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Gas giant Santos sued for alleged greenwashing
One of Australia's largest gas companies could be in breach of Australian Consumer Law over environmental claims.
Last updated: 28 Nov 2022
Gas giant Santos, Australia’s largest domestic gas supplier, is being sued for allegedly making ‘misleading and deceptive’ claims about its carbon emissions reductions and its ‘net zero’ claims.
The Australiasian Centre for Corporate Responsibility (ACCR), a shareholder advocacy group, filed the lawsuit in the Federal Court last year, and in August expanded its ‘greenwashing’ claims against the company. If proven, the claims may be a violation of Australian Consumer Law (ACL).
The court case, which is expected to be heard in the first half of next year, will hear allegations that Santos breached the Corporations Act as well as the ACL by failing to disclose emissions related to its blue hydrogen operations, which it claimed was a “zero emissions” technology.
Blue hydrogen is created using natural gas and supported with carbon capture and storage (CCS). In contrast, green hydrogen is created from renewable energy sources.
World-first case
The ACCR says this is a world-first case challenging the veracity of a company’s net zero emissions target, and raises questions about CCS and its role in a zero emissions economy.
“As investors, we rely on company disclosures being complete, accurate, honest, and timely,” Brynn O’Brien, executive director of ACCR, tells CHOICE.
“We’re concerned that the statements that Santos has made don’t meet that standard. Our allegation is that they’re misleading and or deceptive. That includes statements made by the CEO within Investor Day, so it’s quite a serious allegation that we’ve made,” she says.
Misleading information can impede an effective and timely response to the climate crisis
Zoe Bush, Environmental Defenders Office
Zoe Bush, senior solicitor at the Environment Defenders Office – the lawyers representing ACCR – says it’s essential that companies are transparent about the risks and uncertainties of various technologies.
“Misleading information can impede an effective and timely response to the climate crisis. It may also leave investors vulnerable to major losses, and potentially unfairly skew the market away from companies that are acting responsibly,” Bush says.
ACL still applies
Santos is a gas supplier rather than a retailer. But, despite its not selling directly to households, the ACL still applies.
Gerard Brody, CEO of Consumer Action Law Centre in Melbourne, says it’s important companies don’t make greenwashed claims.
“Greenwashing distorts relevant information that a current or prospective investor might require in order to make investment decisions. At a broader level, misleading statements can erode investor confidence in the market for sustainability-related products (including in the energy sector), and it also poses a threat to a fair and efficient financial system,” he says.
Australia’s corporate regulator ASIC and the competition watchdog the ACCC have both signalled that cracking down on greenwashing is a priority.
Australia’s corporate regulator ASIC and the competition watchdog the ACCC have both signalled that cracking down on greenwashing is a priority
In October ASIC took its first action against a greenwashing claim, fining Tlou Energy Limited over $53,000 for making false and misleading statements to the ASX.
O’Brien says in an ideal world organisations like ACCR wouldn’t need to take on companies like Santos in the courts, and called for greater enforcement from regulators.
“We would like to see a much more muscular response from the regulator. You know, the signalling is certainly very welcomed, but it hasn’t yet been matched by action at the level that’s warranted,” she says.
But Brody says regulators are limited in what they can do, and that test cases like the ACCR’s have an important role to play.
“Strategic litigation by civil society organisations is an important tool to promote accountability in our marketplace. While regulators have an important role, they are also resource constrained. That’s one of the reasons why we should be supportive and facilitative of strategic litigation by advocacy organisations,” he says.
Santos declined to comment to CHOICE on the case.
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