There’s a great deal of discussion lately about companies becoming carbon neutral, or setting Net Zero goals. Do these terms mean the same thing, and what exactly are people referring to when they use these terms?
Basic Definitions
The term Carbon Neutral is used when carbon emissions are balanced out by funding equivalent carbon savings elsewhere. For example, a company can say it is carbon neutral if it has measured the amount of Greenhouse Gases (GHG) its operations emit, and can balance those emissions with carbon offsets from verifiable projects such as wetlands restoration, planting trees or regenerative farming.
According to Sustain.life, “A business can claim carbon neutrality by measuring its emissions and then offsetting the balance through financed projects outside of its value chain, without actually reducing its own emissions.” (https://www.sustain.life/blog/difference-between-net-zero-carbon-neutral)
Net Zero is when a company adds no incremental GHGs. In this instance, a company will have retooled its operations so that it is no longer producing any GHGs. On a planetary scale, this refers to the goal of no longer burning any fossil fuels on Earth. “Net-zero does not permit financed emissions, which compels companies to more meaningfully reduce value chain emissions”. (https://www.sustain.life/blog/difference-between-net-zero-carbon-neutral) It’s important to note that net zero refers to all GHGs, and not just carbon.
In late 2021, the Science Based Target (SBT) initiative announced its Corporate Net-Zero Standard, “the world’s first framework for corporate net-zero target setting in line with climate science. It includes the guidance, criteria, and recommendations companies need to set science-based net-zero targets consistent with limiting global temperature rise to 1.5°C”. (https://sciencebasedtargets.org/net-zero)
The standard clearly asserts that net-zero requires a reduction in emissions. How a company achieves this depends on the type of operation and how current energy sources can be replaced by renewables, electrification, or more efficient operations.
Carbon Neutrality Goals – Quality Offsets are Key
At this time, most companies are struggling to become carbon neutral. They indicate that they have set carbon neutrality goals, but often times cannot prove how they are planning to reach those goals.
One way, while actively trying to reduce emissions, is to use verified carbon offsets. There are lots of offsets on the market, many of which are from unverified sources. These offsets not only negate a company’s message of being carbon neutral, it more seriously has absolutely no impact on actually reducing GHGs. This is an important reason why so many consumers have become distrustful of brands that say they are carbon neutral, when in reality, they are making little to no effort to reduce their own emissions and fight climate change.
In order for a company to be truly carbon neutral, a company must counter balance its emissions with voluntary offsets that have been validated and verified by an accreditation bureau such as American Carbon Registry (ACR) and Gold Standard. When working to understand offsets, organizations such as these provide excellent resources and solid places to begin. You can also visit Soli’s partner the Climate Remediation Foundation for an overview of offsets.
As described in a previous Soli blog article,
“Voluntary offset credits can be created by a variety of actions that reduce GHG emissions or expand seizure of carbon (sequestration) and are produced by measuring the carbon footprint of various projects. Such Offsets can be derived from preserving forests and in agronomy where carbon sequestration is measured; these are often called “avoided emissions.” They can come from regenerative agriculture (storing carbon in soils) and reforestation (planting trees). They can also be Renewable Energy Credits (RECs) associated with developing solar farms, wind turbines, or hydro power. Each type must pass strict inspections and be regularly monitored to qualify and be validated as effective emissions reductions and control mechanisms.
The Integrity Council for the Voluntary Carbon Market (ICVCM) based in London was recently created to address the quality of carbon offsets. It is currently scheduled to publish a draft of core carbon principles in July, with the goal of hopefully establishing a clear definition of exactly what is “high quality offsets.” (https://icvcm.org/)
In short, companies must acquire only quality verified offsets that consumers can trust, or risk the trap of “greenwashing;” put more bluntly, fraudulent claims of carbon reduction through fake or misleading offsets would negate consumer confidence and loyalty. Consumers have become savvy about carbon offsets, and have indicated in numerous surveys that they have a low tolerance for greenwashing, and for companies that buy cheap offsets that do not achieve the goal of lowering GHGs.