What is the meaning of Net Zero ?

While working with leading organizations committing to Net Zero, it is heartening to observe not only their public commitments but also their active efforts to embed decarbonization into operational and strategic plans. Many are going a step further by linking their Sustainability-Linked Loan (SLL) targets to Net Zero milestones, demonstrating tangible integration of climate action with financial accountability. Such approaches reflect a shift from aspirational pledges to measurable, accountable climate strategies—setting a strong precedent for peers and the broader market.

The Growing Importance of Net Zero

Net Zero has progressed from a voluntary sustainability goal to a strategic requirement for corporates, investors, and governments. Over 140 countries and more than 10,000 companies globally have announced Net Zero commitments, driven by regulatory forces, investor scrutiny, and the intensifying impacts of climate change.

Despite its widespread adoption, the term “Net Zero” is often misunderstood. Historically, organizations pursued carbon neutrality, which allowed emissions to be balanced through offsets without requiring meaningful internal decarbonization. Carbon neutrality is not equivalent to Net Zero.

In contrast, Net Zero requires a science-aligned, deep decarbonization pathway, supported by independently governed and globally recognized frameworks.

 What Net Zero Really Means

A scientifically credible Net Zero commitment rests on three non-negotiable pillars:

1. Deep, Absolute Emissions Reductions Organizations must reduce emissions across Scope 1, 2, and 3 in line with a 1.5°C emissions trajectory, typically requiring a 90–95% reduction by the target year.

2. Neutralization of Residual Emissions Only the small fraction of unavoidable emissions at the final target year may be neutralized, using high-quality carbon removals. Avoidance offsets do not count.

3. No Reliance on Carbon Avoidance Offsets Avoidance offsets (e.g., renewable energy certificates, avoided deforestation credits) cannot be used to claim Net Zero.

In essence, Net Zero is not a compensation strategy; it is a decarbonization-first strategy, with removals used strictly as a final step.

The Role of Credible Frameworks

Achieving Net Zero is not about making high-level commitments—it requires alignment with rigorous global standards to ensure scientific integrity, transparency, and auditability. Among these, the Science Based Targets initiative (SBTi) has emerged as the most authoritative reference for corporate Net Zero targets.

We will discuss SBTi’s methodologies, validation criteria, and sector-specific guidance in detail in our next article.

We will further describe how to achieve Net Zero.

For any further questions, guidance on Net Zero strategy, or support in aligning your organization with credible frameworks, please reach out to us at contact@esgweise.com.