Greenwashing litigation in Australia has entered a new phase. Until now, these cases have been brought by regulators, shareholder groups and advocacy organisations. A consumer class action has now been filed in the Federal Court against AGL Energy Limited ('AGL') – the first greenwashing class action in Australia.
For insurers, the case shows a new kind of exposure: large groups of consumers suing over environmental marketing claims.
The class action
In a media release on 14 October 2026, AGL Energy Limited confirmed that it was subject to class action proceedings alleging that it had engaged in misleading and deceptive conduct in contravention of the Australian Consumer Law.
At the heart of the action, AGL advertised its Carbon Neutral Energy products by stating that 'when you choose a certified Carbon Neutral product with AGL, we'll purchase carbon offsets from projects that reduce or store greenhouse gas emissions'. AGL also stated that 'the carbon offsets meet the integrity requirements under the Climate Active Carbon Neutral Standard to ensure they represent genuine abatement'.1
These products were sold at a higher price point on the basis that they offered small businesses and individuals a tangible way to reduce their personal carbon footprints.
It is alleged that AGL did not deliver on these claims, giving rise to the belief that it had 'greenwashed' its products.
Slater and Gordon's climate and environment practice is bringing the claim on behalf of what it says are hundreds of thousands of households and small businesses, stating 'Living costs are already high. Families and small businesses squeezed budgets to pay extra because they believed they were reducing the climate impact of their energy use'.
Lead applicant Michael Ihle said he paid extra because he wanted to offset the emissions from his energy use, adding 'If it didn't, customers deserve clear answers and fair compensation'.
Slater and Gordon is bringing the claim on a no-win, no-fee basis, seeking compensation and injunctions on behalf of consumers.
What is greenwashing?
Greenwashing has been defined by the Federal Court as 'when a company makes itself, its products or services appear more environmentally friendly, sustainable or ethical than they are in fact'.2 Recently, the Federal Court has seen a rise in similar greenwashing cases, reflecting the growing concerns of Australian consumers.
The AGL action follows several developments in this area:
Santos
In February 2026, the Federal Court dismissed the Australasian Centre for Corporate Responsibility's claims against Santos about its 'clean energy' and net zero statements.
The decision was in the respondents' favour, as the 'Clean Energy Representation' was found to suggest that natural gas was cleaner than coal and diesel, not that it produced no emissions.
Despite this, the scrutiny of the representations made by Santos regarding its climate-focused products and the applicants' intention to 'vindicate the public interest in ensuring that commitments by Australian companies regarding climate change are reasonably based and not misleading' demonstrate the value of the decision for future claims.
EnergyAustralia
EnergyAustralia settled a claim by Parents for Climate over its 'Go Neutral' products. As with Santos, the crux of the issue was the marketing language used to advertise EnergyAustralia's carbon offset product.
While the 'Go Neutral' product suggested to customers that it was a tangible way to offset emissions from their electricity or gas consumption, the customers' electricity or gas use was still sourced predominantly from fossil fuels.
Accordingly, the climate activist group Parents for Climate brought claims alleging misleading or deceptive conduct under the Australian Consumer Law.
Though this matter was settled out of court, the settlement statement acknowledged the concerns surrounding greenwashing raised by the applicants and the necessity for 'organisations to provide clear and transparent information to consumers on where and how offsets have been used and what those offsets can achieve'.3
Climate Active
In July, the federal government scrapped a long-running but widely criticised scheme that allowed companies to claim 'carbon-neutral' status if they met the scheme's standards.4
The scheme was advertised to provide best-practice guidance on how to measure, offset and report an organisation's emissions in an effort to promote carbon-neutral practices.
In practice, critics argued that the scheme's focus on offsets, rather than reductions, allowed businesses to greenwash their practices, creating the misleading impression of climate action when, in fact, the scope of the scheme did not account for the entirety of a business's carbon footprint.
What this means for insurers, insureds and businesses
The developments above illustrate the appetite of consumers to engage with climate-friendly products at an increased cost, but only when the product follows through with sustainable action.
Businesses should note the scrutiny of language used in advertising those products and ensure that it is clear to consumers exactly how and to what extent a product is able to deliver the claimed environmental benefits.
An increased focus on genuinely sustainable practices, described in terms that avoid unnecessary overpromising, can assist businesses in avoiding the perception of greenwashing.
Looking ahead
Whatever the outcome of this class action, it is likely that the AGL proceeding will help determine the circumstances in which companies can be held responsible for their efforts and promises regarding sustainable practices and will provide valuable precedent for future climate change litigation.
Businesses that avoid misleading environmental claims and clearly communicate their sustainable practices can reduce the risk of potentially significant financial and reputational damage.
1 AGL, 'Carbon Neutral FAQs'.
2 Australasian Centre for Corporate Responsibility v Santos Limited [2026] FCA 96.
3 EnergyAustralia, 'Go Neutral Litigation – EnergyAustralia acknowledges issues with “offsetting” and moves away from carbon offsets for its residential customer products', 19 May 2025.
4 Australian Financial Review, 'Labor abolishes the term “carbon-neutral”, cuts green program', 24 July 2026.
