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The evolving landscape of corporate sustainability can be puzzling, to say the least. The alphabet soup of acronyms and confusing terms muddies it further. A great example is the terms "Carbon Neutral" and "Net Zero". These terms are often used interchangeably by those unfamiliar with their distinct differences. However, the difference between the two is significant and crucial for brands to understand. 

As a carbon intelligence platform devoted to the Food & Beverage industry, CarbonOne is on a mission to cut through the cloud of confusion and bring F&B companies the clarity needed to drive climate performance at speed. So, what’s the difference between Carbon Neutral and Net Zero? In short, Net Zero is much more rigorous than Carbon Neutral. 

Why F&B Companies Should Care 

Climate is arguably the top sustainability-related concern globally. Expectations are companies will solidify climate commitments now and begin showing progress quickly. What companies need to know when setting climate commitments is that the market is shifting away from Carbon Neutral towards Net Zero with over 90% of Global GDP now covered by a Net Zero Commitment (Net Zero Tracker, n.d.). This shift is being driven by governments, investors, and large players across all industries, including grocery retailers here in Canada. 

Brands need to ensure their commitments are relevant and align with stakeholder expectations. Failure to do so will create risk and limit growth. 

Brand Alert! Carbon Neutral does not equal Net Zero 

Carbon Neutral: The Starting Line 

The concept of carbon neutrality focuses on balancing the amount of carbon dioxide emitted with an equivalent amount reduced, sequestered, or offset. However, Carbon Neutral certification has no requirements to set targets or even reduce emissions in the near or long term and allows for unlimited use of carbon credits. This means companies can achieve carbon neutrality by simply purchasing carbon credits to "cancel out" their emissions with no requirement to reduce their own carbon footprint directly, now or in the future. It also has no requirement to include Scope 3 emissions, which typically represent 80% or more of a company’s carbon footprint.  

Most critically, Carbon Neutrality does not support the global goal of preventing average temperatures from rising above 1.5°C by 2050. Without achieving this goal, the risk of worsening and potentially irreversible effects of climate change rise substantially. So, while Carbon Neutral was a good starting point in the climate fight, it no longer cuts it. 

Net Zero: The Commitment to Real Change 

Contrasting sharply with Carbon Neutral, Net Zero demands more stringent and proactive efforts. It is governed by The Corporate Net Zero Standard through the Science Based Targets Initiative (SBTi). The standard sets a clear direction for near and long-term targets with specific pathways for F&B companies via the Food Land and Agriculture (FLAG) Guidance Standard. Achieving Net Zero means setting near and long-term science-based targets aligned with the global goal to limit warming to 1.5°C above pre-industrial levels.  

The Net Zero Standard mandates the inclusion of Scope 3 emissions, representing the vast majority of a company’s carbon emissions. To reach net zero, a company must first drastically reduce its emissions across all scopes. Only the residual emissions—those that are technologically or financially infeasible to eliminate—can be offset by validated carbon credits. CarbonOne helps companies do this in Canada by offering an accurate and affordable platform that lets companies calculate their Scope 3 emissions easily. 

Implications for Brands: You Can't Buy Your Way to Sustainability 

For brands, particularly those under increasing scrutiny from consumers, customers, and investors who demand transparency and genuine sustainability, the journey to Net Zero is not a simple purchase away. It involves a deep, systemic transformation in how they operate and interact with the environment. This transformation includes technological innovations, changes in supply chain management, and a transition to renewable energy sources—all aimed at real emission reductions. 

Carbon credits, while still a tool in the arsenal, are relegated to a supplementary role under Net Zero. They are used only after achieving the substantive emission reductions set out in near and long-term targets. This paradigm ensures the primary focus is on actual emission reductions within the company's operations and across its entire value chain. 

Conclusion: A Clear Path Forward 

Understanding the nuances between Carbon Neutral and Net Zero is not only essential for any brand genuinely committed to sustainability; it's essential to compete and win in a Circular, Net Zero world. While Carbon Neutral might offer a quicker, easier path to a “green” image, Net Zero embodies a more honest and impactful commitment to combating climate change. It will realize greater benefits and has become the global benchmark for climate targets. Brands aiming for true, long-term sustainability and compliance are well served to adopt Net Zero, preparing for a future where this will be a prerequisite for doing business. 

Are you looking to learn more about Net Zero or have questions about this article? Get in touch with us today at Carbon-one.ca.  

References 

Net Zero Tracker. (n.d.). Net Zero Tracker. https://zerotracker.net/