Carbon Neutral Claims and Communications

Are carbon neutrality claims still viable in an increasingly sceptical environment?

Many large companies have grown wary of them, yet they remain common in the SME space, some fuelled by questionable labelling schemes. Despite sustained regulatory focus, businesses keep getting these communications wrong. So, what’s going on?

This page explains what ‘carbon neutral’ means, why the term so often misleads, how it differs from related terms like net zero, where the regulators stand, what credible practice looks like, and what a defensible carbon-related claim actually requires. It’s a companion to our main Greenwashing guide; for the latest rulings and developments, see Greenwashing News.

What ‘carbon neutral’ actually means

Carbon neutrality generally applies at the level of a product, service or organisation, and refers to balancing carbon emissions with an equivalent amount of carbon reductions and the purchase of carbon offsets. That balancing act is the crux of the problem, largely because it isn’t how most people understand the term.

ASA research into consumer understanding found a widespread lack of clarity around ‘carbon neutral’, ‘net zero’ and ‘climate neutral’. The terms were often treated as synonymous, and ‘neutral’ and ‘net’ were both frequently read as meaning a direct, absolute reduction in emissions. In other words, many people believe a ‘carbon neutral’ claim means a company is cutting its emissions now or will in the near future. However, in common practice, carbon neutrality often relies heavily on offsets. That mismatch creates a significant likelihood of consumers being misled.

Carbon neutral, net zero and climate positive — what’s the difference?

A large part of the problem is that these terms are used interchangeably when they mean quite different things. Getting the distinctions right is the first step towards communicating honestly.

• Carbon neutral means a balance between the emissions associated with a product, service or organisation and an equivalent amount of reductions and offsets. In practice, the balance can be struck with very little actual reduction and a significant amount of offsetting, which is precisely why the term attracts suspicion.
• Net zero sets a much higher bar. It implies deep, absolute decarbonisation, typically reducing emissions by around 90% or more in line with climate science, with only the small, genuinely hard-to-abate residual being neutralised, ideally through permanent carbon removals rather than avoidance offsets. Net zero is a destination reached largely by cutting emissions, carbon neutral can be reached largely by paying for them elsewhere.
• Climate positive/carbon negative claims go further still, asserting that more carbon is removed than emitted. They set the highest evidential bar of all, and, unsurprisingly, are among the most frequently challenged.

The key point here is that ‘carbon neutral’ and ‘net zero’ are not synonyms, and treating them as such is one of the most common ways an otherwise well-meaning claim can slide into greenwashing.

The offsetting credibility problem

Both scientific and public opinion have, to some extent, turned against the concept of carbon neutrality as it’s commonly practised. Climate scientists are clear that dramatic, absolute reductions in emissions are what’s needed. Against that backdrop, numerous investigations have lifted the lid on carbon-offsetting schemes and shown that many fail to deliver real or lasting emissions reductions. The result has been a crisis of confidence and a broader backlash against offsetting.

When a general consumer’s understanding of ‘carbon neutral’ doesn’t match what such schemes can be proven to deliver, you have precisely the right ingredients to deepen mistrust in environmental communication on this topic.

What credible practice looks like: reduce first, offset last

Scepticism about offsetting doesn’t mean carbon claims are impossible, rather it means they have to be developed in the right order. The principle that now underpins both good practice and the formal standards is the mitigation hierarchy, reduce first, offset last.

• Reduce. The priority is always to cut your own emissions, across the full value chain, including Scope 3. Reductions inside your own operations and supply chain are sometimes described as insetting, to distinguish them from buying credits elsewhere.
• Then remove. For the residual emissions that genuinely cannot yet be eliminated, the next preference is removals, credits that take carbon out of the atmosphere, rather than avoidance credits, which claim to prevent emissions that would otherwise have occurred. The two are very different in quality and permanence, and conflating them is a common weakness in carbon-neutral claims.
• Then offset — carefully. Any offsetting used to close the gap should rest on high-integrity credits. Reference points here include the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles, which set quality criteria for credits, and the Voluntary Carbon Markets Integrity Initiative’s Claims Code of Practice, which sets out how companies can talk about their use of credits without overstating them.

The order matters as much as the activity. A claim built on heavy offsetting with little underlying reduction may be technically ‘neutral’ on paper, but it is increasingly indefensible, both reputationally and, in some markets, legally.

A standard to certify against: ISO 14068-1

For organisations that want a formal, verifiable basis for a carbon-neutrality claim, the standards landscape has changed. The long-standing British specification PAS 2060 has been retired and superseded by the first international standard for carbon neutrality, ISO 14068-1:2023 (‘Climate change management, Transition to net zero, Part 1: Carbon neutrality’).

The shift is more than a change of reference number. ISO 14068-1 embeds the reduction-first hierarchy described above, requires broader inclusion of material Scope 3 emissions, applies stricter validation to the carbon credits used, and is designed to align with the GHG Protocol, the Science Based Targets initiative (SBTi) and the Paris Agreement. Where PAS 2060 allowed neutrality to be reached largely through offsetting, ISO 14068-1 treats neutrality as a stepping stone on a genuine path to net zero. If you intend to make a carbon-neutral claim and have it independently verified, this is now the standard to work to.

Where the regulators stand

Regulators face a difficult balancing act, and their positions continue to harden.

United Kingdom

In the UK, the ASA and CMA work closely together on this agenda. The ASA has publicly signalled its intent to crack down on misleading and socially irresponsible environmental advertising, and its Climate Change and the Environment project exists to ensure environmental claims are neither misleading nor irresponsible. Following its consumer research, the Committee of Advertising Practice (CAP) has published guidance reflecting the problem of consumer perception around carbon terms, aligned with the CMA’s Green Claims Code.

This remains an active workstream rather than a settled one. CAP has committed to reviewing what forms of evidence are more or less likely to be acceptable to substantiate offset-based claims — the question of whether, and how, offsetting can ever properly support a neutrality claim is one the regulators have explicitly left open. The ASA is also engaging with the Government’s planned consultation on voluntary carbon and nature markets, so further guidance can be expected as that work matures.

European Union

In the EU, the picture shifted notably during 2025, of most importance is the Empowering Consumers for the Green Transition Directive (commonly the ‘ECGT’, or ‘EmpCo’ Directive (EU) 2024/825). It entered into force in March 2024; member states were required to transpose it into national law by 27 March 2026, and its rules apply across the EU from 27 September 2026. Amongst other things, it bans generic environmental claims that can’t be substantiated and, critically for this topic, prohibits ‘climate neutral’, ‘carbon neutral’ and similar product claims where they rest on carbon offsetting. Only sustainability labels backed by approved certification schemes will be permitted.

A second, more far-reaching measure (the Green Claims Directive, which would have required science-based substantiation and independent third-party verification of green claims) has stalled. In June 2025 the European Commission announced its intention to withdraw it, and the final round of negotiations was cancelled after key member states withdrew their support. The proposal has not been formally killed off, and its future is uncertain, so the substantiation-and-verification regime it promised is, for now, on hold. However, the important point for businesses is that this changes nothing about the offset ban which sits within the ECGT, and is proceeding regardless.

National courts aren’t waiting, either. In June 2024 Germany’s Federal Court of Justice ruled that ‘klimaneutral’ (climate neutral) is inherently ambiguous, and that any company using it must explain what it means (reduction, offsetting, or both) within the advertisement itself, not via a QR code or a linked page. It is a precise judicial echo of the UK regulators’ ‘put the evidence next to the claim’ principle.

Taken together, an outright ban on offset-based product neutrality claims, reinforced by national case law, the European position on this specific issue is now tighter than the UK’s, where a properly qualified carbon-neutral claim can still, in principle, be made.

Operating across markets

The practical implication of this divergence is that businesses operating across multiple markets must make a choice: pursue different claims in different jurisdictions, or unify to the tougher standard. Most of our clients take the latter route, consistency of approach and message avoids undue confusion and risk, and it future-proofs communications against rules that are converging in the same direction anyway.

Practice is already changing

The market has responded to this pressure. The Carbon Trust, a widely respected UK climate non-profit, retired its long-standing Carbon Neutral label and replaced it with a set of more specific labels focused on carbon reductions, a clear response to changing expectations. The direction is away from a single, easily misunderstood badge and towards claims that distinguish genuine reductions from offsets.

But companies continue to get into trouble. The ASA monitors communications actively, including through AI tools, and also acts on complaints. Recent rulings against businesses making ‘carbon neutral’ and ‘carbon negative’ claims have turned not on the underlying ambition, but on a failure to make the basis of the claim clear and to put the supporting evidence on, or very close to, the advert itself. (We cover individual rulings as they happen on our Greenwashing News page.)

What makes a defensible carbon claim

The regulators are consistent on what carbon-related communication requires, and it’s no different in principle from the requirements for any other environmental claim:

• The basis of the claim must be very clear. A bare ‘carbon neutral’ or ‘carbon negative’ badge, unqualified, is likely to mislead.
• The claim must rest on evidence and accurate information, and that evidence must appear on the advert, or very close to it. Constraints of space or ad format are not, in the regulators’ view, a valid reason to omit material information.
• The balance between actual reductions and offsets must be spelt out. Consumers should be able to see how much of a ‘neutral’ position comes from real reductions versus purchased offsets — and, increasingly, the quality of those offsets matters too.
• Future goals require a verifiable delivery strategy. Any claim about future reductions must be underpinned by a credible, monitorable plan, not an aspiration. A science-based target (for example, one validated through the SBTi) is a far stronger foundation than a self-declared ambition.

A final note on authenticity

Beyond compliance, there’s a question of what’s authentic. As dramatic real-world emissions reductions become ever more urgent, it’s increasingly hard to argue that offsets alone can deliver the change required. The most credible carbon communication leads with genuine reduction, is transparent about the role of offsets, and avoids absolute claims the evidence can’t support.

For many product-level claims, the most defensible course now is the simplest one: stop saying ‘carbon neutral’ altogether, and instead communicate specific, evidenced reductions, ‘we have cut the emissions of this product by X% since [year]’, alongside a credible target for the rest. It’s less eye-catching than a neutrality badge, but it is honest, harder to challenge, and increasingly what regulators and informed customers expect.