Companies around the world are under growing pressure to reduce their carbon footprint and align with global sustainability goals. Governments and regulatory bodies are tightening emission standards and giving priority to businesses that demonstrate environmental responsibility. Achieving carbon neutrality has evolved from a corporate social responsibility initiative to a strategic necessity. This blog aims to help understand key aspects to achieve carbon neutrality, from carbon accounting to implementing reduction strategies to help companies navigate the transition toward a more sustainable future.

CO₂ Neutral vs. CO₂ Negative

When discussing carbon emissions, two key terms often come up: CO₂ neutral and CO₂ negative. While both indicate a commitment to reducing environmental impact, they represent different levels of action and ambition.

  • CO₂ Neutral (Carbon Neutral): A company is considered CO₂ neutral when it balances the amount of carbon dioxide it emits with an equivalent amount removed from the atmosphere. This is typically achieved through emission reductions, increased efficiency, and carbon offsetting projects, such as reforestation or renewable energy investments. The goal is to achieve net-zero emissions, meaning the company does not contribute additional CO₂ to the atmosphere.
  • CO₂ Negative (Carbon Negative): Going beyond neutrality, a CO₂ negative approach means that a company actively removes more carbon dioxide from the atmosphere than it emits. This can be done through advanced carbon capture technologies, large-scale reforestation, or direct air capture projects. Being CO₂ negative results in a net reduction of atmospheric CO₂, contributing significantly to reversing climate change.

For companies, striving for CO₂ neutrality is often the first step in sustainability efforts, while CO₂ negativity represents a more ambitious goal for those aiming to have a positive environmental impact.

Accounting for carbon emissions  

The first step towards carbon neutrality is to go through the identification process for accounting carbon emissions. The Greenhouse Gas (GHG) Protocol, the leading global standard for carbon accounting, categorizes emissions into three scopes based on their source and level of control by an organization. These scopes aim to help companies track and manage emissions systematically, allowing better reporting, regulatory compliance, and targeted mitigation strategies.

Scope 1: Direct emissions. These emissions come from sources owned or controlled by the company. This scope includes production or process equipment to generate heat, steam, and electricity, such as boilers and furnaces, and mobile combustion equipment like vehicles.

Scope 2: Indirect emissions. This scope includes emissions from the use of electricity generators not owned or controlled by the company (purchased electricity). Therefore, the emissions occur at the facility where electricity is generated.

Scope 3: Other indirect emissions. This category includes emissions from downstream and upstream processes used by third parties along the value chain of a company.

Scope 1 and 2 emissions are managed by the company through equipment selection and choosing their suppliers. Therefore, addressing scope 1 and 2 emissions is the starting point to tackle. Scope 3 emissions are harder to control and require collaboration with partners and suppliers.

Implementing Reduction Strategies: Steel Manufacturing Example