Carbon neutrality is a state of net-zero carbon dioxide emissions. Whether directly or indirectly most human activities generate at least some amount of carbon dioxide. Achieving carbon neutrality means limiting those carbon emissions and reducing them to zero. In cases where that is not yet possible it requires balancing the remainder of the emissions by purchasing and retiring high-quality carbon offsets. Carbon credits are used to ‘offset’ the emissions from an organisation or activity.
In order to achieve carbon neutrality a company must first measure their carbon footprint, which includes their scope 1,2 and 3 emissions.
A company will then set environmental targets and will use carbon credits to offset their emissions as a way of compensating for emissions created. This however is different from achieving net-zero emissions. Net-zero is where a company reduces its emissions to the lowest technologically possible level, and then offsets the remaining emissions. Being carbon neutral, doesn’t necessarily mean that companies have taken every step to decarbonise and reduce their own carbon footprint prior to offsetting.