What Does Net Zero Mean? A Plain-Language Guide for Food Businesses

This guide covers what net zero actually means, how it differs from related terms like carbon neutral and carbon negative, what a credible net zero strategy requires for a food business, and why Scope 3—specifically the carbon embedded in your ingredients—is where the work actually happens.

What Does Net Zero Mean?

Net zero means reaching a state where the greenhouse gases a business emits into the atmosphere are balanced by the greenhouse gases it removes or avoids. When emissions and removals are equal, the net result is zero—hence the name.

The key word is net. Net zero does not mean producing no emissions at all; that is effectively impossible for most operating businesses. It means reducing emissions as far as possible through operational changes, and then addressing any remaining emissions through credible carbon removal.

The most widely used definition comes from the Science Based Targets initiative (SBTi), which specifies that net zero requires:

• Reducing absolute emissions across all scopes by at least 90% from a base year, in line with a 1.5°C pathway
• Neutralizing the remaining (up to 10%) residual emissions through permanent carbon removal

The emphasis on the 90% reduction first is deliberate. Net zero is not primarily an offsetting strategy—offsets are a tool for dealing with the last unavoidable fraction, not a substitute for operational decarbonization.

Net Zero vs. Carbon Neutral: What's the Difference?

These terms are often used interchangeably, but they mean different things—and the distinction matters for how seriously a commitment is taken.

Carbon neutral typically means that a company has offset its current emissions through carbon credits, without necessarily reducing them. A business can claim carbon neutrality today by purchasing enough offsets to balance its annual emissions, even if underlying emissions haven't changed.

Net zero sets a higher bar. Under SBTi's Corporate Net-Zero Standard, achieving net zero requires a deep cut in absolute emissions first—at least 90%—with offsets used only for residual emissions that genuinely cannot be eliminated. The standard also requires third-party validation and regular progress reporting.

Carbon negative (sometimes called "climate positive") means removing more greenhouse gases from the atmosphere than the business emits, going beyond net zero to produce a net positive impact on atmospheric carbon levels.

For food businesses, the practical distinction is significant: carbon neutrality can be purchased; net zero has to be earned through structural changes to how the business sources and operates.

Why Net Zero Is Structurally Harder for Food Businesses

In most industries, the path to net zero runs primarily through energy. Switch to renewable electricity, electrify equipment, improve building efficiency, and you've addressed the majority of your emissions.

Food businesses face a different challenge. For most food operators—caterers, hotel groups, food producers, contract catering companies—the distribution of emissions across the three GHG Protocol scopes looks roughly like this:

• Scope 1 (direct emissions from owned equipment): 3–8% of total
• Scope 2 (purchased energy): 3–7% of total
• Scope 3 (value chain emissions, primarily ingredients): 80–95% of total

Switching to renewable electricity and electrifying kitchen equipment is worthwhile, but it addresses only a small fraction of total emissions. The vast majority of a food business's climate impact sits upstream in agricultural production—in the farming, land use, and supply chains behind every ingredient purchased.

This means a credible net zero strategy for a food business is primarily a procurement and supply chain strategy, not an energy strategy. The levers are ingredient choice, supplier engagement, menu composition, and waste reduction, not solar panels and heat pumps alone.

What a Credible Net Zero Pathway Looks Like for Food Businesses

Step 1: Measure Your Full Scope 1, 2, and 3 Baseline

You cannot set a credible net zero target without knowing where your emissions currently sit. For food businesses, this means building an emissions inventory that covers all three scopes—with particular depth on Scope 3 Category 1, the carbon embedded in purchased ingredients.

Spend-based approximations (mapping financial expenditure to average emission factors) can give a rough starting point, but they can't distinguish between a beef dish and a vegetable dish of equivalent cost. Meaningful reduction planning requires ingredient-level, activity-based calculation using LCA-derived emission factors. For a complete guide to building this data foundation, see Scope 1, 2, and 3 Emissions: A Complete Guide for Food Businesses.

Step 2: Set a Science-Aligned Target

Science-based targets (SBTs) are emissions reduction targets consistent with limiting global warming to 1.5°C. For food businesses, SBTi has developed FLAG (Forest, Land, and Agriculture) guidance that creates separate reduction pathways for agricultural supply chain emissions and fossil fuel emissions—recognizing that land-related emissions behave differently and require different strategies.

A valid SBTi target for a food business typically covers:

• A near-term target (5–10 year reduction pathway) across Scope 1, 2, and 3
• A long-term net zero target (by 2050 at latest) with at least 90% absolute reduction
• A FLAG target covering land-use and agricultural emissions in Scope 3

In June 2026, SBTi published a new version of its Corporate Net-Zero Standard—its first major update since the original launched in 2021. The definition of net zero hasn't changed: reduce emissions as far as possible, then address what remains. What the update changes is how companies are expected to demonstrate progress—with more granular targets, stricter reporting requirements, and a clearer expectation that commitments translate into measurable action year on year.

The new standard applies to new target submissions from early 2028. Companies with existing validated targets are not immediately affected. But for food businesses currently setting targets or planning to, it's worth knowing the framework is evolving and that the ingredient-level data foundation required to meet it remains the same starting point it has always been.

Step 3: Reduce Emissions Across the Value Chain

For food businesses, the most impactful reduction levers are:

• Ingredient substitution: Shifting protein sources, prioritizing lower-impact suppliers, reducing high-impact ingredients as a share of procurement
• Supplier engagement: Working with key suppliers to improve agricultural practices, reduce transport emissions, and improve data quality
• Menu and product design: Building lower-carbon options into menus and product ranges, using emissions data to guide development decisions
• Waste reduction: Food waste is a significant emissions source; reducing it cuts Scope 3 Category 5 emissions alongside material costs
• Operational decarbonization: Electrification, renewable energy, and energy efficiency for Scope 1 and 2, even though these represent a smaller share of total impact

Step 4: Address Residual Emissions With Credible Removal

Once emissions have been reduced as far as operationally feasible, residual emissions can be addressed through carbon removal. SBTi recommends using high-quality, permanent carbon removal credits rather than avoidance-based offsets for this purpose. The distinction matters: avoidance credits (preventing emissions that might have happened) are less durable than removal credits (actively pulling carbon from the atmosphere).

How Net Zero and Regulatory Reporting Connect

Net zero is a voluntary commitment, but it connects to regulatory reporting in important ways.
Under CSRD, companies in scope must disclose Scope 1, 2, and 3 emissions under ESRS E1, including their plans for aligning with a 1.5°C pathway. A company with an SBTi net zero commitment will have the underlying data and methodology needed to satisfy most of these disclosure requirements.

Under SBTi FLAG requirements, food businesses with science-based targets must separately account for land-use and agricultural emissions—the same ingredient-level data that drives Scope 3 Category 1 reporting.

In practice, the data foundation for net zero and the data foundation for regulatory compliance are the same thing: ingredient-level emissions data, structured and auditable, updated annually. Building it once serves both purposes. For more on how these frameworks connect, see How CSRD, Scope 3, and SBTi Work Together for Food Businesses.

FAQ About Net Zero

Q: What does net zero mean in simple terms?
A: Net zero means that the greenhouse gases a business emits are balanced by the greenhouse gases it removes or avoids, so the net effect on the atmosphere is zero. It does not mean producing no emissions at all—it means reducing emissions as far as possible and then neutralizing what remains. The Science Based Targets initiative defines net zero as requiring at least a 90% reduction in absolute emissions before any offsets are used for residual amounts. For food businesses, reaching net zero requires engaging Scope 3 emissions from ingredient sourcing, which typically represent 80–95% of total emissions. See Scope 1, 2, and 3 Emissions for a full breakdown.

Q: What is the difference between net zero and carbon neutral?
A: Carbon neutral typically means a company has offset its current emissions through carbon credits, without necessarily reducing them. Net zero sets a higher bar: it requires at least a 90% reduction in absolute emissions first, with carbon removal used only for the residual fraction that cannot be eliminated. A business can claim carbon neutrality by purchasing offsets; net zero requires demonstrating structural decarbonization over time, with third-party validation. For food businesses, this distinction matters because the majority of emissions sit in agricultural supply chains that must be actively addressed—not offset away.

Q: Why is Scope 3 so important for food businesses pursuing net zero?
A: For most food businesses, Scope 3 emissions—primarily the carbon embedded in purchased ingredients and agricultural production—account for 80–95% of total emissions. That means switching to renewable energy or electrifying kitchen equipment, while valuable, only addresses a small fraction of total climate impact. A credible net zero pathway for a food business is fundamentally a supply chain and procurement strategy: reducing high-impact ingredients, engaging suppliers, and building ingredient-level data that makes progress measurable. Without tackling Scope 3 Category 1, net zero is not achievable regardless of what happens to Scope 1 and 2. For practical guidance, see Sustainability Reporting for Food Businesses.

Q: What is a science-based target and how does it relate to net zero?
A: A science-based target is an emissions reduction target set in line with what climate science says is required to limit global warming to 1.5°C. Science-based targets are validated by the Science Based Targets initiative (SBTi) and provide a credible, independently verified pathway to net zero. For food businesses, SBTi has introduced FLAG (Forest, Land, and Agriculture) guidance that requires separate reduction pathways for land-use and agricultural emissions,  which sit in Scope 3 Category 1 for most food operators. A company with an approved SBTi target has, in effect, a structured net zero roadmap.

Q: What is the SBTi FLAG target and why does it apply to food businesses?
A: FLAG stands for Forest, Land, and Agriculture. SBTi's FLAG guidance recognizes that emissions from land use and agricultural production behave differently from fossil fuel emissions—they can be reduced through different interventions and sequestered through land management practices. For food businesses, FLAG emissions sit primarily in Scope 3 Category 1 (purchased ingredients), since agricultural production is the dominant source. SBTi requires food businesses setting science-based targets to set a separate FLAG target alongside their fossil fuel target. This makes ingredient-level emissions data essential; you can't set or track a FLAG target without knowing where your agricultural emissions sit.

Q: How does net zero connect to CSRD reporting?
A: CSRD requires companies in scope to disclose Scope 1, 2, and 3 emissions under ESRS E1 and to describe their transition plans for aligning with a 1.5°C pathway. A company with an SBTi net zero commitment will already have the underlying data, methodology, and reduction targets that CSRD disclosure requires. In practice, the data needed for a credible net zero strategy and the data needed for CSRD compliance are the same: ingredient-level Scope 3 data, structured and auditable, updated annually. For more on how these frameworks overlap, see CSRD for the Food Industry.

Q: How do food businesses start working toward net zero?
A: The starting point is always measurement: building a baseline emissions inventory across all three scopes, with particular depth on Scope 3 Category 1 (purchased ingredients). From there, the process is: set a science-based target, identify the highest-impact reduction opportunities in your supply chain and operations, act on them systematically, and report progress annually. The Carbon Readiness Blueprint is a practical starting resource for food businesses at the beginning of this process. For teams ready to build the underlying data foundation, Klimato Food Emissions automates ingredient-level Scope 3 calculation from procurement data.