Santos ‘greenwashing’ claims dismissed in historic Federal Court case
Greenwashing allegations against one of Australia’s largest fossil fuel producers have been dismissed after the court ruled Santos was justified in portraying itself as a clean energy company with a realistic plan to achieve net-zero emissions.
Santos, Australia’s second-largest gas producer, is at the center of a long-running legal turmoil in the Federal Court; He faces activists who accuse him of “greenwashing” by describing natural gas as clean energy and arguing that it has a “clear and credible” path to net-zero emissions by 2040.
The Australasian Center for Corporate Responsibility, an investor-focused activist group, launched the unprecedented lawsuit after Santos described itself as a clean energy company in investor materials despite being a major producer of natural gas, a fossil fuel that causes climate-warming emissions when extracted, processed and burned.
He also accused the company of having no evidence to support its claim that it has a strategy to reduce its carbon footprint by 26-30 percent by 2030 and reach net zero by 2040, and disputed claims that it could produce “zero-emission” hydrogen using carbon capture and storage technology.
However, Judge Brigitte Markovic dismissed the case on all grounds, finding that Santos had not breached the Corporations Act or the Australian Consumer Law. In the reasons for the decision announced by the court on Monday, Markovic acknowledged that Santos’ description of natural gas as “clean” did not mean that the fuel does not cause greenhouse gas emissions, but suggested that it is relatively cleaner than heavier emitting fossil fuels such as coal and diesel.
He said a “reasonable investor” who read Santos’ 2021 climate report or attended his briefings would understand that natural gas is a significant contributor to emissions.
“Santos… states that natural gas ‘produces half as much greenhouse gas emissions as coal when used to generate electricity,'” Markovic said. “To the extent that a member of the target audience was familiar with that publication, they would have that additional context.”
He added that Santos’ description of itself as a “clean fuel company” was made in the context of its future goals to produce emissions-free hydrogen.
ACCR, represented by the Environmental Defenders Office, argued Santos’ claims were misleading and deceptive. They said Santos’ core business remains the extraction and supply of carbon-intensive fossil fuels, while its plan to reach net-zero emissions by 2040 relies on controversial carbon capture and storage technology (CCS). The lawsuit challenged Santos’ claims that “blue hydrogen,” the name for hydrogen produced from natural gas using CCS to capture and bury emissions before they enter the atmosphere, is “clean” and can be called “zero emissions.”
Santos successfully argued that emissions targets were statements of “current intent” rather than firm promises or guarantees. The company argued that its 2040 roadmap is an aspirational framework that will evolve naturally alongside technology and public policy.
Markovic also supported Santos’ claim that investors were not misled into believing that all carbon dioxide emissions from blue hydrogen production would be captured by carbon capture technology, but “they will understand that most emissions will be captured and Santos can purchase carbon credits to offset the remaining emissions from hydrogen production.”
The lawsuit marks the second time in less than two years that the Environmental Defenders Office has lost a high-stakes case against Santos. In 2024, the climate-focused legal service was ordered to pay Santos more than $9 million after a court rejected his attempt to block an offshore pipeline near the Tiwi Islands and found he had coached Indigenous witnesses.
The Federal Court’s express dismissal of ACCR’s latest lawsuit against Santos highlights the need to crack down on activist groups “abusing the courts” to target critical energy projects and companies and provide greater transparency about how they are funded, oil and gas industry lobbyists said Monday.
“Transparency is essential when groups engage in high-profile regulatory initiatives designed to influence public debate and investment confidence,” said Australian Energy Producers CEO Samantha McCulloch.
“If activist organizations expect companies to meet the highest standards of disclosure and accountability, they should be held to the same standard.”
ACCR said the court’s decision was disappointing but the case would pave the way for others to legally challenge corporate net zero claims around the world.
“This was the first case in the world to test a company’s net zero claim and has helped drive significant improvements in climate reporting in the Australian market and internationally,” ACCR co-chair Brynn O’Brien said.
“It is disappointing, in our view, that the court’s decision does not support these advances.”
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Nick Toscano is an economic correspondent for The Age and the Sydney Morning Herald.Connect with: X or email.
