What net zero means for a business
Net zero means reducing your emissions as far as you can, across Scopes 1, 2 and 3, and balancing only the small amount left with permanent removals of CO2 from the atmosphere. The SBTi's Corporate Net-Zero Standard puts that as cutting emissions by at least 90% by 2050 at the latest. The UK has the same destination in law for the whole economy: the Climate Change Act 2008 was amended in 2019 to set a target of net zero by 2050.
For a small business, net zero is mainly a direction of travel and a commitment buyers ask for. A PPN 006 Carbon Reduction Plan must include a commitment to net zero by 2050 at the latest, and the NHS asks smaller suppliers for a Net Zero Commitment.
Step 1: measure a baseline
You can't plan cuts without knowing where your emissions come from. Take a full year of energy bills, fuel, travel, commuting and waste and calculate your footprint with the UK government conversion factors. Our footprint guide shows how, with a worked example, and our kWh to CO2e calculator handles the energy and fuel lines. That first full year becomes your baseline.
Step 2: commit and set targets
- A net zero year, 2050 or earlier, signed off by a director.
- An interim target, such as a cut in Scope 1 and 2 by 2030. The SBTi's SME route asks for at least 4.2% a year; the free SME Climate Commitment asks you to halve emissions by 2030. See our science-based targets guide.
- Absolute targets in tonnes, plus an intensity ratio so growth doesn't hide progress.
Step 3: cut the big sources first
| Source | Actions | UK support and rules (as of October 2026) |
|---|---|---|
| Company cars and vans (Scope 1) | Route planning, driver training, right-sizing vehicles, then switching to electric at replacement | Company car tax on fully electric cars is 4% of list price in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. A 100% first-year allowance for new zero-emission cars and chargepoints runs to 31 March 2027 for companies (5 April 2027 for income tax) |
| Gas or oil heating (Scope 1) | Controls and timers, insulation, then a heat pump when the boiler is due for replacement | The Boiler Upgrade Scheme in England and Wales covers small non-domestic buildings: £7,500 for an air-to-water or ground source heat pump, £9,000 off the gas grid when replacing oil or LPG |
| Electricity (Scope 2) | LED lighting, switching off out of hours, efficient IT, on-site solar, then a renewable tariff backed by REGOs | A renewable tariff reduces market-based Scope 2. Location-based Scope 2 still falls each year as the grid decarbonises |
| Refrigerants (Scope 1) | Regular leak checks; choose lower-GWP refrigerants when replacing air conditioning | F-gas rules require leak checks on larger systems |
| Business travel (Scope 3) | Rail before domestic flights, video calls for short meetings, a travel policy | No grants; savings come from lower travel costs |
| Commuting (Scope 3) | Hybrid working, cycle to work schemes, car sharing, electric vehicle salary sacrifice | Cycle to work and salary sacrifice schemes have tax advantages for staff |
| Purchased goods and services (Scope 3) | Ask your biggest suppliers for their emissions and targets; buy less and buy lower carbon | Supplier data improves your figures and shows where to act |
| Waste (Scope 3) | Separate recycling and food waste; reduce packaging | Simpler Recycling rules in England have required workplaces with 10 or more FTE staff to separate dry recyclables and food waste since 31 March 2025; smaller businesses follow from 31 March 2027 |
Large organisations with an ESOS audit already have a list of energy saving opportunities to work from; see our ESOS guide.
Step 4: write the plan down
A plan is more credible, and more useful in a tender, if it names actions, owners and dates rather than general intentions. "Replace the two oldest vans with electric vans in 2027 and install two chargepoints at the depot" is the kind of line evaluators score well. The PPN 006 format works for any business: baseline, current emissions, targets, projects completed and planned, and director sign-off. Our free Carbon Reduction Plan template follows it.
Step 5: report every year
Recalculate each year with that year's government factors, compare with your baseline and explain the changes. Some changes are not your doing: the UK grid electricity factor fell by about 26% in the 2026 factors, so separate grid decarbonisation from your own cuts. See our conversion factors guide.
Where offsets fit
Last. Buying credits doesn't reduce your reported emissions or count towards a science-based target, and calling a business "net zero" because it bought offsets is the kind of claim the CMA's green claims guidance warns against. At net zero, permanent removals balance only the residual you cannot cut. Our offsetting guide covers what you can say.
How Carbon Recycling helps
Carbon Recycling keeps your baseline year fixed, recalculates each new year with the right factors, and shows your progress by scope and source, so you can see which actions worked. Your Carbon Reduction Plan updates when you add next year's data, ready to publish and to attach to tenders.