Net Zero
Net zero is the state in which a company has reduced its anthropogenic greenhouse gas emissions as far as possible and permanently removes the remaining residual emissions from the atmosphere, so that its balance across all scopes is brought to zero.
Net zero describes a target state in which the greenhouse gas emissions caused by a company and the volumes permanently removed from the atmosphere by carbon sinks fully balance each other out. The sequence is decisive: emissions across the entire value chain (Scope 1, 2 and 3) must first be avoided and reduced as far as technically and economically feasible. Only the residual emissions that remain unavoidable after ambitious reduction may be neutralised through permanent carbon removal. Net zero therefore differs fundamentally from mere offsetting: avoidance takes absolute priority over compensation.
The scientific frame of reference stems from the Paris Agreement, which aims to limit global warming to ideally 1.5 degrees Celsius. From this a global net-zero point for CO2 around the year 2050 is derived. With its Corporate Net-Zero Standard, the Science Based Targets initiative (SBTi) has set binding criteria: companies must define near-term and long-term science-based reduction targets, typically achieve an emissions reduction of around 90 percent by 2050 at the latest, and only then neutralise the remaining maximum of 10 percent through permanent removal. A credible net-zero strategy also includes a transition plan with interim milestones and transparent progress reporting.
For companies subject to reporting obligations, net zero is increasingly relevant in legal terms. Through the standard ESRS E1 (Climate Change), the Corporate Sustainability Reporting Directive (CSRD) requires disclosure of climate protection plans, greenhouse gas targets and the compatibility of the business model with the 1.5-degree pathway. At the same time, supervisory authorities and the planned Green Claims Directive set strict standards against greenwashing: terms such as climate neutral or net zero may only be used if they rest on a robust methodology, verifiable reduction pathways and transparent documentation. A careful greenhouse gas inventory in line with the GHG Protocol forms the indispensable data basis for this.
Legal Basis
ESRS E1 (Climate Change) in conjunction with the CSRD (Directive (EU) 2022/2464); Paris Agreement; SBTi Corporate Net-Zero Standard; GHG Protocol
Practical Example
A mid-sized mechanical engineering firm subject to CSRD reporting asks its sustainability manager to set up a net-zero strategy. She first compiles a complete greenhouse gas inventory across Scope 1, 2 and 3 in line with the GHG Protocol and identifies purchased intermediate products as the biggest lever. She then defines science-based targets (a 42 percent reduction by 2030, around 90 percent by 2045) and has them validated by the SBTi. She documents the reduction pathway, the planned measures (green electricity, process electrification, supplier engagement) and the treatment of unavoidable residual emissions in a transition plan, which feeds into the sustainability report as part of the ESRS E1 disclosures and withstands assurance.