The CarbonNeutral Protocol Index

Purpose of this Guidance

Historically the terms carbon neutral and net zero have been interchangeable, but recently greater clarification on what net zero could and should mean has been published. This guidance provides an overview of the concept of net zero, and sets out three different ways in which CarbonNeutral® certifications support net zero objectives.

Net zero concept

Net zero is still a relatively new concept with approaches and definitions being published frequently. We anticipate that definitions of net zero will be refined with time and application, and this guidance will be updated in subsequent revisions to the Protocol.

The rising prominence of net zero targets was initiated by The Intergovernmental Panel on Climate Change’s (IPCC) Special Report on Global Warming of 1.5˚C, which advised of the critical importance of achieving net-zero emissions as soon as possible to improve the probability of limiting warming to 1.5˚C. Adoption of net zero by the private sector is driven in large part by the desire to align with the ambition set out in the Paris Agreement of net zero emissions by or before 2050, and the growing number of nations which have refined their national climate plans to target the same.

Research by Natural Capital Partners into the Fortune Global 500 (Natural Capital Partners, 2020, Response Required, link) found that 6% (32) of companies have a net zero target set between 2031 and 2050, 1% (5) have set a net zero target to be achieved earlier – all five targeting 2030 – and that multiple definitions are used across this net zero group. More than three quarters of these were announced between July 2019 and August 2020. This compares to 6% (30) that are carbon neutral today, a further 5% (24) that have a target to be carbon neutral by 2030, and a further 6% (32) that have a target to be carbon neutral by 2050.

How CarbonNeutral certifications support net zero ambitions

There are three main ways in which CarbonNeutral certifications support net zero ambitions:

1. Annual carbon accounting and action on all unabated emissions. Defining and measuring carbon footprints on an annual basis and taking action on unabated emissions are processes that are common in carbon neutral programmes and will be necessary for corporates achieving net zero. Carbon neutrality’s requirement to compensate for all unabated emissions through offsetting provides a reference price for GHG emissions that helps entities identify opportunities for deeper internal reductions. In addition to helping an individual organization become carbon neutral, offsetting unabated emissions to achieve a CarbonNeutral certification finances emission reductions and transformation in the wider economy. Offsetting, according to The Science-Based Targets Initiative’s Foundations For Net Zero paper, “can play a critical role in accelerating the transition to net-zero emissions at the global level” (Science Based Targets initiative, 2020, Foundations for Science-Based Net-Zero Target Setting in the Corporate Sector, link, page 8). This is the first time that this particular coalition of respected environmental NGOs (CDP, WWF, WRI) has positively acknowledged the role of offsetting in a major publication.

2. Increasing removals. For an organisation to achieve a net zero target, unabated emissions are offset through removal projects, e.g. natural climate solutions such as forests that remove carbon from the atmosphere (“neutralisation measures” in SBTi language). During the transition to net zero, reductions and avoided emissions through offsetting projects continue to play a critical role (“compensation measures” in SBTi language). To align CarbonNeutral certifications with a net zero target, organisations must increase the proportion of removals in their offset portfolio until all unabated emissions are offset only with removal projects. Boston Consulting Group exemplifies this approach, with its commitment to steadily increase its portfolio of removal projects while achieving carbon neutrality, on the path to its net zero by 2030 target (BCG, 2020, BCG’s Net-Zero Pledge, link). See Figure 8.

Figure 8: How CarbonNeutral certifications support net zero ambitions: increasing removals

3. Increasing climate action on value chain emissions. When an organisation reaches net zero, it must cover all material sources of GHG emissions within its value chain. Through CarbonNeutral product and service certifications, organisations are moving towards taking responsibility for all sources of emissions. CarbonNeutral product certification for 825,000 Microsoft Xboxes helped the company begin to expand its carbon neutrality from operations towards a broader scope as part of its target to be net zero by 2030 (see Figure 9).

Figure 9: How CarbonNeutral certifications support net zero ambitions: using CarbonNeutral product certification to start taking climate action on entire value chain emissions

Source: Microsoft, 2019,Ambition is good; action is better, link

Increasingly businesses are also looking for approaches that integrate climate action with other SDG impacts. Many avoidance and reduction projects deliver quantified impacts for sustainable development such as health and livelihoods, biodiversity conservation and education. As a result, mixed portfolios of these projects, alongside removal projects which may not have the same level of SDG impact, can offer an optimal solution.

Further information can be found at:

Science Based Targets Initiative (SBTi), 2020, Foundations For Net Zero, link

Natural Capital Partners, 2020, Climate Calculus Series: Carbon neutrality, net zero and beyond, link

Natural Capital Partners, 2020, Solutions: Net zero, link