In a significant decision for climate litigation in Australia, the Federal Court has dismissed greenwashing claims against Santos, providing important guidance on how forward‑looking climate statements will be assessed.
In issue
- On 17 February 2026, the Federal Court dismissed a landmark greenwashing case against Australia’s major fossil fuel producer, Santos Limited (Santos) commenced by the Australasian Centre for Corporate Responsibility (ACCR). The case centres on a greenwashing claim where a company makes misleading representations about the environmental or sustainability credentials of its goods or services. This case is Australia’s first to consider climate-based forward-looking statements.
The background
On 25 August 2021, the ACCR commenced proceedings against Santos for misleading or deceptive conduct in contravention of the Corporations Act 2001 (Cth) and the Australian Consumer Law (ACL), by making statements in its 2020 Annual Report, 2020 Investor Day Presentation, and 2021 Climate Change Report in relation to its emissions reduction plans.
ACCR alleges that Santos misled investors by representing that:
- Santos was a producer of 'clean energy' and that natural gas provides 'clean energy' (Clean Energy Representation)
- hydrogen produced by Santos from natural gas with carbon capture and storage is 'clean hydrogen' and 'zero emissions hydrogen', whereas in fact Santos was proposing to produce blue hydrogen, which generates material additional emissions (Hydrogen Representation), and
- Santos had a clear and credible pathway to achieve 'net zero' greenhouse gas emissions by 2040 (Net Zero Representation).
Santos denies all allegations and contends that:
- the Clean Energy Representation did not convey that natural gas produced no emissions. Rather, the term referred to natural gas being cleaner than coal and diesel, and no reasonable investor could have been misled,
- the Hydrogen Representation referred to hydrogen produced with carbon capture and storage (CCS), capturing most emissions and offsetting any residual emissions through carbon credits, and
- the Net Zero Representation was setting long-term targets based on reasonable assumptions about future market, that were inherently uncertain.
The decision at trial
On 17 February 2026, in a 340-page judgment, Justice Brigitte Markovic dismissed the proceedings on all grounds. Her Honour found that:
- the Clean Energy Representation was not misleading and that Santos’ description of natural gas as 'clean' was not to suggest that natural gas caused no greenhouse gas emissions, but that it was cleaner than coal or diesel. Her Honour cautioned against solely relying on the dictionary definition of 'clean fuel' because it ignores the context in which the term is used,
- the Hydrogen Representation was not misleading because a reasonable investor would understand 'clean' and 'zero emissions' hydrogen to mean hydrogen produced with CCS and offsets, resulting in no net emissions, as conveyed in Santos’ publications, and
- the Net Zero Representation was a roadmap which implicitly and explicitly expressed a level of uncertainty. Given the long-term 20-year range of the roadmap, a reasonable investor would understand that it involved assumptions about future markets and developments that were beyond Santos’ control.
In her Honour’s decision, Justice Markovic applied the lens of a reasonable member of the target audience to Santos’ representations, being a diverse group of investors, financial institutions and corporate advisors.
Implications for you
Companies can take comfort in the approach of the Court to interpret phrases such as 'clean energy' to be relative to coal or diesel, rather than present and absolute. Expressions such as 'realistic and doable' or 'clear and credible' are also to be read in context. In this case, such expressions suggest that a plan can be achieved but not that it will be achieved. This suggests that clear and communicative context can mitigate greenwashing risk by explaining what certain phrases mean. Litigants cannot solely rely on dictionary definitions of a phrase.
Whilst this case ruled in Santos’ favour, companies should continue ensuring that there are reasonable grounds, backed by sufficient evidence, when making representations regarding emissions and the energy transition. This is particularly important in the context of mandatory climate reporting, with medium or large entities commencing reporting on 1 July 2026. To support this transition, certain statements made in a sustainability report that would otherwise constitute misleading or deceptive conduct, may attract a modified liability within the first three years of the regime under ASIC Regulatory Guide 280.
That said, mandatory climate reporting will expand existing directors’ duties in relation to climate reports. There is a risk of shareholder class action if failures of disclosure can be linked to changes in share prices.
Australasian Centre for Corporate Responsibility v Santos Limited [2026] FCA 96
