Carbon Neutral Is Back And It Might Be Smarter Than Net Zero

Forbes

2 days ago

LONDON, ENGLAND - APRIL 28: Zero emission branding is displayed on a Kia all electric British ... More Transport Police car is displayed during the Fully Charged Live UK at Farnborough International on April 28, 2023 in London, England. This year's show includes dozens of 'live sessions' and an exhibition of hundreds of companies, with electric vehicles of all shapes and sizes, and a large selection of home energy options (Photo by)
Before net zero became the benchmark of corporate climate ambition, carbon neutrality led the way. In the 2000s and early 2010s, companies and governments pledged to measure emissions, offset what they couldn't reduce, and label themselves or their products accordingly. It offered a straightforward, near-term approach to climate responsibility.
Over time, however, the label lost credibility—undermined by vague accounting, low-quality offsets, and limited transparency. As climate science advanced, net zero emerged as the more rigorous standard, requiring deep emissions cuts across entire value chains and limiting the role of offsets. Over the past decade, it has largely replaced carbon neutrality as the mark of serious climate leadership.
But for many companies, net zero has become too complex, expensive, or misaligned with real-world operations—especially in a politically polarized environment where climate action can trigger backlash. Some are walking away from their goals; others are looking for a more practical, verifiable approach that allows progress without overpromising. That's prompting a renewed interest in carbon neutrality—this time with clearer standards and stronger intent.
A March 2025 study found that over 40% of companies abandoned or stopped reporting on their climate goals. Even missed targets drove progress, but without enforcement, momentum is faltering. Now, companies are asking: is there a better way forward?
One answer is the return of carbon neutrality, redefined through standards like ISO 14068-1. It requires verified emissions accounting, high-quality offsets, and annual action—prioritizing measurable impact today over distant 2050 goals. The ISO framework also enables credible product- or unit-level claims by requiring full life cycle emissions for each. This differentiation matters because it allows companies to credibly label specific products or business units as carbon neutral, even if full decarbonization is still underway—building trust, capacity, and momentum along the path to net zero.
Net zero remains crucial for limiting global warming to 1.5°C. To limit warming to 1.5°C (if that's even a possibility), we need total, economy-wide emissions to fall sharply, with only minimal reliance on offsets. Net zero provides a planetary roadmap for systemic change—essential for governments, financial systems, and long-term innovation planning.
At the company level however, rigid frameworks can backfire. The Science Based Targets initiative (SBTi), for example, requires a 4.2% annual reduction in absolute emissions, a challenge for fast-growing companies displacing higher-emission incumbents.
Chris Hocknell, director at UK-based sustainability consultancy Eight Versa, sees this firsthand. 'A lot of companies have just hit the wall,' he said in an interview. 'They made a bold net-zero pledge, but once they crunched the numbers, they realized it might put them out of business.'
He points out that companies growing lower-carbon alternatives—like green cement—may see emissions rise even while lowering sector-wide footprints.nHocknell notes, "You're reducing the sector's overall footprint, but because your own emissions grow, you look like you're falling short. That nuance is completely lost in current net zero metrics.' In short, net zero makes sense for the world—but it doesn't always make sense for how companies grow.
Hocknell argues that carbon neutrality offers more adaptability. The updated ISO standard mandates rigorous measurement, science-based reduction plans, and independent verification—but doesn't require fixed annual cuts. It also allows for the use of high-quality offsets, giving businesses space to act in volatile market conditions.
For Hocknell, this flexibility isn't a flaw; it's a feature. 'We need a North Star, not a map,' he says. 'We need to know where we're going, but the route is never going to be straight. Carbon neutral gives companies the structure to act without boxing them into methodological rigidity that doesn't reflect how the real world works.'
Data quality is another sticking point. Emissions models often rely on generic factors with wide uncertainty margins—sometimes 25–30%. One pharmaceutical company saw its reported footprint drop 50% after upgrading its data, without any actual operational change.
This disconnect within the data can lead to performative strategies that prioritize compliance over impact. Hocknell points to practices like 'scope switching,' where companies move emissions from directly controlled sources (Scope 1 or 2) into supply chain emissions (Scope 3) by spinning off facilities or outsourcing production. On paper, emissions go down. In reality, little changes. But these accounting manoeuvres allow companies to claim progress and still meet arbitrary targets.
Rather than being a loophole, high-quality offsets can provide a critical bridge, especially for hard-to-abate sectors like cement, aviation, and shipping. In these industries, rapid decarbonization isn't just unrealistic—it's structurally impossible in the short term.
Credible offsets must start with additionality and measurable results. Nature-based solutions like regenerative agriculture not only sequester carbon but also enhance biodiversity, water retention, and farmer resilience—a 'triple win.' While top-tier offsets may cost more, they're still cheaper than the social cost of carbon—and deliver real impact. 'The best offsets cost more,' says Hocknell. 'But they deliver. And you can stand behind them.'
It helps that the offset market itself has matured. After scandals involving questionable forest-based credits, the sector now emphasizes verifiable removals, community co-benefits, and third-party standards. Integrity is improving, and with it, confidence.
This shift is already playing out. Apple recently defended its 'carbon neutral' label for the Series 9 Watch in court, supported by the Environmental Defense Fund. EDF highlighted the 80% emissions reduction achieved, with the remaining footprint offset using high-quality, nature-based credits. It wasn't just a defense of Apple, but rather it was a signal to the market that carbon neutrality, when backed by real reductions and verification, can be considered credible climate action.
As Hocknell puts it, 'Net zero is conceptually elegant. But the business world doesn't run on elegant concepts. It runs on risk, margins, and uncertainty.' For companies trying to act amid imperfect data and dynamic pressures, carbon neutrality offers a structure to keep moving.
That case is part of a broader trend. The EU's upcoming Green Claims Directive will ban unsubstantiated climate labels unless backed by rigorous evidence. Courts are also increasingly scrutinizing environmental claims—down to the assumptions behind individual offsets. As EDF warned in the Apple case, that risks silencing credible efforts along with the greenwash.Without clear rules, there's a risk of a chilling effect: companies may stop communicating altogether, stalling both transparency and progress.
Yet research suggests there's a better path. According to a report from the Anthesis Group, companies that combine carbon credits with broader net zero strategies are significantly more likely to include Scope 3 emissions and have validated science-based targets. Net zero may remain the ultimate destination but carbon neutrality, used as a milestone—not a mask—can help maintain momentum while laying the groundwork for deeper change.
For businesses navigating rising costs, fragmented regulations, and mounting public scrutiny, one truth is becoming clear: what you call your climate strategy may be important, but how you build it matters far more.
The resurgence of carbon neutrality isn't a retreat from net zero—it's a pragmatic step toward it. Used well, it enables companies to act now, communicate credibly, and adjust as data, regulation, and technology evolve. It's even arguable that climate targets should be seen as aspirations not absolutes, as best practice today may not be fit for purpose tomorrow.
In a world of rising scrutiny, fragmented policy, and accelerating climate impacts, flexible, science-aligned frameworks like carbon neutrality may be not only acceptable but essential. What companies call their strategy matters—but how they build it matters far more.