Major win in Australia’s first greenwashing case

The legal action alleged that the major electricity company told customers its fossil-fuel-based energy had a “positive impact on the environment” because it offset emissions by buying carbon credits, but Parents for Climate said this did not undo the damage from burning fossils.

The proceedings were due to be the first in Australia to target the marketing of consumer products as “carbon neutral”, but Energy Australia agreed to settle and offered apologies to impacted customers.

Equity Generation Lawyers principal lawyer David Hertzberg said companies need to “seriously consider” if environmental claims “stack up”, and particularly when that claim is related to “carbon neutral”.

“Today’s outcome is a watershed moment in greenwashing litigation in Australia. Our client hopes it marks the beginning of the end for ‘carbon neutral’ marketing based on offsetting and the beginning of the end for use of offsets to distract from real action on climate change,” he said.

In a statement, Energy Australia acknowledged carbon offsetting was not the “most effective” way to assist customers in reducing emissions.

“While offsets can help people invest in worthwhile projects that may reduce greenhouse gas emissions elsewhere, offsets to not prevent or undo the harms caused by burning fossil fuels for a customer’s energy use.

VIEW ALL

“Even with carbon offsetting, the emissions released from burning fossil fuels for a customer’s energy still contribute to climate change,” it said.

A decision was made in July 2024 to withdraw the Go Neutral product.

Energy Australia chief customer officer Kate Gibson said the company accepted there is “legitimate public concern” about the efficacy of programs such as the Climate Active certified carbon offset program.

“Energy Australia is now focused on more effective ways of helping its customers to directly reduce the emissions associated with their energy use,” Gibson said.

Nic Seton, CEO of Parents for Climate, said the settlement has set a new standard for the way carbon-offset products are marketed.

“Not only does this acknowledgment send a powerful message that the era of unchecked greenwashing is over, but it’s incredibly reassuring to see the commitment from one of the largest energy retailers in the country to want to do better for their customers and the climate,” Seton said.