Carbon neutral, climate neutral, GHG neutral or net-zero

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Decarbonization is increasingly gaining attention from the business community and we are noticing this in the amount of climate strategy projects carried out across Europe. In order to communicate climate targets and achievements clearly and credibly, a thorough understanding of climate change-related language is crucial.

Why is this important? More and more news items are appearing where companies have been revealed to use false CO2 neutrality claims as we have seen with VW and ALDI Süd, who advertised with the term “climate neutral”. Since their actions are based on compensation inventories, this advertising was classified as misleading by the German competition authority. To prevent greenwashing and assure a proper use of claims we need to take a closer look at the common terms and definitions.

CO2 or carbon neutral, climate neutral, GHG neutral or net-zero – these are a few of the most commonly used and unfortunately also misused terms and, although at first glance they are very similar, in reality, they describe different states of corporate carbon footprint reduction pathways. For example, CO2 or carbon neutrality is often used interchangeably with net-zero or climate neutrality, although they are fundamentally different.

To claim to be “CO2 or carbon neutral” it is sufficient for a company to simply counterbalance its CO2 emissions through carbon offsets without the necessity to reduce any of its own emissions. The state of net-zero as per the SBTi requires deep decarbonization within Scopes 1, 2 and 3 (where relevant) within the company by around 90% first, before the remaining GHG emissions (as per the UNFCCC/Kyoto Protocol) may be neutralised. This is just a first insight into the different terminologies.

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