ESG and climate positive, defined
ESG stands for environmental, social and governance. The term comes from Who Cares Wins, a 2004 report from the UN Global Compact that urged investors to weigh those three areas because they affect long-term returns. That origin still shapes what ESG is: a way of asking how the world might hurt a company’s value. Rating agencies turn the answer into a score, usually compared with others in the same industry.
Climate positive asks the opposite question: what does this company or product do to the world? Something is climate positive when it removes more carbon dioxide (and other greenhouse gases, counted as CO₂e) from the atmosphere than it releases, across a boundary you state out loud. It means the same thing as carbon negative. We prefer the positive word because, as we’ve written before, “negative” sounds like bad news.
Two more terms sit between them and get mixed up with both:
- Carbon neutral means emissions inside a boundary are balanced out, usually by buying offsets.
- Net zero is a target: cut emissions about 90% by a date, then permanently remove what’s left.
| Compare | ESG rating | Carbon neutral | Net zero target | Climate positive |
|---|---|---|---|---|
| The question | How well does this company manage risks to its value? | Are this boundary's emissions balanced out? | Will this company reach near-zero emissions by a date? | Does this remove more carbon than it releases? |
| Mainly for | Investors and lenders | Buyers and marketers | Investors, customers, policymakers | Specifiers, buyers, anyone who breathes |
| Measured as | A grade or score relative to peers | Tonnes of CO₂e, netted to zero | A dated pledge plus interim goals | Tonnes of CO₂e, below zero |
| Who decides | Each rating agency, with its own method | The claimant, often with offsets | The company; SBTi validates some | A life cycle assessment or EPD |
| Can you check it? | Not against physics; raters often disagree | Partly; offset quality varies | Only as the years pass | Yes, against an EPD built to ISO 21930 or EN 15804 |
| Blind spot | Actual emissions and stored carbon | How much was emitted before offsets | Today | Must state its boundary and how long carbon stays stored |
Why a good ESG score can hide a bad footprint
There’s nothing dishonest about an ESG rating. It just answers a different question than most people think it does. Four gaps explain why a company can look green on paper and still be a heavy emitter.
1. Ratings measure management, not tonnes
A rater mostly asks whether a company has a climate policy, a board committee that oversees it, a disclosure and a target. Those are signs that risk is being managed. They aren’t measurements of what the company puts into the air, and a manufacturer of aluminum storefronts can score well on all of them.
2. Raters don’t agree with each other
Researchers at MIT compared six major ESG ratings (KLD, Sustainalytics, Moody’s ESG, S&P Global, Refinitiv and MSCI) and found they often disagree on the same company. More than half of the disagreement came from the raters measuring the same thing in different ways. If two thermometers disagreed that much, you’d stop trusting the thermometers.
3. Most of the carbon is outside the boundary
Corporate climate accounting splits emissions into three scopes. Scope 1 is fuel the company burns itself. Scope 2 is the electricity it buys. Scope 3 is everything up and down the supply chain, including the materials in what it sells. CDP, which collects climate data from thousands of companies, found that supply chain emissions average 11.4 times a company’s own operational emissions. A Scope 1 and 2 report sees less than a tenth of the picture, and it can’t see materials at all.
4. Spend-based estimates can’t tell wood from aluminum
When companies do estimate Scope 3, most start with spending: dollars paid to a supplier, multiplied by an industry-average emission factor. That’s a reasonable first pass. But it means a company that switches from aluminum to wood at the same price sees no change in its report. Only activity data (kilograms of each material times the value in its EPD) can see a better material choice.
And then there’s the carbon stored in products. The GHG Protocol’s corporate standard keeps biogenic carbon outside the three scopes, and its rules for counting carbon held in products are still being finalized. In practice, most corporate inventories leave it out. That’s the carbon that makes wood-based materials climate positive.
An ESG score is a forecast of risk to the company. Climate positive is a measurement of what happened to the atmosphere.
Interactive · about 2 minutes
Your exposure vs. reality scorecard
Nine questions. You get two scores: how your company looks on paper (reports, ratings, targets) and what your products do in reality (the carbon they release and store). Nothing you enter leaves your browser.
Answer all nine questions to see your result.
Your result
- On paper
- / 100
- In reality
- / 100
- Material carbon your reporting can see
- %
Your next moves
Materials: where the two ledgers split
Buildings and construction produce about a third of the world’s CO₂ emissions: 34%, according to the UN Environment Programme’s 2024/2025 Global Status Report for Buildings and Construction. As buildings use less energy to run, a bigger share of that comes from making the materials they’re built and furnished with. Interiors matter here more than people expect, because cabinets, flooring, casework and furniture get replaced many times over a building’s life.
Wood is different from every other common building material for one reason. About half its dry weight is carbon the tree pulled out of the air as it grew. A kilogram of dry wood holds the equivalent of roughly 1.8 kilograms of CO₂, and it stays there until the wood burns or rots. Composite panels like particleboard and MDF are made largely from sawmill and woodworking leftovers that used to be burned or left to decompose, so they keep that carbon locked up too.
The chart below uses published Environmental Product Declarations (EPDs) for North American particleboard and softwood lumber, and the widely used ICE database for the other materials. Switch the view to see what a typical corporate report counts.
Interactive · published EPD and ICE data
Same material, two ledgers
Switch between what a typical corporate climate report counts and what the atmosphere experiences. The difference is the carbon stored in the product.
At the factory gate, per kilogram, both wood products hold more carbon than was released making them. Every other material is a net emitter.
See the numbers and sources
Cradle-to-gate (modules A1 to A3) unless noted. 'Released' is fossil greenhouse gas emitted making the material. 'Stored' is biogenic carbon held in the product at the factory gate. 'Whole life' applies the EPD's end-of-life scenario (wood only; the other materials store no carbon, so their gate value stands). Your supplier's EPD should replace these generic values. Comparing by weight is rough: a steel shelf and a wood shelf don't weigh the same. Aluminum runs past the end of the chart's scale; its bar is cut and its number is exact. Use the chart for the direction each material points, then use real EPDs to size a specific swap.
Two things are worth noticing. First, in the report view every material looks like an emitter, and wood just looks like a small one. That’s how a company with excellent material choices ends up with an ordinary-looking footprint. Second, the whole-life view is smaller than the factory-gate view. Some stored carbon returns to the air at the end of a product’s life, which is why durability is a climate strategy. Even counting a landfill after 75 years in use, the particleboard EPD still finds the panel holds more carbon than its manufacture released.
Interactive · claim decoder
Decode the claim on the spec sheet
Pick a label you've seen on a product, a proposal or an annual report.
“Climate positive”
- What it means
- The product or company removes more greenhouse gas from the atmosphere than it emits across the boundary it states. It means the same thing as carbon negative.
- What it doesn't mean
- It doesn't tell you the boundary. A company can call itself climate positive by buying removals while its products are carbon intensive.
- Ask them
- Climate positive across which stages: making it, using it, disposing of it?
- Is the removal in the product (stored carbon) or bought from someone else?
- Can I see the EPD or LCA?
- The rules
- A claim that rests on offsets can't be made on products sold in the EU since September 27, 2026. In the US, the FTC's Green Guides say a claim has to be substantiated for the whole product unless you say otherwise.
“Carbon neutral”
- What it means
- Emissions within a stated boundary are balanced, usually by buying offsets for whatever wasn't cut.
- What it doesn't mean
- It doesn't mean low carbon. Two products can both be carbon neutral while one emits ten times more before offsets.
- Ask them
- How much was emitted before offsets?
- What offsets, from which registry, and are they removals or avoided emissions?
- The rules
- This is the claim the EU's 2024 consumer rules were written to stop when it's based on offsets.
“Net zero by 2040 (or 2050)”
- What it means
- A commitment to cut emissions deeply, typically about 90%, and neutralize the remainder with permanent removals by that date, under standards like SBTi's.
- What it doesn't mean
- It says nothing about today. A net zero pledge is a plan, not a property of anything you can buy now.
- Ask them
- What's the interim target for this decade?
- Is it validated by the Science Based Targets initiative?
- Does it include Scope 3?
- The rules
- Raters and regulators now look for interim targets and transition plans. A distant date alone carries little weight.
“ESG leader (AA rating, top quartile)”
- What it means
- A rating agency judged the company to be managing its environmental, social and governance risks well compared with its industry peers.
- What it doesn't mean
- It isn't a measure of impact on the climate. Ratings mostly ask how exposed the company is to risk, and different agencies often disagree on the same company.
- Ask them
- Which rater, and what drove the score?
- What are the company's actual emissions, including Scope 3?
- The rules
- The EU now regulates ESG rating providers (in force from 2026). In the US, ESG ratings aren't regulated.
“Eco-friendly, green, sustainable”
- What it means
- Usually nothing specific. These are general environmental benefit claims.
- What it doesn't mean
- They don't promise any measurable property.
- Ask them
- Eco-friendly compared with what, and measured how?
- The rules
- The FTC's Green Guides warn that unqualified general claims are hard to substantiate. The EU bans generic claims like these unless the seller can show recognized excellent environmental performance.
“Low embodied carbon”
- What it means
- Less greenhouse gas was released making the product than a stated baseline, usually measured in an EPD.
- What it doesn't mean
- Low isn't negative. A low-carbon steel is still a net emitter, while a wood panel can store more carbon than its manufacture released.
- Ask them
- Lower than what baseline?
- Does the EPD report biogenic carbon separately?
- The rules
- Buy Clean programs in several US states set maximum embodied carbon limits for some materials, with EPDs as the proof.
“Made with recycled content”
- What it means
- Some share of the material came from recovered waste, either from a factory (pre-consumer) or from used products (post-consumer).
- What it doesn't mean
- It doesn't tell you the share or the carbon. Recycled aluminum is far lower carbon than new, but still a net emitter.
- Ask them
- What percentage, and pre- or post-consumer?
- The rules
- The FTC's Green Guides require the share to be stated if it isn't 100%.
The rules as of November 2026
Climate rules are moving fast and some are tied up in court, so check the current status before you rely on a date. As of this review:
- US federal. The SEC’s 2024 climate disclosure rule never took effect. The agency stayed it in 2024, stopped defending it in court in 2025, and proposed rescinding it entirely in May 2026.
- California. SB 253 requires companies with more than $1 billion in revenue doing business in California to report Scope 1 and 2 emissions starting in 2026, and Scope 3 from 2027. If you’re a supplier to one of them, expect requests for your product data.
- European Union, reporting. The 2026 “omnibus” package narrowed the Corporate Sustainability Reporting Directive to companies with more than 1,000 employees and more than €450 million in turnover.
- European Union, marketing claims. Directive 2024/825 applies from September 27, 2026. It bans generic claims like “eco-friendly” without proof of recognized excellent performance, and it bans claims that a product has a neutral, reduced or positive climate impact because of offsets.
- US marketing claims. The FTC’s Green Guides already require environmental claims to be specific and substantiated.
- Buy Clean. California and several other states set maximum embodied carbon limits for some materials on public projects, with EPDs as the proof.
The common thread: every one of these rewards product-level evidence and punishes vague claims. That’s good news for anyone whose products really are climate positive.
What to do this quarter
- Get an EPD for your best-selling product, or collect your suppliers’ EPDs. Industry-wide EPDs from the American Wood Council and the Composite Panel Association are free and a good place to start.
- Count materials by weight, not by dollar. Replace the spend-based estimate for your biggest material categories with kilograms times EPD values. It’s the only way your best choices show up.
- Report stored carbon next to released carbon, never mixed in. That’s how ISO 21930 and EN 15804 do it, and it’s what makes the claim believable.
- Make claims small and specific. “This particleboard panel stores more carbon than its manufacture released, according to the industry EPD” beats “we’re a climate positive company.”
- Design for a long life. Durable finishes, laminates and edge banding keep stored carbon out of the air longer. A cabinet that lasts 30 years instead of 10 holds its carbon three times as long.
- Answer the questionnaires with product data. When a customer’s ESG team sends a supplier survey, an EPD answers questions that a brochure can’t.
Questions people ask
Is climate positive the same as carbon negative?
Yes. Both mean that something removes more greenhouse gas from the atmosphere than it releases within a stated boundary. Climate positive is easier to say without sounding like bad news.
Does an ESG rating measure environmental impact?
Not directly. Most ESG ratings measure how well a company manages environmental, social and governance risks to its own business, compared with peers. A company can score well while still having high emissions.
Can a company have a high ESG score and a big carbon footprint?
Yes. Ratings reward policies, disclosures and targets. A heavy emitter with strong governance and good disclosure can outscore a small, low-carbon manufacturer that has never filled out a survey.
Do carbon offsets make a company climate positive?
They can make a company’s accounts net negative, but they don’t change what its products do. Since September 27, 2026, EU rules ban product claims of neutral or positive climate impact based on offsets, so the safest claims rest on the product itself.
Is wood really climate positive if trees are cut down?
When forests are managed so they regrow, yes. Cradle-to-gate EPDs for North American lumber and particleboard count the carbon stored in the product as a removal only because those forests meet sustainability conditions under ISO 21930. Certification such as FSC or SFI is how buyers check that.
What’s the difference between climate positive and net zero?
Net zero is a target for the future: cut emissions deeply and remove the rest by a date like 2050. Climate positive describes something today: it already removes more than it emits.
What is an EPD?
An Environmental Product Declaration is a standardized, third-party verified report of a product’s environmental impacts across its life cycle. For climate claims, it’s the receipt.
Making climate positive products? Say so, with proof.
Climate Positive NOW celebrates the manufacturers, suppliers and surface makers whose wood-based materials already store more carbon than they release. Join them, or get new research and tools as we publish them.
Sources and method
The material values come from the EPDs and databases below, converted to a common unit of kilograms of CO₂e per kilogram of material. Particleboard and lumber show three numbers because their EPDs report them: fossil emissions from making the product, carbon stored in it at the factory gate, and the net result after the EPD’s end-of-life scenario. For the other materials the factory-gate value stands, because they store no carbon. Use your own suppliers’ EPDs for any real decision.
The scorecard is a teaching tool, not an audit. Each answer adds points to one or both scores. “On paper” rewards the things raters and customers ask about: disclosures, EPDs, targets and ratings. “In reality” rewards the things that change the atmosphere: wood-based materials, real reductions over offsets, clean power, long product life and reuse. The share of material carbon your reporting can see is based on CDP’s finding that supply chain emissions average 11.4 times operational emissions.
- UN Global Compact and Swiss Federal Department of Foreign Affairs, Who Cares Wins: Connecting Financial Markets to a Changing World (2004). No longer hosted online by its publishers.
- Berg, Kölbel and Rigobon, “Aggregate Confusion: The Divergence of ESG Ratings”, Review of Finance 26(6), 2022.
- CDP, Transparency to Transformation: A Chain Reaction, Global Supply Chain Report 2020; the 11.4 times figure is on slide 8 of CDP's presentation of the report to Japan's Ministry of the Environment (March 2021).
- GHG Protocol, Land Sector and Removals Guidance.
- UNEP and GlobalABC, Global Status Report for Buildings and Construction 2024/2025.
- Composite Panel Association, North American Particleboard EPD (ASTM International, 2024).
- American Wood Council and Canadian Wood Council, North American Softwood Lumber EPD (UL Environment, 2020).
- Circular Ecology, Inventory of Carbon and Energy (ICE) database.
- Natural Stone Institute, Embodied carbon and natural stone (engineered quartz EPD average).
- US EPA, Greenhouse gas emissions from a typical passenger vehicle (about 400 g CO₂ per mile).
- Science Based Targets initiative, Net-Zero Standard.
- European Union, Directive (EU) 2024/825 on empowering consumers for the green transition.
- European Commission, Corporate sustainability reporting.
- California Air Resources Board, Corporate greenhouse gas reporting (SB 253 and SB 261).
- US Federal Trade Commission, Guides for the Use of Environmental Marketing Claims (Green Guides), 16 CFR Part 260.
Facts and regulatory status last checked November 5, 2026. Spot something out of date? Tell us and we'll fix it.