Why Carbon Neutrality at company level is a misleading concept and what companies should do instead

In recent years, the concept of carbon neutrality has become a central theme in corporate climate communication. Companies increasingly face requests from customers, investors and regulators to disclose their greenhouse gas emissions and demonstrate progress on climate action. In this context, many organizations express the ambition to become “carbon neutral”.

However, carbon neutrality is a concept that only makes sense at the scale of the planet. For individual companies, products or organizations, claiming neutrality can easily lead to confusion or misleading communication.

Carbon neutrality: a planetary concept

Carbon neutrality is generally understood as a balance between greenhouse gas emissions and removals from the atmosphere. This balance is primarily defined at the global level, as it determines whether global warming stabilizes. This understanding is reflected in the work of the Intergovernmental Panel on Climate Change (IPCC), the objectives of the Paris Agreement, and corporate climate frameworks such as the Science Based Targets initiative (SBTi).

In corporate climate discussions, several related terms are often used interchangeably, including carbon neutrality, climate neutrality and net zero. While definitions vary slightly across frameworks, they all broadly refer to a situation where greenhouse gas emissions are balanced by removals from the atmosphere. Climate neutrality generally refers to balancing all greenhouse gases, carbon neutrality often focuses specifically on CO₂ emissions, while net zero typically refers to achieving deep emission reductions first and neutralizing only the residual emissions that cannot be eliminated.

As awareness around climate claims grows, organizations also face increasing scrutiny regarding how they communicate their climate ambitions. Simplified or poorly substantiated claims of “carbon neutrality” particularly when they rely heavily on offsetting may expose companies to reputational risks. Clients, investors and civil society are increasingly critical of such claims, and companies may face PR backlash if their climate communication is perceived as misleading or insufficiently transparent.

Regulation is also evolving in this direction. The EU’s Empowering Consumers for the Green Transition Directive (often referred to as the anti-greenwashing directive) introduces stricter requirements for environmental claims. Companies will increasingly need to substantiate sustainability claims with verifiable evidence and avoid vague or potentially misleading environmental messaging. In this context, broad claims such as “carbon neutral” without clear methodological explanations may carry both reputational and regulatory risks.

This position is increasingly reflected in international climate governance frameworks. Organizations such as the Science Based Targets initiative (SBTi) emphasize that companies should focus primarily on deep emission reductions aligned with climate science, rather than relying on offsetting claims to reach neutrality.

Why companies still ask for carbon neutrality

Despite the methodological limitations of the concept, requests for carbon neutrality often originate from legitimate business pressures.

Many organizations encounter carbon-related questions in:

In these contexts, companies often use the term “carbon neutral” as a shorthand for taking climate action. For consultants, this creates an important opportunity: helping organizations translate these expectations into credible climate strategies rather than marketing claims.

What this means for sustainability consultants

When a client asks how to become carbon neutral, the key challenge is to reframe the conversation.

Instead of focusing on neutrality claims, consultants typically guide companies through a structured climate management process:

Through this process, climate action becomes a management exercise grounded in data, rather than a communication objective.

From carbon neutrality to credible climate strategies

A growing number of internationally recognized frameworks help organizations move beyond simplified carbon neutrality claims and focus instead on credible climate action.

Carbon accounting standards, such as the GHG Protocol Corporate Standard, provide the methodological foundation for measuring emissions across an organization’s operations and value chain.

Science-based target frameworks, such as the Science Based Targets initiative (SBTi), translate the goals of the Paris Agreement into concrete emission reduction pathways for companies.

Transition strategy frameworks, including the ACT (Assessing low-Carbon Transition) methodology developed by ADEME and CDP, help organizations evaluate the credibility of their climate strategies and identify transformation levers across their business model.

Climate disclosure frameworks, such as the European Sustainability Reporting Standards (ESRS) developed by EFRAG under the CSRD regulation, encourage companies to disclose their transition plans, governance structures and progress indicators.

Finally, operational management systems such as the CO₂ Performance Ladder, widely used in public procurement contexts, support organizations in embedding emission reductions into procurement, operations and supply chain management.

Together, these frameworks shift the focus away from neutrality claims and toward measurable emission reductions, transparent reporting and credible transition strategies.

The role of carbon accounting tools

Implementing a credible climate strategy requires reliable carbon data and the ability to analyze emissions across organizational boundaries.

Carbon accounting platforms help consultants and companies to:

In this sense, carbon accounting tools should not be seen as a shortcut to climate claims, but rather as decision-support systems that enable organizations to manage and reduce their emissions over time.

From climate claims to climate action

The growing attention around carbon neutrality reflects an important reality: companies increasingly recognize that climate change is a strategic issue.

But credible climate leadership does not start with neutrality claims. It starts with measurement, transparency and emission reductions aligned with scientific pathways.

For sustainability consultants and the organizations they support, the objective is therefore not to make companies “carbon neutral”, but to help them transform their operations and value chains in line with the global transition to a low-carbon economy.

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