A Federal Court judgment this week could have signalled a landmark turning point in corporate accountability for net zero claims. Instead, it’s seen gas giant Santos Ltd successfully defend itself against greenwashing claims that it misled investors and consumers in asserting that it had a credible pathway to achieve net zero emissions by 2040. 

However, while the decision marks a more limited development than many had envisaged, it won’t be the end of the line for cases addressing greenwashing. 

Rather, the standard for what is required from companies in making these claims will only rise over time. And cases like such as this pave the way for others to continue to pursue transparency and truth in corporate claims. 

The case

Shareholder advocacy organisation the Australasian Centre for Corporate Responsibility (ACCR) lodged its case against Santos in the Federal Court in 2021. It argued that representations in Santos’ annual and climate reports and investor briefings amounted to misleading or deceptive conduct in breach of the Corporations Act 2001 (Cth) and the Australian Consumer Law. 

The key representations were that: 

• Santos is a producer of clean energy and gas is a clean fuel 
• Hydrogen produced by Santos from natural gas with carbon capture and storage is clean hydrogen and zero-emissions hydrogen
• Santos had a clear and credible pathway to net zero emissions by 2040. 

During a three-week trial in late 2024, the ACCR alleged that Santos had misled its investors and consumers regarding its net zero claims, arguing its statements were speculative. In response, Santos maintained that reasonable investors would have understood their statements were not promising that the company would achieve net zero. 

This week, the proceeding was dismissed in favour of Santos. The judgment has not yet been made public and is expected to be published on 23 February, with legal advisors assessing the basis for any confidentiality claims by the end of the week.

Why is litigation being brought to address greenwashing? 

Greenwashing is a term for false or misleading environmental claims that make businesses appear more environmentally-friendly than they actually are. 

Litigation to address greenwashing has become a significant trend in Australia, especially in recent years. 

For example, Australia’s corporate regulator, ASIC, has brought civil penalty proceedings against superannuation funds, an asset manager and an ESG investment fund in cases against Active Super, Mercer Superannuation, Vanguard Investments Australia and Fiducian Investment Management Services. 

Last year, a civil society group, Australian Parents for Climate Action, settled its case with EnergyAustralia, with the company admitting that “offsets do not prevent or undo the harms caused by burning fossil fuels”. 

Another case is currently making its way through the courts, brought by the ACCC against Australian Gas Networks Limited for claims that gas would be “renewable in a generation”. The ACCC alleges that there was no basis for making such unqualified claims.

Greenwashing causes harm to consumers, investors, markets and the planet. This practice harms consumer choice and confidence, reducing their ability to make informed decisions and inducing them into supporting industries they may not want to support.

It also distorts information that investors need to make informed investment decisions and undermines those businesses that are pursuing environmental goals in good faith. 

Crucially, greenwashing obstructs real progress on climate change by creating the illusion of action while failing to achieve the emissions reductions needed to keep global warming below 1.5°C in line with the international Paris Agreement.

Possible implications

Although the full decision has not been released yet, here are three initial observations: 

1. Greenwashing litigation reflects a clear structural shift – corporate climate representations are increasingly being tested by courts. Even where claimants are unsuccessful, these proceedings clarify the evidentiary and legal thresholds that apply to forward-looking “net zero” and climate transition-related claims.
2. This case also reinforces that long-term emissions reduction commitments are not insulated from scrutiny simply because they’re aspirational or future-oriented. Courts are increasingly being asked to assess whether such claims are grounded in concrete near-term measures, credible modelling and transparent assumptions. 
3. This decision doesn’t absolve businesses of their responsibilities. Corporate climate targets and transition strategies increasingly attract close legal and regulatory attention. Businesses need to be careful about the evidence used to make statements about the future of their business and strategies in a changing climate. Failure to do so could result in further litigation brought by shareholders, civil society groups or regulators. 

The outcome in this case may be more limited than hoped, but it’s part of a bigger picture. An ecosystem of greenwashing litigation is taking shape in Australia and beyond, and as the court’s reasons are analysed in detail, this decision will influence how companies handle climate risk, transition planning and sustainability communications for years to come.