What is net zero

Net zero is the state in which an entity, whether a company, a country or an entire supply chain, has reduced its greenhouse gas (GHG) emissions to the lowest level that current technology and processes allow, and has permanently removed from the atmosphere whatever residual emissions remain. The key word is removed: net zero demands actual carbon dioxide removal (CDR), not the purchase of avoidance-based offsets that merely prevent emissions elsewhere.

How net zero differs from carbon neutral

Carbon neutrality allows an organisation to compensate its full emissions footprint by buying carbon credits from projects that avoid or reduce emissions, such as protecting a forest that might otherwise be cleared. Net zero, by contrast, sets a hierarchy: first, cut emissions across Scope 1, Scope 2 and Scope 3 by a science-aligned percentage (typically 90 to 95 percent from a base year); only then neutralise the small residual through removals, meaning activities that physically pull CO₂ out of the atmosphere and store it durably. Removals include direct air capture with geological storage, biochar, enhanced rock weathering and, under certain protocols, afforestation with long-term permanence guarantees.

This distinction matters because an entity could claim carbon neutrality while barely touching its own operations, simply purchasing cheap avoidance credits. Under a net zero framework, that path is closed. The deep cuts must happen inside the value chain first.

How it works in practice

Consider a cement manufacturer whose base-year emissions total one million tonnes of CO₂ equivalent. A credible net zero pathway, aligned with the Science Based Targets initiative (SBTi) Corporate Net-Zero Standard, would require the company to:

• Set near-term targets (typically five to ten years out) to reduce absolute emissions by a rate consistent with limiting warming to 1.5 °C.
• Set a long-term target for the net-zero year (no later than 2050 for most sectors) that covers at least 90 percent abatement across all scopes.
• Address the residual (the remaining portion that cannot be eliminated through operational or value-chain changes) exclusively through permanent carbon dioxide removal.

During the transition, the company may invest in high-quality carbon credits as a complement (what SBTi calls “beyond value chain mitigation”), but those credits do not count toward the reduction targets. They are additional contributions, not substitutes for cutting emissions at the source.

The regulatory and framework landscape

The Paris Agreement set the goal of holding warming well below 2 °C while pursuing efforts to limit it to 1.5 °C (Article 2), and of reaching a balance between emissions and removals in the second half of this century (Article 4.1). Since then, multiple jurisdictions have written the concept into law. The European Climate Law, for instance, makes economy-wide climate neutrality by 2050 a binding obligation for EU member states. The SBTi Corporate Net-Zero Standard provides the most widely adopted private-sector methodology, specifying sector-specific decarbonisation pathways, required emission boundaries and criteria for valid removals.

The ISO family has also moved into this space. ISO 14068 (published in late 2023) defines requirements for carbon neutrality, and the broader ISO net-zero guidance builds on it. Voluntary market integrity initiatives such as the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI) set quality thresholds for credits used alongside, not instead of, reduction targets.

How net zero applies in Brazil

Brazil committed under its Nationally Determined Contribution (NDC) to reach climate neutrality by 2050. Domestically, the National Climate Change Policy (Política Nacional sobre Mudança do Clima, established by Law 12,187/2009) provides the overarching legal framework, while the recently regulated Brazilian Emissions Trading System (Sistema Brasileiro de Comércio de Emissões, SBCE) creates a cap-and-trade mechanism that will progressively tighten allowable emissions for covered sectors.

The SBCE, regulated under the provisions of Law 15,042/2024, covers entities whose annual emissions exceed a defined threshold and will require them to hold or surrender allowances and, in certain cases, eligible removal credits. For international professionals managing Brazilian operations, this means that facilities in sectors such as energy, steel and chemicals will face direct compliance obligations that feed into the country’s net-zero trajectory.

Brazil’s land-use profile adds a layer of complexity. Because deforestation and land-use change represent a large share of national emissions, achieving net zero at the country level depends heavily on halting illegal deforestation and scaling restoration. Corporate net-zero plans that include Brazilian supply chains (soy, beef, pulp) must account for Scope 3 land-use emissions, an area where traceability requirements under the EU Deforestation Regulation also apply for exporters.

The most common mistake

The most frequent confusion is treating net zero as a synonym for carbon neutrality or “zero emissions.” Net zero is not zero emissions; it explicitly acknowledges that some residual emissions will persist. It is also not carbon neutrality, which historically has allowed unlimited use of avoidance-based offsets with no requirement for deep internal cuts. When a company announces a “net-zero target” but relies primarily on offset purchases without a science-aligned reduction pathway, it is, in effect, pursuing carbon neutrality under a different label.

A second common error is setting a net-zero target without specifying the emission scopes covered. A target that excludes Scope 3 (which often represents more than 70 percent of a company’s footprint) may be technically accurate in its own narrow terms but is misleading in substance. Credible frameworks require disclosure of scope boundaries and, for most sectors, demand that Scope 3 be included.

Key takeaways

• Net zero requires deep, science-aligned emission reductions first, with removal of residuals second.
• Avoidance-based carbon credits do not satisfy the residual neutralisation requirement under credible standards.
• In Brazil, the SBCE and the national NDC create binding and policy-driven pathways toward mid-century net zero, with particular relevance for high-emitting sectors and agricultural supply chains.
• Any net-zero claim that omits Scope 3 or substitutes offsets for reductions should be scrutinised carefully.

Primary sources: Corporate Net-Zero Standard v1.3.1 (Science Based Targets initiative, 2026); Paris Agreement, official text (United Nations Treaty Collection, 2015); European Climate Law (European Commission, 2021); Law 15,042 of 11 December 2024, creating the SBCE (Planalto, 2024).