Climate Neutrality
Climate neutrality describes a state in which the greenhouse gas emissions attributable to a company, product or process are reduced and offset so that, on balance, they reach net zero.
Climate neutrality describes a state in which the greenhouse gas emissions attributable to a company, an activity, a product or a service are net zero on balance. This is achieved through a combination of consistently avoiding and reducing an organisation's own emissions and offsetting unavoidable residual emissions through compensation measures. The key methodological basis for accounting is the Greenhouse Gas Protocol, which distinguishes between Scope 1, Scope 2 and Scope 3 emissions, together with the ISO 14068-1 standard, which since 2023 has for the first time defined consistent requirements for climate neutrality claims.
Conceptually, climate neutrality must be carefully distinguished from related notions. Whereas "net zero" generally requires a deep, science-based reduction of emissions across the entire value chain, typically by more than 90 percent, and permits only very limited offsetting of the unavoidable residual emissions through durable sinks, "climate neutrality" can in practice also be claimed through pure offsetting without any significant reduction of an organisation's own emissions. It is precisely this lack of clarity that makes the term prone to greenwashing, which is why the forthcoming EU Green Claims Directive and the already adopted Directive (EU) 2024/825 (Empowering Consumers) prohibit blanket climate neutrality claims towards consumers that rest solely on offsetting.
A credible climate neutrality claim must therefore meet high standards: a complete and transparent greenhouse gas inventory covering all material scopes, clearly defined and verifiable system boundaries, a binding reduction pathway with interim targets, the primacy of avoidance and reduction over offsetting, and the use of high-quality, additional and durable offset credits. Claims should also be independently verified and worded so that the reference object, the accounting boundaries and the share of offsetting are clearly identifiable. For companies subject to reporting obligations, climate-related targets and measures must additionally be disclosed under ESRS E1 of the CSRD.
Legal Basis
ISO 14068-1; Greenhouse Gas Protocol; ESRS E1 (Delegated Regulation (EU) 2023/2772); Directive (EU) 2024/825 (Empowering Consumers Directive); forthcoming EU Green Claims Directive
Practical Example
A compliance officer at a mid-sized manufacturer is asked to review the planned marketing claim "produced climate neutrally" before it appears on the product packaging. She finds that so far only Scope 1 and Scope 2 emissions have been accounted for, that the material Scope 3 emissions from the supply chain are missing, and that "neutrality" is to be achieved solely through purchased offset credits. Because the Empowering Consumers Directive classifies such an offset-only claim as misleading, she recommends withholding the advertising for now, compiling a complete corporate carbon footprint including Scope 3, setting a binding reduction pathway, and having the claim externally verified.