Federal Court dismisses greenwashing challenge, clarifying legal standard for net zero and “clean energy” claims: Santos v ACCR

Green and net zero statements can create legal risk if they are not done correctly, including risks that the statements could be found to be misleading and deceptive if they are not supported by reasonable grounds.

On 23 February 2026, the Federal Court dismissed claims that Santos made misleading or deceptive climate‑related statements, holding that references to “clean energy”, “zero‑emissions” or “clean” hydrogen and the company’s 2030 and 2040 targets in its Net Zero Roadmap were not misleading or deceptive. This case reinforces the key principles from the ACCC guideline Making Environmental Claims, and provides comfort that, when done correctly, green and net zero statements should not be misleading or deceptive. Although the importance of making assumptions clear and express, remains. 

In respect of the particular claims made by Santos, the Court determined that:

1. Claims will be read in context by a reasonable member of the target audience. The Court assessed the challenged statements in context and by reference to a reasonable member of the target audience (which it described as diverse, including retail and institutional investors, not assumed to have scientific training but reasonably familiar with climate and energy concepts).
2. “Clean” and “zero‑emissions” may be understood as relative or net concepts when the materials make that clear. The Court concluded “clean energy” did not convey “no emissions” when read in context, and that “zero‑emissions” or “clean” hydrogen would be understood as hydrogen produced from natural gas incorporating CCS and offsets. The language was not misleading where the documents made the approach apparent and did not promise literal zero gross emissions.
3. Long‑range targets and transition pathways are “long‑term objectives” and may be subject to uncertainty and contingencies. The Court treated the 2030/2040 pathway and the Net Zero Roadmap as long‑term objectives that a reasonable investor would expect to evolve over time. Companies are not required to publish a fixed, inflexible list of steps to 2040. What matters is that the company had reasonable grounds at the time of publication.
4. When considering whether there are reasonable grounds for future looking statements (such as the 2030/2040 pathway and the Net Zero Roadmap) the Court will look for contemporaneous material—governance processes, technical and commercial analysis, and internal decision‑making, showing that the company had a reasonable basis for making the statements at the time they were made.

However, claims of misleading and deceptive conduct depend on the particular circumstances of each case and, as the Court acknowledged, green claims will evolve over time. As such, it is strongly recommended that companies seek legal advice prior to publishing any claims

The background

The Australasian Centre for Corporate Responsibility (ACCR) is an incorporated not‑for‑profit shareholder advocacy and research organisation whose stated mission is “to influence changes to the strategies of [its] portfolio companies to decrease absolute, real world emissions”. It uses “shareholder strategy to enable investors to escalate engagements with heavy‑emitting companies in their portfolios”. ACCR was, at all material times, a shareholder in Santos Limited (Santos), a leading producer and supplier of natural gas in Australia listed on the ASX.

The Applicant’s position (ACCR)

ACCR alleged that Santos engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) contrary to s 1041H of the Corporations Act 2001 (Cth) and ss 18 and 33 of the Australian Consumer Law by reason of statements in three investor facing documents:

1. the 1 December 2020 Investor Day Presentation;
2. the 2020 Annual Report (published 18 February 2021); and
3. the 2021 Climate Change Report (also published 18 February 2021).

In summary, ACCR alleged that the 2020 Annual Report stated Santos is a producer of “clean energy” and that natural gas provides “clean energy”, which ACCR said is misleading given Santos’ emissions and, the Investor Day Presentation and the 2021 Climate Change Report represented that Santos had a credible and clear plan to reduce the direct emissions from the company’s activities (Scope 1 emissions), and the indirect emissions from the generation of energy purchased or acquired by the company (Scope 2 emissions) by 26–30% by 2030 (from a 2019–2020 baseline) and to reach net zero Scope 1 and 2 emissions by 2040 as depicted in the Net Zero Roadmap, while failing to disclose that:

• the 2030 Target and the Net Zero Roadmap did not account for additional Scope 1 and Scope 2 emissions associated with expected growth and exploration beyond 2025, nor emissions from CCS and blue hydrogen (hydrogen produced from natural gas, incorporating CCS); and
• those targets depended on undisclosed and/or unreasonable qualifications and assumptions, including “nominal”, “notional” and “speculative” reductions or offsets; and that statements about delivering “zero emissions” or “clean” hydrogen, or hydrogen with “no emissions in its production (Scope 1 and 2)”, were misleading because blue hydrogen would generate additional emissions.¹

ACCR sought declarations and an injunction, but no damages, explaining that the case was brought to vindicate the public interest in ensuring corporate climate commitments are reasonably based and not misleading.²

The Respondent’s position (Santos)

Santos argued that:

1. the “clean energy” phrasing did not convey that gas has no emissions and a reasonable member of the target audience would not be misled;
2. “zero‑emissions hydrogen” did not mean literally zero emissions and, at the time, was used synonymously with “clean” or “carbon neutral” hydrogen, understood to mean hydrogen produced from natural gas, incorporating CCS and the use of offsets for residual emissions; and
3. the Net Zero Roadmap set long‑term targets based on assessments about potential developments and opportunities in a rapidly changing industry, which a reasonable investor would understand.³

The audience

Justice Markovic identified a diverse investor audience including retail and institutional holders. The audience was not assumed to have scientific training, but was taken to be familiar with climate and energy concepts and with the reality that long horizon transition strategies evolve as technology, policy and markets develop. This framing informed the meaning of expressions such as “clean,” “zero emissions,” “realistic and doable,” and “clear and credible.”⁴

The Court applied ss 18 and 33 of the ACL and s 1041H of the Corporations Act, addressing future matters and the requirement for reasonable grounds when forward‑looking statements are made. These principles set the benchmark for the 2030/2040 targets and the Net Zero Roadmap.⁵

Key findings

“Clean energy” statements

The Court found that the “clean energy” statements were not misleading:

Her Honour found that:

1. The phrase “clean energy” had to be read with the surrounding disclosures, not in isolation; the reasonable investor would not treat “clean” as an absolute claim of zero emissions;⁷
2. Given the audience described above, investors would understand that natural gas has emissions even if it is described as “clean” in a relative, comparative sense;⁸
3. Taking the publications as a whole, the statements did not convey that Santos or natural gas involved no emissions.

“Zero emissions/clean” hydrogen

The Court found that the “zero‑emissions” or “clean” hydrogen statements were not liable to mislead.

Her Honour found that:

1. In context, a reasonable investor would understand “zero‑emissions” or “clean” hydrogen as hydrogen from natural gas, incorporating CCS and offsets, i.e., net‑zero, not a literal promise of zero gross emissions at the production stage⁹;
2. At the time, “zero‑emissions” was commonly used interchangeably with “clean” and “carbon neutral” in this context;¹⁰
3. ACCR’s suggestion that Santos falsely or dishonestly represented it could produce “zero‑emissions” blue hydrogen was not made out on the evidence.¹¹

2030 and 2040 targets and the Net Zero Roadmap

The Court found that Santos had reasonable grounds for the 2040 Target and the Net Zero Roadmap when published, and the Court was not satisfied that the targets or the Roadmap were misleading or deceptive or likely to mislead or deceive.¹²

Her Honour found that:

Nature of the Statements: The targets and Roadmap were long‑term strategic statements that the reasonable investor would expect to evolve with developments in markets, technology and regulation“… It would be clear to a reasonable member of the target audience that one or more elements may need to change and that the pathway may need to be adapted dependent on changes to the internal and external environment which would inevitably occur over a 20 year period.”¹³

Specific components tested:

1. Emissions baseline and trajectory: It was reasonable to adopt a baseline of about 5.9 Mt CO₂e per annum and assume a flat profile from 2025 for modelling the pathway to 2030 and 2040;¹⁴
2. CCS Expansion after 2030: Santos had reasonable grounds to anticipate about 1.5 Mt CO₂e per annum reduction from CCS expansion opportunities;¹⁵
3. Alleged omissions and offsets: The Roadmap did not mislead by non‑disclosure, because it was framed as a long‑range, contingent pathway expected to adapt over time, and offsets were expressly disclosed in the 2021 Climate Change Report which stated reductions would occur “through a series of carbon abatement, emissions reduction and offset initiatives.”¹⁶

Reasonable grounds for future representations

Her Honour noted, “Whether there are reasonable grounds for making a representation is a question of fact to be determined at the time of making the representations. There will not be reasonable grounds … if, at the time it was made, the person … did not have facts sufficient to induce in the mind of a reasonable person a basis for making the representation. That is to be assessed objectively and not by reference to the maker’s subjective state of mind.” (citing Griffiths J in ACCC v ACM Group Ltd (No 2) [2018] FCA 1115 at [173])

Her Honour ultimately found that Santos had reasonable grounds for its forward‑looking representations at the time they were made, supported by governance processes, technical inputs and a long‑range strategy rather than mere assertion. Accordingly, the Court was not satisfied the statements were misleading or deceptive or likely to mislead or deceive.¹⁷

Outcome and future implications

Justice Markovic held that ACCR did not establish that any of the alleged positive misrepresentations about the Targets, or any of its claims, were misleading or deceptive or likely to mislead or deceive. Her Honour dismissed the proceedings and ordered that ACCR pay Santos’s costs.¹⁸

This decision provides reassurance that well-substantiated and transparent climate statements can withstand legal scrutiny, but also reinforces that careful drafting, disclosure and evidence are critical in managing greenwashing risk.

¹ Paragraph 5 of the Judgment.

² Paragraph 6 of the Judgment.

3 Paragraph 17 of the Judgment.

⁴ 478–499 of the Judgment.

⁵ 452–468; 470–477 of the Judgment.

⁶ 528 of the Judgment.

⁷ 501-528 of the Judgment.

⁸ 478–499; 501–528 of Judgment.

⁹ 563–566 of the Judgment.

¹⁰ Ibid.

¹¹ 695 of the Judgment.

¹² 823;851 of the Judgment.

¹³ 604–608; 829 of the Judgment.

¹⁴ 661 of the Judgment.

¹⁵ 771;822 of the Judgment

¹⁶ 841 of the Judgment.

¹⁷ 567–823 of the Judgment.

¹⁸ However, the Orders include provision allowing either party to give notice by 3 March 2026 of their intention to apply to vary the costs order.