Carbon Neutrality

Carbon neutrality means that an entity’s net GHG emissions equal zero through a combination of emissions reductions and carbon offsetting. A company claims carbon neutrality when residual Scope 1 and Scope 2 emissions (and sometimes Scope 3) are offset by verified carbon removal or avoidance credits. The ISO 14068-1:2023 standard (Carbon Neutrality) provides the international framework for credible carbon neutral claims. Carbon neutrality differs from Net Zero: carbon neutral focuses on balancing emissions with offsets; net zero requires deep absolute emissions reductions before any residual offsetting.

ISO 14068-1:2023 (Carbon Neutrality); Science Based Targets initiative (SBTi) Corporate Net Zero Standard; GHG Protocol.

Carbon neutrality claims require a verified emissions inventory, emissions reduction plan, and use of high-quality carbon credits for residual emissions. The EU Greenwashing Directive (EU) 2024/825, applicable from March 2026, restricts unsubstantiated sustainability claims including ‘carbon neutral.’ Companies must substantiate claims with ISO 14068-1-compliant methodology and verified credits. Vague carbon neutral claims without methodology disclosure now create legal and reputational risk in the EU.