Net zero: Definition

Net zero is the point at which the greenhouse gases an organisation or country emits are balanced by an equal amount permanently removed from the atmosphere. The order matters: a credible net zero claim comes from cutting emissions first and only then removing what is genuinely left over.

Net zero is not the same as carbon neutral

Carbon neutral usually means today’s footprint is balanced, often with offsets, and often for Scope 1 and 2 only. Net zero is a long-term end state that covers the full value chain, including Scope 3. Under the SBTi Corporate Net-Zero Standard, companies are expected to cut most of their emissions (around 90% for most sectors) and use durable carbon removals only for the residual.

Net zero in Australia

Australia’s net zero by 2050 target and its 2030 target of a 43% cut on 2005 levels are legislated in the Climate Change Act 2022. For companies, net zero targets now carry disclosure obligations: under AASB S2, if you set a climate target you must explain how it was set, what it covers, the role of carbon credits, and how you are tracking against it.

What to check before you announce a net zero target

• Boundary: does it cover Scope 3, or only operations? Say which.
• Interim milestones: a 2050 date with no 2030 step is hard to defend.
• Credits: state how much of the target relies on carbon credits and what type.
• Baseline: a recalculation policy for acquisitions and methodology changes.

Vague net zero statements are also a greenwashing risk under the ACCC’s guidance on environmental claims, so the evidence behind the target needs to be as clear as the target itself.