Practical implications: What the dismissal of the ACCR v Santos greenwashing case means for corporations’ climate commitments and disclosures

Despite the Federal Court’s dismissal of a greenwashing claim brought by the Australasian Centre for Corporate Responsibility against oil and gas producer, Santos Limited, the risk of legal action from shareholders, regulators and activists remains certain. Large emitting corporations should continue to focus on ensuring all representations regarding emissions and the energy transition are accurate and evidence based.

Need to know:

• In 2021, on behalf of the Australasian Centre for Corporate Responsibility (ACCR), the Environmental Defenders Office (EDO) sued Santos Limited (Santos), an Australian oil and gas producer, for alleged misleading or deceptive conduct in breach of the Corporations Act 2001 (Cth) (Act) and the Australian Consumer Law (ACL). The allegations centred on Santos’ claims that natural gas is a “clean fuel” and that it has a credible pathway to net zero emissions by 2040.
• At the case’s heart was alleged greenwashing, which concerns businesses’ misleading claims about their goods’ or services’ environmental or sustainability credentials. When filed in 2021, the case was significant as (according to ACCR and EDO):
  • a world first contesting the legitimacy of a company’s net zero emissions target;
  • a world first testing the viability of carbon capture and storage, and the environmental impacts of blue hydrogen; and
  • an Australian first suing the oil and gas industry in relation to climate greenwashing.^[1]  
• Following the 2024 trial, her Honour Justice Markovic’s 257-page judgment, published on 23 February 2026, dismissed the claims against Santos. By applying the lens of a reasonable member of the target audience to Santos’ representations, her Honour found:
  • The “clean energy” and “clean fuel” representations were not misleading or deceptive because Santos’ statements conveyed natural gas as relatively cleaner than coal and diesel, with audience appreciation that natural gas is a material contributor to greenhouse gas emissions.
  • The “clean” and “zero emissions hydrogen” representations were not liable to mislead because those terms refer to hydrogen produced from natural gas alongside carbon capture and storage (CCS), resulting in no net emissions.
  • The 2030 and 2040 Targets and Net Zero Roadmap representations were not misleading or deceptive because the Targets would have been understood as long-term aspirational objectives subject to assumptions, uncertainties, and contingencies, with the Roadmap’s elements and methods retaining sufficient flexibility and adaptability.
• Although not a legal victory for ACCR, the case’s significance lies in being a test case in the sphere of climate change and relating to disclosures, commitments and transition plans that many corporations are preparing and publishing (particularly given new mandatory reporting requirements). It is notable for its successful progression to trial and a complex judgment; the expansion of focus of greenwashing cases beyond investment portfolios to energy producers; and as a challenger litigation carving a wider path against corporations regarding climate commitments.
• While the law may not have changed, the risk of this type of lengthy and resource-consuming litigation should be heeded by corporations. The judgment serves as a reminder that companies, particularly significant emitters or those utilising alternative techniques to reduce their carbon footprint, must be vigilant to ensure the accuracy of statements and explanations regarding climate commitments and claims, such as net zero, and the existence of supporting evidence.
• Corporations and their directors must act now to prepare for the mandatory sustainability reporting regime, ensuring they are properly resourced and trained to meet its requirements and comply with their directors’ duties.

This article considers the case of ACCR v Santos [2026] FCA 96 and what its dismissal by the Federal Court means for businesses, particularly those in the energy sector and heavy industry. We reflect on the current enforcement environment with respect to greenwashing, why this case is different, and how businesses can take action to reduce their exposure to similar litigation – particularly in light of the new mandatory sustainability reporting requirements.

The parties

ACCR is a climate change research and shareholder advocacy organisation. Its activities include bringing shareholder resolutions and as demonstrated with the Santos case, strategic litigation against corporations to compel behavioural and legal change to reduce emissions. Other examples of its activities include its case against Commonwealth Bank of Australia ([2015] FCA 785 and [2016] FCAFC 80), and its shareholder resolutions lobbying for change on the part of BHP in respect of climate advocacy and cultural heritage.

Santos is a leading, publicly listed, Australian oil and gas exploration and production company, with its headquarters in Adelaide, South Australia. It owns liquefied natural gas, pipeline gas, and oil assets.

The proceedings

ACCR’s allegations

ACCR alleged that Santos had engaged in misleading or deceptive conduct contrary to s 1041H of the Act and s 18 and s 33 of the ACL (Sch 2 to the Competition and Consumer Act 2010 (Cth)). The relevant financial product was Santos shares. The conduct related to Santos’ representations in its 2020 Annual Report, 2020 Investor Day briefing and 2021 Climate Change Report.

The main areas of focus were representations that:

1. Santos is a producer of “clean energy”, and that natural gas is a “clean fuel”;
2. hydrogen produced by Santos from natural gas (known as blue hydrogen), along with carbon capture and storage, is “clean hydrogen” and “zero emissions hydrogen”; and
3. Santos had a clear and credible pathway to “net zero” by 2040.

ACCR sought declarations of contravention and an injunction for Santos to issue a corrective statement about the environmental impacts of its operations. It did not seek any financial remedies as it considered the case was in the public interest.

Santos’ defence

Santos defended the allegations, contending its statements were not misleading or deceptive for a reasonable member of its target audience.

Judgment findings

ACCR’s case against Santos was unsuccessful, and it is liable for Santos’ legal fees. The Court’s key findings are summarised below (with paragraph references to the judgment):

Relevant characteristics of the target audience:

• An interest in climate change; varying levels of knowledge and assumed lack of scientific training; understanding of the energy transition to reduce reliance on fossil fuels, but a lack of precise familiarity with necessary technologies; and understanding that oil and gas companies may set long-term strategic objectives, with variable and adaptable pathways to achieve them (noting the impact of technological developments). [499]

“Clean energy” and “clean fuel” representations were not misleading or deceptive because:

• Santos’ statements conveyed that natural gas is not “clean” but is relatively cleaner than coal and diesel. [519]
• As to being a “clean fuels company”, Santos made the statement in the context of its transition to a lower-carbon future, from natural gas to hydrogen. [521]
• The target audience would have understood that consumption of natural gas is a material contributor to greenhouse gas emissions. [523; 524]

“Clean” and “zero emissions hydrogen” representations were not liable to mislead because:

• A reasonable member of the target audience would have understood “clean”, “zero-emissions”, and “carbon neutral” hydrogen to mean the production of hydrogen from natural gas with CCS with no net emissions. [545; 563]

The 2030 and 2040 Targets and Net Zero Roadmap representations were not misleading or deceptive because:

• A reasonable member of the target audience would have understood the Targets involved assumptions about future markets and developments in changing circumstances and environments over two decades. [607; 608]
• There were clear indicators that a realistic plan relating to the Targets and Net Zero Roadmap does not mean certainty of achievement, but its long-term objectives were subject to uncertainties and contingencies. [828; 829]
• The Net Zero Roadmap elements and Target methods had a degree of flexibility, and the pathway was adaptable. [850]

ACCR may appeal the judge’s decision, so this might not be the last word on the matter.

Greenwashing legal actions

This case sits in a broader context of legal action against greenwashing. For the last few years, the Australian Securities & Investments Commission (ASIC) has prioritised enforcement action to prevent harm from greenwashing and sustainable-finance related misconduct. As well as issuing infringement notices for greenwashing, ASIC has had three successes in court proceedings for misleading and deceptive conduct, resulting in civil penalties of $10.5 million, $11.3 million and $12.9 million, respectively. The targeted companies were superannuation funds and an investment management company.

The Australian Competition and Consumer Commission (ACCC) has successfully pursued a cleaning supplies business for an $8.25 million civil penalty regarding claims about the sustainability of their products. The ACCC is currently suing a gas distributor for false and misleading representations to its consumers regarding its claims about the future of gas.

In the private sphere, civil society group, Australian Parents for Climate Action (APCA), settled its claim against an electricity company for misleading or deceptive conduct under the ACL in relation to its carbon neutral claims.

Internationally, there has been significant activity in the European Union, where cases such as FossielVrij NL v. KLM have seen legal action taken against major companies for misleading sustainability claims.

Greenwashing is no longer an enforcement priority of ASIC – the regulator has deployed its test cases to make examples of companies and outline the greenwashing perimeters. However, companies must remain vigilant, not least given that the mandatory climate-related financial reporting rules open up a new realm of potential litigation risks through inaccurate claims about carbon footprints, resilience to climate change risks, and climate strategy and transition plans.

Practical takeaways

1. Companies can take comfort in the reasonable approach of the Federal Court to interpreting emissions target commitments, utilisation of common phrases of “clean energy”, and net zero transition plans. The Court recognised that companies are preparing future-looking plans in the context of ongoing technological and environmental developments.
2. However, although the facts were in Santos’ favour here, in the context of mandatory climate reporting (with Group 2 Medium / Large entities commencing reporting on 1 July 2026) and the era of transition to net zero, companies must maintain focus on accurate disclosures, transparent communications, credible climate commitments, and solid supporting evidence.
3. Importantly, the case highlights how you should explain what your climate claims and commitments mean from the point of view of a casual reader – for example, add footnotes or defined terms to disclosed documents to explain “clean” or “zero”.
4. Misleading or deceptive conduct can stem from omission or non-disclosure, so consider what reasonable expectations apply to your company’s disclosures. Further, you must be comfortable that you have reasonable grounds to make representations as to any future matter in the nature of a promise, forecast or prediction.
5. Where political attention on net zero and the energy transition may have waned, activist shareholder litigation, enforcement actions and class actions continue to shine a spotlight on companies’ activities and claims. In particular, if your industry is a heavy emitter of greenhouse gases, be conscious of your exposure to activist litigation, given the known challenges of reducing your carbon footprint. Therefore, considered and realistic ambition when preparing statements and plans is critical.
6. ASIC expects corporations and directors to be up to date with the transition to the mandatory reporting regime and its requirements.^[2] Corporations and their officers should ensure they are properly resourced and trained to meet the regime’s requirements. To support the transition, certain statements made in a sustainability report that would otherwise constitute misleading or deceptive conduct may attract a modified liability or the benefit of a ‘safe harbour’ where they are made within the first three years of the regime and are for the purpose of “complying with a sustainability standard”.^[3]
7. Notwithstanding the modified liability framework, broader company and director liabilities continue in full force. Further, the mandatory reporting regime expands the application of existing directors’ duties (such as the duty to exercise due care and skill) to climate reports. As with other company reports, directors must turn their minds to and understand the contents of climate reports. This responsibility cannot be delegated, with professional advice from advisors and management assisting rather than substituting individual director judgement.

Please get in touch with the team at Hamilton Locke if you would like more information about any clean energy, corporate disclosure, mandatory reporting, or greenwashing matters.

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[1] Environmental Defenders Office, ‘World-first Federal Court case over Santos’ ‘clean energy’ & net zero claims’, 26 August 2021.

[2] See their dedicated quarterly updates.

[3] See ASIC Regulatory Guide 280 and also Corporations Act 2001 (Cth) s 1707D.