"Carbon neutral" was the most popular environmental claim in corporate marketing. Past tense. Under the EU's new regulatory framework, claiming carbon neutrality based on offsetting is effectively banned. Over 1,500 European companies used "carbon neutral" on products or in corporate messaging as of 2024. Most of them need to change their approach.
Here's the full picture: what exactly changed, what's still technically allowed, and how to communicate your climate efforts without crossing the line.
What Changed and Why
Two pieces of EU legislation converge on carbon neutral claims:
The Empowering Consumers Directive (2024/825), adopted in early 2024, amends the Unfair Commercial Practices Directive to explicitly prohibit "making an environmental claim about future environmental performance without clear, objective and verifiable commitments and targets, and without an independent monitoring system." It also bans generic environmental claims — including climate-related ones — that aren't substantiated by recognized certification schemes.
The Green Claims Directive (ECGT) goes further by requiring that any environmental claim be substantiated through a life-cycle assessment approach and verified by an independent third party before communication.
Together, these mean that the old model — calculate your emissions, buy equivalent offsets, slap "carbon neutral" on your marketing — is dead.
The Problem with Offset-Based Neutrality
Regulators didn't target carbon neutral claims arbitrarily. The evidence was damning:
- A 2023 Guardian investigation found that over 90% of Verra's rainforest carbon credits were likely "phantom credits" — they didn't represent real emission reductions
- The Berkeley Carbon Trading Project estimated that only 12% of offset credits from major registries represented genuine, additional emission reductions
- Multiple academic studies showed that consumers interpreted "carbon neutral" as meaning "no climate impact" — which was almost never true
The EU's position: allowing companies to claim neutrality through offsets misleads consumers about the actual environmental impact of products and services, and reduces incentives for genuine decarbonization.
What's Explicitly Banned
Offset-Only Neutrality Claims
You cannot claim that a product, service, or company is "carbon neutral," "climate neutral," "carbon compensated," or "net zero" when the claim is based exclusively or primarily on purchasing carbon offsets. This applies to:
- Product labels and packaging
- Corporate-level claims
- Advertising and marketing materials
- Website content
- Social media communications
The banned terms reference on our site tracks these restrictions in detail.
Unsubstantiated Future Commitments
Claiming "We will be carbon neutral by 2030" requires:
- Detailed, publicly available implementation plans
- Time-bound interim targets
- Clear methodology for measuring progress
- Independent monitoring of progress
A pledge without a concrete, verifiable plan is not a compliant claim.
Misleading Separation of Scope
Claiming "our operations are carbon neutral" while Scope 3 emissions (supply chain, product use) represent 95% of your total footprint is considered misleading if the limited scope isn't prominently communicated. You must make the scope of any climate claim immediately clear.
What's Still Allowed
The news isn't all restrictive. Companies doing genuine climate work have several compliant communication options:
Verified Emission Reduction Claims
"We reduced our Scope 1 and 2 emissions by 35% between 2020 and 2025, verified by [accredited auditor] using [methodology]."
This is specific, verifiable, and doesn't rely on offsets. It's exactly the kind of claim the ECGT encourages.
Science-Based Target Communication
"Our emission reduction targets are validated by the Science Based Targets initiative (SBTi) and aligned with a 1.5°C pathway."
SBTi validation is a recognized third-party verification that meets ECGT requirements.
Transparent Offset Disclosure
"In addition to reducing our direct emissions by 35%, we invest in [specific project type] carbon removal projects certified under [standard]. These investments address X tonnes of residual emissions that we cannot yet eliminate through operational changes."
Key differences from banned claims: offsets supplement reductions rather than replacing them, the projects are specified and certified, and the communication doesn't claim neutrality.
Product-Level Carbon Footprint Data
"This product's carbon footprint is 2.3 kg CO2e, calculated according to ISO 14067 and verified by [auditor]. This is 40% lower than the industry average for comparable products."
Quantified, comparative, methodology-disclosed, and verified. A model compliant claim.
How Companies Are Adapting
The "Contribution" Model
Instead of "carbon neutral," companies are shifting to "climate contribution" language: "For every product sold, we invest €X in verified carbon removal projects." This is transparent about what's happening without claiming neutrality.
Several major certification bodies have already adapted. The Carbon Trust retired its "carbon neutral" certification and replaced it with a "reducing" and "lower" carbon certification framework focused on demonstrated reductions.
The "Insetting" Approach
Some companies are moving from offsets to "insets" — emission reduction projects within their own value chain. Investing in supplier decarbonization, for example, directly reduces Scope 3 emissions rather than compensating for them externally. Regulators generally view insetting more favorably because the reductions are directly tied to the company's actual footprint.
The Transparency-First Approach
Leading companies are publishing full carbon accounts — total emissions by scope, reduction trajectory, offset details, methodology — and letting the data speak for itself rather than summarizing it in a single claim. This approach is virtually litigation-proof because there's no simplification that could mislead.
Practical Migration Guide
If You Currently Claim "Carbon Neutral"
- Immediate: Remove or qualify the claim. Don't wait for enforcement — competitors and NGOs can file complaints now
- Short-term: Audit your actual emission reductions vs. offset reliance. What percentage of your "neutrality" is real reduction vs. offset?
- Medium-term: Develop a substantiated climate communication strategy that leads with verified reductions
- Long-term: Pursue SBTi validation or equivalent recognized pathway, invest in actual decarbonization
If You're Planning Climate Claims
- Start with a robust GHG inventory (Scopes 1, 2, and relevant Scope 3 categories)
- Set reduction targets — ideally SBTi-validated
- Implement reductions before making claims
- Get third-party verification
- Communicate specific achievements, not aspirational status claims
Communicating the Transition to Stakeholders
When you retire a "carbon neutral" claim, you need messaging for customers, investors, and employees who valued it. Frame the change positively:
"We're moving beyond the 'carbon neutral' label to give you real transparency about our climate performance. Here's exactly what we've achieved, what we're working on, and how we're progressing toward our targets."
This positions the change as more honest and more credible — which it is.
The International Dimension
The EU's rules are the most prescriptive, but the trend is global:
- UK: The Advertising Standards Authority (ASA) and Competition and Markets Authority (CMA) already restrict carbon neutral claims — the Shell ruling was a landmark
- France: Article L229-68 of the Environment Code bans carbon neutrality claims for products since 2023
- US: The FTC is revising its Green Guides with expected restrictions on carbon neutral claims
- Australia: The ACCC is actively pursuing greenwashing cases including offset-based claims
Companies operating globally can't maintain different claim standards for different markets — your website is visible everywhere. The practical approach: comply with the strictest standard (the EU's) and apply it globally.
Scanning Your Current Claims
If your website, packaging, or marketing materials contain any carbon-related claims, run a scan now. Our tool specifically flags carbon neutrality claims and categorizes them by compliance risk under the new rules.
The transition from offset-based neutrality claims to substantiated climate communication is challenging but ultimately better for everyone — consumers get honest information, and companies doing real climate work get properly recognized. That's the whole point.