In a landmark decision handed down on 17 February 2026, the Federal Court of Australia dismissed all greenwashing claims brought against Santos Limited (Santos) by the Australasian Centre for Corporate Responsibility (ACCR). ACCR v Santos [2026] FCA 96 is widely regarded as the first case globally to directly challenge the validity of a company’s stated net zero emissions pathway. While the decision provides some comfort, it is not a green light for complacency when it comes to how organisations communicate their climate commitments.

Background

The ACCR commenced proceedings in August 2021 as a shareholder advocacy organisation and Santos shareholder. They alleged that Santos engaged in misleading or deceptive conduct under the Corporations Act 2001 (Cth) and the Australian Consumer Law. The claims arose from statements made in Santos’ 2020 Annual Report, 2020 Investor Day Presentation and 2021 Climate Change Report. In particular they claimed:

• Santos described natural gas as ‘clean energy’ and this falsely implied the fuel produced no greenhouse gas emissions;
• References to ‘clean hydrogen’ and ‘zero emissions hydrogen’ misrepresented the emissions profile of blue hydrogen produced via carbon capture and storage (CCS); and
• Santos stated that its ambition of achieving net zero Scope 1 and 2 emissions by 2040 was a ‘clear and credible’ plan when it was speculative and unsupported.

Context Is Everything

Justice Markovic dismissed all claims by applying a single unifying lens throughout, being what the likely effect would be of the representations on a reasonable member of the target audience. The target audience in this case was a large and diverse group of investors who had a general awareness of climate change and the energy transition but did not have scientific training.

On the clean energy representations, her Honour found that ‘clean’ was used to signal that natural gas is cleaner than coal or diesel. Effectively ‘clean’ was used comparatively rather than as an absolute descriptor implying zero emissions.

In considering the references to hydrogen, the Court accepted expert evidence that in 2020/2021 the terms ‘clean hydrogen’ and ‘zero emissions hydrogen’ had no settled industry meaning. At that time the Court accepted that the terms were used interchangeably to describe blue hydrogen produced from natural gas with CCS and offsets that resulted in no net emissions. Santos’ usage was therefore consistent with prevailing industry understanding.

The net zero representations attracted the most detailed analysis. The Court characterised these as representations about future matters under section 4(1) of the Australian Consumer Law. As a result, Santos had the burden of demonstrating reasonable grounds. The Court found Santos satisfied this burden as its targets were the product of years of strategic development. In reaching the targets, Santos collaborated with technical experts, drew on external market studies and government materials and presented the targets with explicit acknowledgment of uncertainty and conditionality. Critically, expressions such as ‘realistic and doable’ or ‘clear and credible’ were found to signal that a plan can be achieved and not that it will be achieved.

The ACCR has announced its decision to appeal this decision.

Key Principles

The judgment establishes several principles that are important when considering whether claims are greenwashing.

The first principle is that context qualifies language. Terms like ‘clean’, ‘green’, ‘sustainable’ and ‘net zero’ will be assessed in light of the full document, industry norms at the time of publication and the sophistication of the intended audience. Accompanying disclosures can also be decisive in neutralising a misleading imporession. In this case, accompanying disclosures included Scope 3 emissions data published alongside claims of being a ‘clean fuels company’.

The audience is also critical. The Court drew a clear distinction between disclosures aimed at a sophisticated investor audience and those directed at general consumers. The same language may be assessed more strictly when used in advertising targeted at consumers.

Any reasonable grounds must also be documented, particularly for forward-looking targets where the legal burden sits with the company. This may apply to net zero pathways, emissions reduction milestones and even technology roadmaps. Santos succeeded because it had extensive internal records, board engagement and expert input.

It is also important to ensure the language used evolves with the common meaning. Santos benefited from the fact that terms like ‘zero emissions hydrogen’ lacked settled meaning in 2020. That argument is less relevant today. Regulatory expectations are maturing rapidly and the ACCC and ASIC have both signalled that broad, unqualified environmental claims warrant scrutiny.

The Scrutiny Continues

While Santos’ arguments may have succeeded in this case, substantial penalties have recently been imposed against several organisations for greenwashing including Mercer Superannuation, Vanguard and Clorox Australia. The ACCC has also commenced proceedings against Australian Gas Networks over a television advertising campaign representing that its gas will be renewable within a generation.

On 1 July 2026, mandatory climate-related financial disclosures will commence for large entities, with medium entities to follow. The new regime will broaden directors’ duties in relation to climate reporting. While ASIC’s Regulatory Guide 280 provides modified liability protections for certain statements during the first three years, the risk of shareholder class action remains real.

The Federal Senate is also expected to release a report on greenwashing later this year. As more countries step back from net zero commitments at the policy level, activist shareholders and public interest litigants are likely to intensify scrutiny of individual corporate commitments.