Renal scarring in neonates primarily occurs due to infections such as a urinary tract infection (UTI), particularly when associated with vesicoureteral reflux (VUR). Other causes include congenital abnormalities, obstructive uropathy, and renal dysplasia. When an infection ascends from the lower urinary tract to the kidneys, it can lead to pyelonephritis, which, if untreated or recurrent, can cause scarring.