'Carbon Neutral' is Now One of the Riskiest Phrases in Your Marketing — Here's Why

'Carbon neutral' became one of the most common phrases in sustainability marketing. It signals ambition, gives consumers something to reach for, and looks good on packaging. For the past decade, businesses have built entire green narratives around it.

That's now a problem. The phrase is under regulatory attack on two fronts simultaneously. In the EU, product-level 'carbon neutral' claims based on offsetting are banned from 27 September 2026 — just over four months away. In the UK, the Advertising Standards Authority (ASA) has been issuing rulings against unqualified uses of it for years. And the CMA's new enforcement powers mean the stakes for getting it wrong have risen sharply.

If your business uses 'carbon neutral' anywhere — on packaging, in advertising, on your website — this article is worth reading before your next marketing review.

What 'Carbon Neutral' Actually Claims — and Why Regulators Object

The problem with 'carbon neutral' is not the ambition behind it. The problem is that it implies a product's lifecycle emissions are genuinely zero, or have been fully counterbalanced. In most cases, that claim rests on purchased carbon offsets — credits bought to compensate for emissions that still exist in the atmosphere.

Regulators have concluded this is misleading. Purchasing an offset does not remove emissions from a product's lifecycle. It funds an activity elsewhere intended to reduce or sequester carbon, but the product's own emissions remain. Presenting an offset-based product as 'carbon neutral' tells consumers something that isn't quite true.

The ASA's Position in the UK

The UK's Advertising Standards Authority has been signalling this concern since 2023, when it published updated guidance on carbon neutral and net zero claims in advertising. The guidance is clear: unqualified use of 'carbon neutral' in advertising is likely to mislead.

The ASA expects businesses to qualify such claims, explaining whether neutrality is based on reductions, offsetting, or a combination, and disclosing the methodology. Since 2024, the ASA has been using AI tools to scan advertising at scale, specifically targeting unsubstantiated environmental claims. UK banks, oil and gas companies, and airlines have all faced rulings.

The EU ECGT Ban — Effective 27 September 2026

The EU is going further. Under the Empowering Consumers for the Green Transition Directive (ECGT), enforceable across EU member states from 27 September 2026, product-level carbon neutral claims based on offsetting are flatly prohibited.

The directive bans any claim that a product has a 'neutral, reduced or positive impact in terms of greenhouse gas emissions' where that claim is based on offsetting outside the product's own value chain. This is not about how the claim is worded or qualified. The claim type itself is prohibited.

There is no transition period after 27 September 2026. Products in distribution after that date must comply; regardless of when they were manufactured or labelled. If you sell into any EU market, this applies to you directly.

The Difference Between Product Claims and Company Claims

One of the most important distinctions in this area, and one that catches businesses out, is the difference between claiming a product is carbon neutral and claiming your company has carbon neutral operations.

Product-level claims

A claim on packaging that says 'carbon neutral product' or 'net zero' for a specific item is a product-level claim. This is what the ECGT bans when based on offsetting, and what the ASA has been ruling against in UK advertising when unqualified.

Company-level claims

A statement on your website that says 'we are committed to reaching net zero by 2040' or 'our operations are carbon neutral, certified by [scheme]' is a company-level claim. Not prohibited outright, but still subject to scrutiny: it needs to be specific, evidenced, and not misleading by omission.

The mistake many businesses make is using company-level language in product-level contexts. If a product page says 'from a carbon neutral company,' regulators may treat that as a product-level claim. The positioning matters as much as the words.

Cases Where Carbon Neutral Claims Have Failed Scrutiny

The regulatory record on this is consistent across sectors.

UK banks and financial institutions

The ASA ruled against multiple UK retail banks over billboard advertising making implied net zero or environmental leadership claims. The rulings centred on material omissions — claims gave consumers a more positive impression than the evidence supported. The banks were barred from running the advertisements again, creating a public compliance record.

Oil and gas companies

In April 2025, the ASA handed down rulings against oil and gas sector advertisers promoting low-carbon investments. It found that ads omitted material information about the proportion of business remaining fossil fuel dependent. The ruling noted that 'context is key' — a company cannot market itself primarily as green when the majority of its operations are not.

Aviation and sustainable fuels

Claims about '100% sustainable aviation fuel' were ruled misleading because lifecycle emissions remain significant even from renewably produced fuel. The 'sustainable' descriptor implied environmental benefit that the evidence did not fully support.

The pattern across these cases: regulators are asking whether a reasonable consumer would walk away with an accurate understanding. If the answer is no, even if no individual statement is technically false, the claim can fail.

What to Say Instead

Removing 'carbon neutral' does not mean removing environmental claims. It means replacing imprecise claims with specific, verifiable ones.

Be specific about what you have measured and reduced

'We have reduced Scope 1 and 2 emissions by 40% since 2020' is a verifiable claim. 'We have eliminated single-use plastic from our manufacturing process' is a verifiable claim. These are more credible, and more useful to consumers, than a blanket label.

If you use offsets, say so — separately

Under the ECGT, offsets cannot support a product neutrality claim. But you can communicate your offset activity separately and clearly without implying that it makes a product emissions-neutral. 'We purchase verified carbon credits to fund reforestation; our Scope 3 emissions are still being reduced' is compliant. 'Carbon neutral' on the packaging is not.

Communicate progress, not a destination you haven't reached

'Working towards carbon neutral by 2035' is more defensible than 'carbon neutral' today, provided the claim is qualified with what that journey looks like. It is honest about where you are, signals direction without overclaiming, and sets a public commitment that creates healthy internal discipline.

What Businesses Selling Into the EU Need to Do Before September 2026

With four months until the ECGT applies, the practical steps are time-sensitive:

• Audit every product-level environmental claim across packaging, e-commerce listings, and advertising

• Identify any that assert carbon neutrality, climate neutrality, or net zero status based on offsetting

• Remove or replace those claims before 27 September 2026 — there is no grace period after that date

• Verify that any third-party certification covers what you are claiming and remains current

• Review how company-level sustainability language appears in product contexts — proximity matters

• Document what evidence supports any remaining environmental claims, in case of regulatory scrutiny

The businesses most at risk are those who added 'carbon neutral' to packaging years ago and have not revisited it since. A claim that passed without challenge in 2021 may not pass in 2026.

Frequently Asked Questions

We're carbon neutral certified by a third party. Does that protect us?

Possibly in the UK under current ASA guidance, if the certification is current and accurately represents the product's lifecycle. Not in the EU after September 2026 if the certification is offset-based. Understand exactly what your certification covers — it is not a blanket defence.

Can we still say 'carbon neutral' about our company rather than our products?

Company-level claims are treated differently and are not prohibited under ECGT in the same way. But they still need to be evidence-based, specific about scope, and not misleading by omission. If the claim appears in contexts where consumers might apply it to a specific product, make the distinction explicit.

We only sell in the UK. Does ECGT apply to us?

Not directly. But the ASA's UK guidance on unqualified carbon neutral claims already applies, and the CMA has enforcement powers under the DMCC Act. The trajectory of UK regulation is towards the same outcome. Treating UK and EU compliance as a single problem is the safer approach.

Is 'net zero' in the same position as 'carbon neutral'?

Yes. Both face the same regulatory scrutiny. The ECGT restricts offset-based product-level claims regardless of phrasing. The ASA treats 'net zero' and 'carbon neutral' equivalently in its guidance. If either term relies on offsetting, the compliance question is the same.

'Carbon neutral' spent a decade being good marketing. Regulators have spent the last two years dismantling the credibility of offset-based claims, and the EU is about to make the legal position explicit. Businesses that act now — replacing vague labels with specific, verifiable language — will be in a stronger position than those who wait.

The companies that communicate best on sustainability are not the ones making the boldest claims. They are the ones who can prove what they say.

My Green Comms helps SMEs cut through sustainability regulation and communicate with credibility. If you're unsure whether your current claims stand up to scrutiny, get in touch — we'll tell you what we think.

This article is for informational purposes only and does not constitute legal advice. If you have concerns about your legal accountability for environmental claims, speak to a qualified solicitor.