Carbon Neutral
A business becomes ‘carbon neutral’ when its carbon footprint effectively becomes zero.

Climate change is one of the pressing issues humanity is currently facing. It threatens to bring unprecedented pressure to society through changes such as more extreme weather, less predictable access to water and unpredictable changes to agricultural output.

Climate change is principally a result of human greenhouse gas emissions, of which carbon dioxide is the prominent one. Hence, one of the main targets is to reduce global carbon emissions and become carbon neutral.

What does carbon neutral mean?

Carbon neutrality refers to the state of having net-zero carbon emissions. This means that the amount of carbon being emitted is equal to the amount being offset by activities such as planting trees or buying carbon credits from the voluntary carbon markets (VCM).

Everything we do emits carbon. Anything from a process like the manufacturing of a plastic bottle, to an executive business. Even the choice of supplier of electricity or water has an effect on the carbon footprint of a business.

A business is carbon neutral when the total carbon footprint of all these processes and activities is effectively offset to zero.

How to become a carbon neutral business?

When it comes to businesses, all of the activities and processes that are considered part of a business’ operation have a carbon footprint.

For example, the electricity consumption of the main office and the carbon emitted by personnel driving for business purposes throughout a year need to be accounted for and included as part of a carbon balance report.

Only once the business’ carbon balance is known, it is possible to determine how to become carbon neutral. Normally, businesses are net carbon emitters and have two alternatives to becoming net-zero carbon emitters:

  • Reduce the carbon footprint of existing activities.
  • Purchase carbon offsets from the VCM through a carbon broker to be declared carbon neutral.

What is the Voluntary Carbon Market (VCM)?

Countries have pledged carbon emissions reductions under legally-binding international treaties, and have the Compliance Carbon Markets (CCM) to purchase carbon offsets for any emissions they cannot reduce or mitigate.

Since businesses and individuals were historically not legally bound to reduce their emissions, a voluntary carbon market was created to allow them to voluntarily offset any carbon emissions that they were unable to reduce.

There exist many carbon registries where these carbon offsets (also known as carbon credits) are issued by carbon offsetting projects (e.g. conservation, reforestation, renewable energy) that do so under certain standards.

Examples include Verra, Gold Standard, and American Carbon Registries. The carbon offsets in these registries are normally traded and ‘retired’ (rendered unusable to offset emissions) by a broker.

How to calculate my carbon footprint?

The process of becoming carbon neutral is intrinsically linked with professional carbon accounting.

This sounds simple, but just like financial accounting, there are multiple methodologies and standards for carbon monitoring, reporting and verification (MRV) depending on what the business does and much of the legislation is still in its infancy.

Despite this, carbon accounting is the foundation for any business to forge its strategy toward carbon neutrality.

What are the benefits of becoming a carbon neutral business?

With the pressure mounting on governments to act upon climate change increasing year on year, so is the pressure for businesses to become carbon neutral.

Increasingly stringent requirements for carbon neutrality are not a question of if, but when, and the sooner a business can prepare for this, the easier this inevitable transition will be, potentially saving a lot of time and money in the future.

Since 2019, large businesses with over 250 employees, an annual turnover of £36m, or a balance sheet of £18m are legally required to report an annual Energy and Carbon Report.

What is the difference between carbon neutral and net-zero?

While both are often used interchangeably and essentially have the same meaning, net-zero is often used to describe the broader commitment to decarbonisation and climate action while carbon neutrality is more concerned with the specific carbon balance of the process, activity or entity is in question.

When will the UK be carbon neutral?

Being a signatory of the recent COP-26 in Glasgow, the UK has an international commitment to reach carbon neutrality by 2050. A large part of the UK’s emissions come from businesses, and it is only natural that businesses will need to become carbon neutral or carbon negative by this time.

According to YouGov, only 46% of businesses had planned to go carbon neutral by 2050.

Which businesses are carbon neutral?

Despite legally-binding carbon neutral obligations being historically lacking, several businesses in the UK have taken their own initiative in becoming greener.

For example, M&S has been carbon neutral since 2007 and has been steadily decreasing its carbon emissions since, essentially front-running the industry in climate change action.

Although not fully carbon neutral, other businesses such as Quorn (Beef Replacement products), Innocent (Healthy Foods), Leon (Fast Food) have gone out of their way to reduce their emissions significantly.

Why do Water, Electricity and Gas utilities have a carbon footprint?

It is useful to recognise that virtually any human process has a carbon footprint. Any utilities such as water, gas and electricity come with inherent carbon emissions. For example, water treatment is extremely energy intensive, electricity production may come from polluting greenhouse gasses.

This is why at AquaSwitch we focus on letting businesses compare energy suppliers and water suppliers, as each has its own carbon footprint and therefore a direct effect on a business’ carbon neutrality plan.

Is biomass energy carbon neutral?

Despite being a “renewable energy source” in the sense that biomass refers to any plant material that can be cyclically re-grown, there is a raging debate around biomass’ real carbon neutrality as it depends on a per-project basis. Read our whole article dedicated to biomass and green energy for an in-depth dive.

However, for the practical purposes of carbon accounting for business in the UK, electricity produced from biomass burning does count as part of a business’ emissions.

Is Google carbon neutral?

Yes, Google has been carbon neutral since 2007 and is aiming to be carbon negative by 2030: this means they offset more carbon than what they emit.



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