Carbon jargon: net zero, offsetting, science-based targets – what does it all mean?

UK governments are legally committed to reduce carbon emissions to ‘net zero’ – by 2045 in Scotland and by 2050 in England, Wales and Northern Ireland.

For all businesses this means a significant reduction in emissions. For every kilogram of carbon that cannot be reduced, another must be removed.

Carbon neutral, climate neutral and net zero

‘Carbon neutral’, ‘climate neutral’ and ‘net zero’ all mean the same thing: a balance between the greenhouse gas emissions released into the atmosphere and those absorbed back from the atmosphere in carbon sinks such as forests or oceans.

Net zero can be applied at a global, country, city or business level. For SMEs this means reducing a firm’s emissions as much as practically possible in the coming years while offsetting residual emissions with an accredited scheme.

Carbon, emissions and greenhouse gases

‘Carbon’ and ‘carbon emissions’ can be used as shorthand for all greenhouse gas emissions. This is because carbon dioxide is the most common greenhouse gas, however other gases such as methane also cause global warming and must be reduced.

Carbon footprint

The total amount of carbon emissions (or ‘greenhouse gases’) directly and indirectly released by a business’s activities, including in their supply chain. 

Carbon footprints are also used to describe emissions associated with products or services. 

Science-based targets

Science based targets (SBT) show how much a business’s carbon emissions need to reduce, and how quickly, to be consistent with limiting global warming to 1.5 C.

This involves calculating the amount of global emissions ‘allowed’ across different economic sectors and what a fair share would be for an individual company.

Science based targets do not allow for offsetting.  The Science Based Targets Initiative provides calculation methods and advice for firms considering this approach.

Carbon offsetting

Emissions that haven’t yet been eliminated can be ‘offset’ by paying for an equivalent amount of emissions to be reduced or removed elsewhere. 

Carbon offset projects generate carbon credits. Each credit is equivalent to 1 tonne of carbon dioxide, or the equivalent amount of another greenhouse gas that has been removed from the atmosphere. 

Offsets are not a considered a substitute for taking action to reduce or eliminate carbon emissions. Businesses that intend to use them should use the Oxford Offsetting Principles when doing so. 

Carbon credits

Carbon offset projects generate carbon credits. Each carbon credit is equivalent to one tonne of carbon dioxide, or the equivalent amount of another greenhouse gas that has been removed from the atmosphere.

Businesses that claim carbon neutral status often purchase credits equivalent to their net emissions and retire the credits through registries.

There is scepticism around the quality of some offsetting projects but when done well they support local economies and fund impactful work.


Sustainability is a broad term that means operating in a way that meets the needs of the current generation while not undermining future generations to meet theirs.  It can be applied to social and financial issues as well as environmental ones.

Greenhouse gases (GHGs)

Greenhouse gases are emissions that contribute to climate change, such as carbon dioxide or methane released into the atmosphere by human activity.

Examples of activities which contribute to greenhouse gases are:

  • electricity from fossil fuel power stations
  • burning gas for heating
  • driving a petrol or diesel fuelled car

According to a 2021 study by British Business Bank, SMEs produce around a third of all emissions in the UK.