Carbon Budget

A carbon (or emissions) budget is the upper limit of GHG emissions that can be emitted in order to avoid exceeding maximum concentration levels of GHGs in the atmosphere over a given period of time. These concentration levels are set with the goal of reducing the rate of global warming. So in order to limit global temperature increases, cumulative GHG emissions over a defined period of time must be equal to or below the carbon budget.


In this case, companies seek to mitigate their impact on the climate by eliminating the sources of emissions within the boundary of the target. This is often achieved by avoiding activities that generate emissions (e.g. avoiding combustion of fossil fuels) and/or by preventing the release of emissions that continue to be generated (e.g. through the capture and permanent sequestration of emissions before they are released into the atmosphere).

Emission avoided through optimised product

Companies contribute to emission avoided through optimised product, e.g. producing goods from waste.

Hybrid Approaches

A large number of companies setting neutrality targets have a mixed approach involving a degree of decarbonisation often combined with other mitigation approaches

Life Cycle Analysis

Life Cycle Analysis (LCA) is a method used to evaluate the environmental impact of a product through its life cycle encompassing extraction and processing of the raw materials, manufacturing, distribution, use, recycling, and final disposal.

Nature-based solutions (NBS)

Nature-Based Solutions (NBS) to climate change address challenges such as climate change, access to water, social and economic development and disaster risk by putting nature and people at the heart of the solutions. These are measures specifically focused on ecosystems, and designed to combat climate change and its consequences through their preservation and restoration.

Net Zero

Net Zero means achieving a state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions. This is achieved by reducing value chain greenhouse gas emissions, in line with 1.5°C pathways, and by balancing the impact of any remaining greenhouse gas emissions with an appropriate amount of carbon removals. (Source: SBTi).


In the context of corporate climate neutrality, offsetting refers to the balancing of emissions within the target boundary with an equivalent amount of carbon credits originated from activities that avoid or remove emissions somewhere else. Carbon credits are often issued from two types of project activities: carbon removal and avoided emission.

Science-based target (SBTs)

Launched in 2015 by WWF, CDP, World Resources Institute (WRI) and the UN Global Compact, the SBTi encourages organisations to voluntarily set a GHG emissions reduction target that is aligned and consistent with scientific recommendations on climate change. Organisations can decide to set their own SBT that is compatible with the global 1.5°C or well below 2°C trajectories, as set out by SBTi.

Scope 1 Greenhouse Gas Emissions

All Direct Emissions from the activities of an organisation or under their control. Including fuel combustion on site such as gas boilers, fleet vehicles and air-conditioning leaks.

Scope 2 Greenhouse Gas Emissions

Indirect Emissions from electricity purchased and used by the organisation. Emissions are created during the production of the energy and eventually used by the organisation.

Scope 3 Greenhouse Gas Emissions

All Other Indirect Emissions from activities of the organisation, occurring from sources that they do not own or control. These are usually the greatest share of the carbon footprint, covering emissions associated with business travel, procurement, waste and water.

Value chain carbon removal

Companies reduce their emissions through “deliberate human activities” using technologies that removes and/or stores CO2 from the atmosphere, within the companies’ value chain.


IPCC definitions of climate-neutrality-related terms:



Definition from IPCC SR15

Carbon neutrality or net-zero CO2 emissions

CO2 emissions

Net zero carbon dioxide emissions are achieved when anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specified period.

Climate neutrality

All GHG emissions, regional or local bio-geophysical effects of human activities, and, arguably, other radiative forcers.

Concept of a state in which human activities result in no net effect on the climate system. Achieving such a state would require balancing of residual emissions with emission (carbon dioxide) removal as well as accounting for regional or local bio-geophysical effects of human activities that, for example, affect surface albedo or local climate

Net-zero emissions

All GHG emissions.

Net zero emissions are achieved when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period. Where multiple greenhouse gases are involved, the quantification of net zero emissions depends on the climate metric chosen to compare emissions of different gases (such as global warming potential, global temperature change potential, and others, as well as the chosen time horizon).