include improving energy efficiency, upgrading equipment, reducing waste, reviewing procurement decisions and changing how goods and services are delivered.
Examples include switching to LED lighting, improving insulation, reducing unnecessary travel, using lower-carbon materials, improving logistics and encouraging more sustainable commuting.
This approach aligns with ISO 14068-1, which prioritises direct and indirect greenhouse gas emission reductions and removals within the value chain before offsetting.
3. Switch to Renewable and Low-Carbon Energy
Energy use is often one of the largest sources of emissions. Businesses can reduce their carbon footprint by moving to renewable electricity, installing solar panels, improving heating systems or switching to lower-carbon technologies where suitable.
Improving energy efficiency should usually come before, or alongside, switching energy sources. Reducing demand first can lower costs and make renewable energy options more effective.
4. Decarbonise Transport
Transport-related emissions can be reduced by improving route planning, using electric or hybrid vehicles, reducing unnecessary journeys, encouraging public transport and supporting remote meetings where appropriate.
Businesses with fleets should consider vehicle replacement cycles, charging infrastructure and whether some journeys can be avoided altogether.
5. Address Supply Chain Emissions
For many organisations, the largest emissions sit within the supply chain. Businesses should work with suppliers to understand their environmental performance, request emissions data where available and prioritise suppliers that can support lower-carbon operations.
This may include choosing suppliers with verified environmental data, asking for product carbon footprints, reviewing packaging, reducing delivery distances or selecting materials with lower embodied carbon.
6. Use Carbon Offsets Responsibly
After emissions have been measured and reduced, businesses may use carbon offsets or carbon removals to address remaining emissions. However, offsets should be credible, independently verified and used transparently.
High-quality offset or removal projects should be measurable, additional, durable and independently verified. Businesses should also explain clearly what role offsetting plays in their carbon neutral claim.
Offsetting should not be used as a substitute for reducing emissions. It should only be used for residual emissions that cannot currently be avoided.
7. Monitor, Report and Improve
Carbon neutrality should not be treated as a one-off exercise. Organisations should review their emissions regularly, report progress transparently and update their reduction plans as their operations change.
For greater credibility, businesses should consider independent third-party verification rather than relying only on internal calculations.
Carbon Capture and Carbon Removal
Carbon capture and storage can play a role in reducing emissions from hard-to-abate sectors. This involves capturing carbon dioxide from industrial processes or directly from the atmosphere and storing it securely, often in geological formations.
Nature-based solutions can also contribute to carbon removal. These may include woodland creation, peatland restoration, soil carbon projects and habitat restoration. However, nature-based projects must be carefully managed and verified to ensure they deliver genuine, lasting carbon benefits.
Benefits of Carbon Neutrality
There are several benefits to developing a carbon neutral strategy.
The most important benefit is environmental. Reducing greenhouse gas emissions helps limit the impact of climate change and supports the wider transition to a lower-carbon economy.
There can also be financial benefits. Energy efficiency improvements, waste reduction and better resource management can reduce operating costs over time. Businesses may also become more resilient to energy price changes and future environmental regulation.
Carbon neutrality can also strengthen reputation. Customers, clients, investors and employees increasingly expect organisations to take credible action on climate change. A transparent carbon reduction plan can help demonstrate responsibility and build trust.
For businesses tendering for contracts, especially with larger organisations or public sector bodies, environmental performance is becoming increasingly important. Having a clear carbon reduction plan can therefore support commercial opportunities.
Carbon Neutrality Standards and Verification
The standards and verification landscape has changed in recent years. Older carbon neutral schemes have been replaced or updated, and businesses now need to be careful when making environmental claims.
ISO 14068-1:2023
The key standard to be aware of is ISO 14068-1:2023. ISO describes ISO 14068 as providing principles, requirements and guidance for achieving and demonstrating carbon neutrality. It covers the quantification, reduction and offsetting of carbon footprints, using a hierarchy that prioritises greenhouse gas emission reductions and removals before offsetting.
ISO 14068-1 can be used by organisations that want to make more credible and transparent carbon neutrality claims. It supports a structured approach to measuring emissions, reducing them, addressing remaining emissions and communicating claims clearly.
PAS 2060
PAS 2060 was previously widely used for carbon neutrality claims. However, it has now been superseded by ISO 14068-1:2023.
BSI states that from 1 January 2025, it no longer delivers the BSI PAS 2060:2014 scheme. BSI has developed a carbon neutrality verification scheme for ISO 14068-1:2023, which became available from 1 March 2024.
Businesses that previously used PAS 2060 should review whether they need to transition to ISO 14068-1 for future carbon neutrality claims.
Carbon Trust Verification
The Carbon Trust previously offered carbon neutral verification. However, it states that from September 2023, it no longer offers carbon neutral verification. Existing Carbon Neutral labels may still appear on products or packaging until the relevant verification period expires.
This means businesses should check the current status of any certification, verification or label before relying on it in marketing, tenders or sustainability reporting.
Avoiding Greenwashing
Businesses must be careful when using terms such as “carbon neutral”, “net zero”, “green”, “eco-friendly” or “sustainable”. These claims can be misleading if they are vague, exaggerated or not supported by evidence.
In the UK, the Competition and Markets Authority’s Green Claims Code helps businesses understand their obligations under consumer protection law when making environmental claims.
The Advertising Standards Authority has also published guidance on carbon neutral and net zero claims in advertising. This guidance reflects key principles from the CMA’s Green Claims Code and highlights the need for claims to be clear, accurate and properly explained.
To reduce the risk of greenwashing, businesses should clearly state:
- what the claim applies to, such as the whole organisation, a product, a service or an event;
- which emissions scopes are included;
- the reporting period covered;
- how emissions have been measured;
- what reductions have been made;
- what residual emissions remain;
- what offsets or removals have been used;
- whether the claim has been independently verified.
Carbon Neutrality as Part of a Net Zero Roadmap
Carbon neutrality can be a useful step on the journey to net zero, but it should be part of a wider transition plan. A credible net zero roadmap should focus on long-term emissions reduction, not just annual offsetting.
Businesses should set clear targets, review their operations, engage suppliers and invest in practical improvements that reduce emissions over time. Offsetting should only be used for residual emissions that cannot currently be avoided.
A strong roadmap should include short-term, medium-term and long-term actions. For example, a business may begin by measuring emissions and switching to renewable electricity, then move on to fleet decarbonisation, supplier engagement and product redesign.
Carbon Neutrality Checklist
Before making a carbon neutral claim, a business should be able to show:
- what the claim applies to;
- which emissions scopes are included;
- the baseline year and reporting period;
- how emissions were calculated;
- what reductions have been made;
- what residual emissions remain;
- what offsets or removals were used;
- whether the claim has been independently verified.
Not every business will need formal certification, but independent verification can make carbon neutral claims more credible and reduce the risk of misleading customers.
Summary
Carbon neutrality remains an important part of the climate action journey, but the way businesses approach it has changed. Organisations now need to focus more strongly on greenhouse gas reduction, transparent reporting and credible verification.
The main update is that PAS 2060 has been superseded by ISO 14068-1:2023 for carbon neutrality claims. Businesses should also be aware that the Carbon Trust no longer offers carbon neutral verification, and that UK regulators expect environmental claims to be clear, accurate and properly evidenced.
A credible carbon neutral roadmap should begin with measurement, prioritise emissions reduction, use high-quality offsets only for remaining emissions and communicate claims transparently. When done properly, carbon neutrality can help businesses reduce environmental impact, improve efficiency, strengthen trust and move towards a genuine net zero future.