What is carbon neutral?

When insurance companies talk about being carbon neutral, they mean balancing a measured amount of carbon emissions with an equivalent amount that is captured through one process or another. With net emissions being zero it becomes ‘carbon neutral’.

The most environmentally aware insurance companies will always seek to firstly reduce their own emissions and those of their customers. This will include making their buildings more eco-friendly and cutting energy use. Customers will be encouraged to drive more fuel efficient cars and given advice and incentives to reduce their carbon footprint. Only after this will unavoidable emissions be offset.

Carbon emissions can be offset in a number of ways. For example, carbon dioxide released into the atmosphere from burning fossil fuels can be balanced against renewable energy that creates a similar amount of useful energy, so that the carbon emissions are compensated. More dubiously, insurance companies can pay others to remove carbon emissions by planting trees or by funding 'carbon projects' that lead to the prevention of future greenhouse gas emissions, or by buying carbon credits to remove them through carbon trading.