The long-awaited Federal Court judgment in ACCR v Santos is a blockbuster, both in length and significance.

The case has been closely watched around the world. It is a leading example of a civil society organisation using legal action to challenge a company's expression of its climate targets and transition plan. The dismissal of the case will influence how companies handle transition planning and climate-related communications, but it would be a mistake to conclude from the claim's dismissal that companies are somehow absolved of responsibility for their climate targets and transition strategies. The disposition of the claim against Santos' emissions targets brings into sharp focus the operation of the law about forward-looking statements. Crucially, representations as to future matters are taken to be misleading if, as at the time they were made, there were not reasonable grounds for making them. The judgment re-affirms the orthodox approach in Australian law to identifying and assessing the existence of a reasonable basis for forward-looking statements.

The key takeaway for organisations making claims about emissions reduction and net zero ambitions is that they must be able to substantiate their claims with reasonable grounds.

Greenwashing: a quick refresher

Greenwashing occurs when an organisation misrepresents the environmental or sustainability-related impact or performance of its products, services, or operations.

In Australia, such representations are primarily captured by the general prohibition against misleading or deceptive conduct under section 18 of the Australian Consumer Law (ACL), or the prohibition against misrepresentations in the supply of goods or services under Part 3.1 of the ACL.

Greenwashing can also give rise to liability under the Part 7 of the Corporations Act 2001 (Corporations Act) and Part 2D of the Australian Securities and Investments Commission Act 2001 (ASIC Act) if disclosures are made in relation to financial services or products – including shares – for example in annual company reports or market filings.

ACCR's case against Santos

The Australasian Centre for Corporate Responsibility initiated Federal Court proceedings in 2021 against Santos Ltd, challenging key sustainability-related claims made in Santos' 2020 Annual Report, 2021 Climate Change Report and 2021 Investor Day presentation:

• First, that Santos had a clear and credible transition plan to achieve its stated net zero scope 1 and 2 emissions targets by 2030 and net zero emissions by 2040.
• Second, that Santos was a producer of clean energy and that natural gas – one of Santos’ core products – is a clean fuel, and further that 'blue' hydrogen – hydrogen produced by burning natural gas, which Santos intended to produce – is clean and zero emissions.

The ACCR alleged that these claims were misleading because:

• Santos' net zero strategy relied heavily on carbon capture and storage (CCS) and blue hydrogen technologies (technologies that ACCR argued were unproven and would not be technically or commercially viable as a means of capturing Santos' future scope 1 and 2 emissions.);
• its targets did not account for additional scope 1 and 2 emissions associated with its proposed CCS and blue hydrogen production plans or expected hydrocarbon growth and exploration opportunities beyond 2025;
• its transition plan lacked substantiated evidence, and depended on undisclosed and unreasonable qualifications and assumptions; and
• it failed to account for the full lifecycle emissions associated with natural gas when claiming it to be a clean fuel, and with blue hydrogen when claiming it to be a clean and zero emissions source of energy.

ACCR argued that by making the above representations in its 2020 Annual Report, Santos had engaged in conduct that was misleading or likely to mislead in relation to:

• a financial product – its shares – in contravention of section 1041H of the Corporations Act;
• the supply of goods – natural gas – in contravention of section 18 of the Australian Consumer Law; and
• the nature, characteristics, suitability, and quality of a product – natural gas – in contravention of section 33 of the Australian Consumer Law.

There was a multi-week hearing in late 2024 and Markovic J delivered a decision on 17 February 2026.

Three key points from the Santos judgment

1) Reasonable grounds, not absolute certainty, are required for climate targets and transition plans

Emissions reduction targets and transition plans are representations as to future matters which must, assessed objectively, be based on reasonable grounds at the time they are made. If there are not reasonable grounds, then such claims will contravene the Australian Consumer Law or the Corporations Act.

After extensive analysis of the contemporaneous material, the Court found that Santos had discharged its burden of adducing evidence of reasonable grounds regarding the representation that its transition plan was clear and credible.

The Court accepted that long-term transition strategies inherently rely on uncertain and disparate data and interdependent assumptions about exogenous factors such as markets, technology, and regulation, and cannot be expected to be fully precise years in advance. The inherent uncertainty in Santos' underlying data and estimates, future emissions reduction and offset measures, and external market and regulatory assumptions was insufficient to undermine the reasonableness of Santos' grounds for its Net Zero Roadmap.

Key takeaway: organisations making claims about emissions reduction and net zero ambitions must be able to substantiate their claims with contemporaneous reasonable grounds because, if challenged, the evidentiary burden falls squarely on them.

2) Context is king

When assessing greenwashing risk under the Australian Consumer Law, the impression conveyed by a term or statement must be assessed having regard to the ordinary and reasonable members of the target audience and the full context in which the term or statement appears.

The Federal Court found the target audience of Santos' claims, which were contained in its 2020 Annual Report, 2021 Climate Report and 2021 Investor Day presentation was a large and diverse investor and advisor group with differing levels of sophistication, knowledge and expertise.

The impression conveyed by the impugned statements to that audience needed to be considered in the context of accompanying disclosures about reliance on offsets used to report against and achieve Santos' future emissions reduction targets and the transitional nature of its natural gas consumption in the short to medium term.

With this in mind, the Court decided that the target audience would understand Santos' use of terms such as:

• clean energy or clean fuel to be comparative (e.g., producing fewer greenhouse gas emissions compared to coal or diesel) and aspirational (i.e., relating to future aims, including carbon capture and storage use) rather than present and absolute (i.e., currently producing minimal or no greenhouse gas emissions).
• zero emissions when describing 'blue' hydrogen (hydrogen produced from burning natural gas) to refer to net rather than absolute zero greenhouse gas emissions, as a result of Santos pairing natural gas consumption with carbon capture and storage technology and carbon offsets.

Importantly, this means that regulators and strategic litigants cannot rely on challenging terms or statements in isolation or based on plain English definitions.

Key takeaway: clear, prominent and appropriate levels of communicative context can mitigate greenwashing risk.

3) Emerging technology claims should remain in step with government and industry use

The Federal Court also dismissed ACCR's assertion that Santos representing 'blue' hydrogen as clean and zero emissions was misleading, relying on expert evidence that showed terminology referring to emerging hydrogen technologies at the time Santos made its representation was unsettled and used in a variety of ways.

Notably, government and industry statements and publications at the time used the terms clean and zero emissions interchangeably to refer to blue hydrogen, without those terms being understood to require 100% of greenhouse gas emissions to be captured or avoided.

The Court also accepted that those terms were used at the time to refer to the use of carbon capture and storage or carbon offset strategies in transition plans.

This highlights the importance for climate and sustainability-related claims about particular products, processes or technologies to be consistent with language used in recognised and reputable government and industry statements and publications.

Key takeaway: the communications task is not static and requires ongoing scanning and verification as terminology usage evolves over time.

Greenwashing: some context

The Santos case is the first contested court case in Australia to directly challenge the veracity of a company’s net zero emissions plan. While ultimately dismissed, it arises amid increasing action by civil society organisations, regulators, and shareholders.

EnergyAustralia case

Notably, EnergyAustralia last year settled a claim brought by advocacy group, Parents for Climate, in the Federal Court for representing that its 'Go Neutral Electricity' and 'Go Neutral Gas' products offered customers 'carbon neutral' energy, through the use of carbon credits to offset the carbon emissions associated with generating that energy. More than 400,000 customers opted to purchase those products. The issue was not whether EnergyAustralia purchased offsets — it did. The dispute centred on the actual impact of those carbon credits – in particular, avoidance and net positive credits – and, in turn, how those offsets were described to consumers.

Parents for Climate's claim specifically alleged that the 'carbon neutral' marketing of EnergyAustralia's products amounted to misleading and deceptive conduct in breach of the ACL because:

• it created the impression that carbon emissions associated with EnergyAustralia's 'Go Neutral' energy were neutralised through the use of carbon offsets, when in fact the offsets were based on avoidance and net positive projects that did not cancel out those underlying emissions; and
• possible limitations of the carbon offsets used by EnergyAustralia were not clearly and sufficiently explained to consumers.

The case was settled in May 2025, just before trial. As part of the settlement, EnergyAustralia publicly acknowledged that carbon offsets do not indefinitely eliminate or undo the harm caused by greenhouse gas emissions emitted by generated energy from fossil fuels, and that this distinction had not been made clear in its messaging. It also stopped offering its 'Go Neutral' products to new customers and instead committed to helping existing customers with direct emissions reduction, rather than relying on offsets alone.

Although the case does not create a legally binding precedent, it lends weight to doubt on whether avoidance-based or net positive offsets can be used by organisations to substantiate 'carbon neutral' or 'net zero' claims. It also reflects the necessity to ensure environmental and sustainability-related claims are legally defensible, particularly in light of a preparedness by strategic litigants to challenge these claims.

The use of offsets and certificates does not, in and of itself, amount to greenwashing. However, corporate actors face legal risk where:

• Claims overstate or mis-state the impact of an offset and / or certificate – for instance, suggesting that emissions are cancelled or eliminated when using avoidance-based credits;
• Certificates are used without disclosure of their limitations or regulatory standing — for example, by claiming that disclosed net zero targets will be achieved by using certificates or offsets with questionable credibility, or that are not recognised by a regulatory scheme applicable to the net zero target (e.g., the CER's NGER scheme); and
• Assumptions or dependencies are not clearly and comprehensively disclosed – particularly in forward-looking net zero strategies or product marketing.

As EnergyAustralia’s case shows, even where the purchase and retirement of offsets has occurred, claims like carbon neutral may be challenged where the underlying emissions are not directly negated, and where the nature of the offsets (e.g. avoidance credits) is not sufficiently explained.

ACCC enforcement actions

The ACCC has taken on new 'greenwashing' enforcement actions in recent times:

• In June 2025 against Australian Gas Networks (AGN) for allegedly misleading consumers in its Love Gas advertising campaign. The campaign, which ran in 2022 and 2023, claimed that the gas distributed by AGN would be renewable within a generation. The ACCC alleges that AGN did not have reasonable grounds for making this unqualified claim, particularly given the significant technical and economic barriers to distributing renewable gas at scale.
• In July 2025 against Edgewell Personal Care, the owner of Banana Boat and Hawaiian Tropic sunscreens, for alleged greenwashing related to their reef friendly claims. The ACCC alleges that Edgewell made false or misleading claims about the environmental impact of certain sunscreen ingredients, specifically that they were reef friendly when some ingredients could still harm coral reefs.

In Australia, greenwashing is now a critical source of legal and reputational risk, with activists and regulators asking the courts to bring companies to account for environmental claims. Class action risk is very real if failures of disclosure can be linked to share price changes.

The recent cases, particularly against Santos, demonstrate that being able confidently to make corporate disclosure or product environmental claims in a way that minimises risk of greenwashing litigation, regulatory action and reputational harm has never been more important.

For advice on managing greenwashing risk in your climate-related communications, emissions targets or transition planning, contact our ESG and Environment team.