Net Zero for UK Businesses
Net Zero is a phrase that has become increasingly common in business.
You might have come across it in a customer questionnaire, a tender, a sustainability policy or a Carbon Reduction Plan. You may have been asked whether your business has a Net Zero target, or you may simply be trying to understand what Net Zero actually means and whether it applies to your organisation.
There is a lot of terminology around carbon and Net Zero, and it is not always obvious how the different pieces fit together.
What is Net Zero? How does it relate to a carbon footprint? What are Scope 1, 2 and 3 emissions? Do businesses need a Net Zero target? What is a Carbon Reduction Plan? And where do reporting and procurement requirements fit in?
This guide explains Net Zero for UK businesses in plain English.
It looks at the main concepts businesses need to understand, how they fit together, and some of the questions businesses commonly ask when they start thinking about carbon emissions and Net Zero.
What is Net Zero?
Net Zero means achieving a balance between greenhouse gas emissions released into the atmosphere and greenhouse gas removals. For a business, this means reducing the greenhouse gas emissions associated with its activities as far as possible and addressing the emissions that remain.
The important part is reducing emissions. Net Zero is not simply a matter of continuing to produce the same level of emissions and paying someone else to compensate for them.
The term is also sometimes misunderstood as meaning that a business must have absolutely no emissions. That is not what Net Zero means.
Some emissions may remain because they cannot currently be eliminated completely. The concept of Net Zero recognises this, while placing emphasis on reducing emissions as far as possible and addressing those that remain appropriately.
What is the UK’s Net Zero target?
The UK has a legally binding target to achieve Net Zero greenhouse gas emissions by 2050. The target applies to the UK as a whole. This does not mean every UK business is automatically subject to the same legal requirement to reach Net Zero by 2050.
However, the UK’s Net Zero target has contributed to carbon and sustainability requirements becoming increasingly relevant to businesses.
Businesses can encounter Net Zero through:
Customer requirements
Supply-chain questionnaires
Public sector procurement
Tender requirements
Carbon reporting
Environmental policies
ESG requests
Internal sustainability objectives
For example, current UK Government procurement guidance, PPN 006, sets out how Carbon Reduction Plans and commitments to Net Zero can be taken into account in relevant central government procurements. The current guidance applies to in-scope organisations and relevant contracts under the Procurement Act 2023, subject to the conditions set out in the guidance.
You may still see this referred to as PPN 006, because that was the previous name of the procurement policy note. The current PPN 006 guidance states that it was previously issued in June 2021 and updated in February 2025.
What does Net Zero mean for a business?
There is no single Net Zero journey that looks the same for every business. A business’s emissions depend on what it does, where it operates and how it operates.
For example, a manufacturing business might have significant emissions associated with:
Electricity
Gas or other fuels
Manufacturing processes
Purchased materials
Transport
Waste
Its wider supply chain
A professional services business might have a very different emissions profile, with areas such as:
Electricity
Business travel
Employee commuting
Purchased services
Office-related activities
The first important point is therefore that Net Zero needs to be considered in the context of the individual business. There is no universal list of actions that every organisation needs to take.
How do carbon emissions fit into Net Zero?
Greenhouse gas emissions are at the centre of the Net Zero conversation. Businesses create emissions through activities such as using energy, heating buildings, travelling, purchasing goods and services, transporting products and managing waste.
These emissions are generally measured as carbon dioxide equivalent (CO₂e).
CO₂e provides a common way of expressing the climate impact of different greenhouse gases in a single measurement. Understanding where those emissions come from is an important part of understanding a business’s position in relation to Net Zero. This is where carbon footprinting comes in.
What is a business carbon footprint?
A business carbon footprint is a measurement of the greenhouse gas emissions associated with an organisation over a defined period.
It can include emissions from activities such as:
Energy use
Fuel
Business travel
Transport
Waste
Purchased goods and services
Employee commuting
Other relevant value-chain activities
The exact emissions included will depend on the organisation and the purpose of the calculation.
A carbon footprint therefore helps answer a relatively straightforward question:
What emissions are associated with our business?
Net Zero asks a different question:
How do we reduce those emissions and address what remains over the longer term?
That distinction is important.
A carbon footprint is a measurement.
Net Zero is a longer-term objective.
For a more detailed explanation of business carbon footprints, see: Carbon Footprint Assessments and Business Carbon Footprints: A Complete Guide for UK Businesses
What are Scope 1, 2 and 3 emissions?
You will often see Scope 1, Scope 2 and Scope 3 mentioned alongside Net Zero.
The three scopes are used to categorise different types of greenhouse gas emissions.
Scope 1
Scope 1 covers direct emissions from sources owned or controlled by the organisation.
Examples can include fuel used in company-owned vehicles or fuel burned in boilers and other equipment.
Scope 2
Scope 2 covers indirect emissions associated with purchased energy.
Purchased electricity is the most familiar example.
Scope 3
Scope 3 covers other indirect emissions associated with an organisation’s value chain.
Depending on the business, this can include areas such as:
Purchased goods and services
Business travel
Employee commuting
Waste
Transportation
Other upstream and downstream activities
Scope 3 can be particularly important because a significant proportion of an organisation’s overall emissions may sit outside its direct operations.
However, the relevance of different Scope 3 categories varies considerably between businesses.
For a detailed explanation, see: Scope 1, 2 and 3 Emissions: A Complete Guide for UK Businesses
Why does measuring emissions matter?
A business cannot properly understand its progress towards reducing emissions without some understanding of where those emissions come from.
Measuring emissions can help a business understand:
Its overall carbon footprint
The activities contributing to emissions
Which sources are more significant
Where information may be missing
Where further investigation may be useful
How emissions change over time
The result is not simply a number. It provides information that can help a business understand its environmental impact and make better-informed decisions.
For businesses that are new to carbon reporting, establishing a baseline can also provide a useful reference point for future reporting.
Attain Zero’s Carbon Footprint Assessment service is the commercial service for organisations that need their emissions measured and a baseline established. The service page explains the assessment itself, including the scope of emissions that may be considered and how the results are used.
Do businesses need to measure Scope 1, 2 and 3?
Not necessarily all at once. The appropriate emissions to measure will depend on the organisation, its activities and the reason for carrying out the assessment.
A business may initially focus on Scope 1 and Scope 2 before developing its understanding of relevant Scope 3 emissions.
Other businesses may need to consider particular Scope 3 emissions because of customer, procurement or reporting requirements.
For example, PPN 006 has specific reporting requirements for Carbon Reduction Plans, including Scope 1 and Scope 2 emissions and specified Scope 3 emissions.
This is one reason it is important to understand why emissions are being measured before deciding what needs to be included.
What is a carbon baseline?
A carbon baseline is a reference point against which future emissions can be compared. It provides a picture of an organisation’s emissions for a particular period and can be used when looking at changes over time.
For example, if a business calculates its emissions for a particular reporting year, that figure can provide a baseline for future comparisons.
However, changes between years need to be interpreted carefully. An increase or decrease in reported emissions could be influenced by:
Changes in business activity
Changes in the size of the organisation
Changes in energy use
Changes in suppliers
Better-quality data
Changes in methodology
Changes in emissions factors
Changes to organisational boundaries
A change in the reported figure does not automatically mean that the underlying environmental performance has changed by the same amount.
What is a Net Zero target?
A Net Zero target describes an organisation’s longer-term ambition to reach Net Zero. A target usually includes a timeframe. For example, an organisation may state that it intends to achieve Net Zero by a particular year.
However, the target itself is only one part of the picture.
A target does not tell you:
What the organisation’s current emissions are
What has already been reduced
Which emissions are included
How emissions are being measured
What reductions are planned
How progress will be assessed
How remaining emissions will be addressed
This is why a Net Zero target should be understood in context. The credibility of a commitment depends on the information and action behind it, not simply the wording of the target.
Why do businesses set Net Zero targets?
Businesses may set Net Zero targets for different reasons.
Environmental objectives
Some organisations want to reduce the environmental impact associated with their activities.
Customer expectations
Larger customers may ask suppliers about carbon emissions, Net Zero commitments or reduction plans.
Procurement
Carbon requirements can form part of procurement processes, particularly where suppliers are bidding for certain public sector contracts.
Supply-chain requirements
A business may be asked for emissions information because one of its customers is assessing emissions across its own value chain.
Business planning
Understanding carbon emissions can also form part of longer-term planning around energy, transport, buildings, suppliers and operational change.
The reason behind a Net Zero target matters because it can determine what information a business needs and how formally it needs to document its approach.
What is a Carbon Reduction Plan?
A Carbon Reduction Plan is a structured document that sets out an organisation’s emissions information and its approach to reducing emissions over time.
It is closely connected to Net Zero, but the two are not the same thing.
A useful way to think about the relationship is:
Carbon footprint → shows where emissions are
Carbon Reduction Plan → sets out how emissions will be reduced
Net Zero → describes the longer-term objective
A Carbon Reduction Plan can therefore form part of a business’s wider journey towards Net Zero.
Attain Zero’s Carbon Reduction Plan service is specifically focused on turning emissions data into a practical reduction roadmap, including reduction priorities, opportunities, targets and progress monitoring. The service page should remain the main destination for businesses that need a Carbon Reduction Plan rather than this knowledge article attempting to reproduce that service.
What is PPN 006?
If your business works with government or is bidding for certain public sector contracts, you may have come across PPN 006.
The current guidance applies to relevant procurements by in-scope central government organisations and sets out requirements around suppliers’ Carbon Reduction Plans and commitments to achieving Net Zero by 2050.
The associated technical standard specifies requirements around the carbon footprint information included in a Carbon Reduction Plan. Current guidance focuses on Scope 1 and Scope 2 reporting and a specified subset of Scope 3 emissions.
This is an area where the terminology can be particularly confusing because businesses may still be asked for a PPN 06/21 Carbon Reduction Plan, even though the current policy is referred to as PPN 006.
For the detailed requirements, see the dedicated PPN 006 Carbon Reduction Plan page.
Net Zero vs carbon footprint
These terms are related but they are not interchangeable.
| Term | What it means |
|---|---|
| Carbon footprint | A measurement of greenhouse gas emissions associated with an organisation |
| Carbon reduction | The process of reducing greenhouse gas emissions |
| Carbon Reduction Plan | A document setting out how an organisation intends to reduce emissions |
| Net Zero | A longer-term objective involving substantial emissions reductions and addressing remaining emissions |
| Carbon neutral | A term generally associated with balancing emissions through compensation or other measures |
Understanding these differences is useful because businesses are often asked for several of these things at different stages.
Net Zero vs Carbon Neutral
Net Zero and carbon neutral are sometimes treated as interchangeable terms, but they are not necessarily the same. Carbon neutrality is generally associated with balancing emissions through compensation or other measures.
Net Zero puts greater emphasis on reducing emissions and addressing the emissions that remain. The terminology used by organisations can vary, so businesses should look beyond the label.
If a company describes itself as carbon neutral or Net Zero, useful questions include:
What emissions have been measured?
What has actually been reduced?
What methodology has been used?
What does the organisation include within its boundary?
How are remaining emissions being addressed?
The label alone does not provide all of that information.
Net Zero vs carbon reduction
Carbon reduction and Net Zero are closely connected.
Carbon reduction means reducing greenhouse gas emissions.
Net Zero is the longer-term objective of reducing emissions as far as possible and addressing those that remain.
Carbon reduction is therefore a key part of moving towards Net Zero. A business can reduce its emissions without being Net Zero.
Equally, a business can have a Net Zero target without having achieved the reductions required to reach it. This distinction is important when interpreting business claims and progress.
Net Zero vs ESG
Net Zero is sometimes discussed as part of ESG. However, they are not the same thing.
Net Zero relates specifically to greenhouse gas emissions.
ESG covers a much broader range of environmental, social and governance issues.
For example, ESG can include areas such as:
Environmental impacts
Social responsibilities
Employment practices
Governance
Business ethics
Supply-chain issues
A business may therefore have Net Zero commitments as part of a wider ESG approach.
But a Net Zero target does not, by itself, address every aspect of ESG.
If a customer has asked your business for wider ESG or environmental information, it is important to understand exactly what they are asking for.
Do small businesses need to think about Net Zero?
Net Zero is not only relevant to large organisations. Small and medium-sized businesses can encounter carbon and Net Zero requirements through:
Customers
Larger supply-chain partners
Tender opportunities
Public sector procurement
ESG questionnaires
Environmental policies
However, that does not mean every SME needs the same reporting system or level of documentation as a large organisation. The appropriate approach depends on the business, its activities and the requirements it needs to meet.
For a small business, the starting point may simply be understanding its carbon footprint and the emissions associated with its activities. Over time, that information can support wider carbon reduction planning if it becomes relevant.
Does every business need a Net Zero strategy?
Not necessarily. There is no single Net Zero strategy that applies to every business.
A business’s approach will depend on factors including:
Its size
Its activities
Its emissions profile
Its customers
Its supply chain
Its procurement requirements
Its existing environmental commitments
Some businesses may need a formal strategy because of customer or procurement expectations, others may simply want to understand their emissions and consider how they could be reduced.
The important thing is to understand the requirement before creating documentation. A business does not need to use complex terminology or produce a large strategy document simply because it wants to start taking carbon emissions seriously.
What changes depending on the type of business?
The relevance of Net Zero can look very different across sectors.
Manufacturing businesses
Energy use, fuel, manufacturing processes, purchased materials, transport and supply chains may all be relevant.
Construction businesses
Materials, plant, fuel, transport, subcontractors and purchased services can be important areas to consider.
Professional services businesses
Office energy, business travel, commuting, purchased services and other indirect emissions may be more significant.
Retail and hospitality businesses
Energy use, buildings, refrigeration, purchased goods, food, waste and transport can all play a role.
Small businesses
The overall footprint may be smaller, but customers and procurement requirements can still make carbon information relevant.
The point is not that every business needs to measure every possible source.
It is that the relevant emissions depend on what the business actually does.
Where should a business start with Net Zero?
The starting point does not need to be complicated. A business can begin by asking:
1. Why are we considering Net Zero?
Is it because of a customer, tender, procurement requirement or internal objective?
2. What emissions are associated with our activities?
This is where understanding the business carbon footprint becomes important.
3. What information do we already have?
Businesses often have useful information in energy bills, fuel records, travel information, purchasing systems and other business records.
4. What do we need to achieve?
The answer may be different for a business responding to a tender than for one developing its own environmental objectives.
5. What information or support do we actually need?
Once the requirement is clear, the business can determine whether it needs carbon measurement, a Carbon Reduction Plan, PPN-specific support or wider environmental guidance.
This approach helps prevent businesses from doing work they do not actually need.
What happens after a business understands its emissions?
Understanding emissions is a starting point rather than an end point. Once a business has a clearer picture of its carbon footprint, it can begin to understand where the most significant emissions arise and what that information means for the organisation. This can lead to different next steps depending on the business.
For example:
Need to understand your current emissions?
A Carbon Footprint Assessment can establish the organisation’s emissions baseline.
Need a plan for reducing emissions?
A Carbon Reduction Plan can turn the emissions data into a practical roadmap.
Need to meet a specific public sector procurement requirement?
A PPN PPN 006 Carbon Reduction Plan may be relevant, depending on the procurement.
Need wider environmental or ESG support?
Environmental and ESG guidance may be more appropriate.
The important thing is that Net Zero sits above these individual activities as a longer-term objective.
What are the benefits of understanding Net Zero?
Understanding Net Zero can help businesses make sense of the different carbon-related requests they encounter. It can help answer questions such as:
Why is a customer asking for our carbon footprint?
Why are we being asked about Scope 3?
What is the difference between a carbon footprint and a Carbon Reduction Plan?
Why is a tender asking about Net Zero?
Do we need a PPN 006 Carbon Reduction Plan?
What does a Net Zero target actually mean?
How does carbon reduction fit into the bigger picture?
This is particularly useful for businesses that are new to carbon reporting.
You do not need to become an expert in every aspect of Net Zero before you can understand what applies to your organisation.
Common Net Zero mistakes and misunderstandings
Thinking Net Zero means zero emissions
Net Zero does not mean that every emission must disappear.
Treating Net Zero as the same as carbon offsetting
Reducing emissions and compensating for emissions are not the same thing.
Assuming a Net Zero target proves progress
A target describes an ambition. It does not demonstrate that reductions have already been achieved.
Confusing a carbon footprint with Net Zero
A carbon footprint measures emissions. Net Zero is a longer-term objective.
Assuming every business needs the same approach
Businesses have very different activities, emissions and requirements.
Measuring emissions without understanding why
The right information depends partly on what the business needs it for.
Treating a Carbon Reduction Plan as the same thing as Net Zero
A Carbon Reduction Plan is a document and planning tool. Net Zero is the longer-term objective.
Assuming Scope 3 is always optional
The relevance of Scope 3 depends on the organisation and the reporting or procurement requirement involved.
Net Zero is part of a bigger carbon picture
Net Zero can seem like a single subject, but several connected concepts sit underneath it.
A simple way to understand the relationship is:
Business activities
↓
Greenhouse gas emissions
↓
Scope 1, Scope 2 and Scope 3
↓
Carbon footprint
↓
Carbon reduction
↓
Carbon Reduction Plan
↓
Long-term Net Zero ambition
These are not all the same thing, each answers a different question and understanding those differences makes it easier for businesses to work out what they need to measure, report or plan for.
Frequently Asked Questions
Does every UK business have to reach Net Zero by 2050?
The UK’s legally binding Net Zero target applies to the UK as a whole. It does not mean that every individual business is automatically subject to an identical legal requirement to reach Net Zero by 2050.
Businesses may nevertheless encounter Net Zero commitments through customers, supply chains, procurement and other requirements.
Do small businesses need to achieve Net Zero?
There is no single requirement that applies identically to every small business. However, SMEs can encounter Net Zero and carbon requirements through customers, supply chains, tenders and procurement. The level of carbon reporting or planning needed will depend on the business and the requirements it needs to meet.
Do businesses have to measure all three scopes?
Not always. The appropriate emissions to measure depend on the organisation, its activities and the reason for reporting. Some customer, procurement or reporting requirements may specify particular emissions or scopes.
What is PPN 006 and how does it relate to Net Zero?
PPN 006 was the previous name for the UK Government’s procurement policy relating to Carbon Reduction Plans. The current policy is PPN 006. The policy sets out requirements relating to Carbon Reduction Plans and Net Zero commitments for relevant central government procurements and suppliers.
Businesses may still encounter the term PPN 006 when searching for information or responding to requirements, which is why both terms are commonly used.
Related guides
Carbon Footprints for Businessess: A Complete Guide for UK Businesses
Carbon Reduction for UK Businesses: A Practical Guide