The law relating to misleading environmental claims (or ‘greenwashing’) has received important guidance from the Australian courts in a major new judgment which was issued last week.
In Australasian Centre for Corporate Responsibility (ACCR) v Santos Limited [2026] FCA 96, the Federal Court drew a helpfully clear distinction between misleading corporate climate communications and the legitimate realities of long-term target-setting. For New Zealand businesses making their own climate-related disclosures (particularly under the climate-related disclosures regime) this case offers both reassurance and useful guidance for defensible climate reporting.
Summary of the Case
The ACCR, a shareholder activist organisation, alleged that Santos engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law through statements in a 2020 Investor Day Presentation and Annual Report, as well as its 2021 Climate Change Report.
The key allegations fell into three categories:
- Santos’s Net Zero Roadmap
The ACCR challenged Santos’s stated plans to reduce Scope 1 and 2 emissions by 26–30% by 2030 and achieve net zero by 2040, alleging the plan was "rushed and speculative" and lacked reasonable grounds. The Court rejected this entirely, finding that Santos had reasonable grounds for its forward-looking statements and that its plans had been "considered at numerous levels of the organisation". The Net Zero Roadmap was, as the Court stated, "as the name suggests, a roadmap. It implicitly and explicitly expressed a level of uncertainty". - "Clean energy" claims
The ACCR alleged Santos conveyed that natural gas was emissions-free. The Court found the opposite: read in context, Santos' statements conveyed that natural gas was "in relative terms cleaner than coal and diesel", and that "the ordinary person's understanding of natural gas is that when burnt it does emit GHGs". - Clean Hydrogen claims
The ACCR alleged that "zero emissions" and "clean" hydrogen meant literally zero production emissions. The Court found a reasonable member of the target audience would have understood these terms to refer to the production of hydrogen from natural gas with CCS with “no net emissions”, including using carbon credits to offset residual emissions.
The Court’s findings were premised on various important considerations and principles that will be relevant for many businesses considering their own climate disclosures. In particular, the Court found that each representation must be understood in its full context (including a company's broader disclosures about emissions, environmental impacts and strategic plans). The Court attributed to the relevant target audience, an assumed understanding that long-term strategic objectives are inherently uncertain and subject to change, dependent on external developments. In that context, it was considered reasonable for Santos to base a 20-year target on opportunities that were at early stages of development, faced technical and commercial challenges, and where the availability and cost of carbon credits was not certain.
Finally, the Court rejected the proposition that offsets are inappropriate within a net zero roadmap, or that only certain types of offsets are permissible, agreeing with expert evidence offsets have "a key role" during the transition period.
What does this mean for New Zealand businesses?
The Santos decision should temper the enthusiasm of activists for pursuing greenwashing cases that test the outer boundaries of misleading and deceptive conduct. The Court's analysis supports the view that the law requires reasonable grounds for statements but does not require scientific precision in climate communications or prohibit aspirational language when announcing long-term targets.
That said, New Zealand businesses should not be complacent. The decision turned on fairly specific factors that assisted Santos in defending the claims. In particular, businesses should take note of the following:
- Santos was able to demonstrate that its targets were the product of work across multiple levels of the organisation, drawing on years of strategic development and reviewed by senior management and the Board. Businesses should ensure their climate commitments are similarly well-documented and the subject of genuine internal deliberation.
- The Court placed significant weight on the broader context in which Santos's statements appeared, including its extensive disclosure of emissions data, the qualifications and uncertainties expressed in its reporting, and the visual cues (such as graduated shading on the roadmap) that signalled imprecision. Businesses should ensure their climate claims are accompanied by sufficient contextual information (including, for climate reporting entities, where specifically required by the New Zealand Climate Standards).
- Santos benefitted from the fact that its language (while ambitious and emphatic) was clearly forward-looking and subject to contingencies (e.g. claims that Santos “will grow its clean fuel capability as customer demand grows”).
As such, the Santos judgment does not soften the need to take real care with climate disclosures. It is, however, a powerful reminder that greenwashing claims must be assessed contextually, with a sensible view of the knowledge and understanding of a shareholder audience, and with appropriate regard for the realities of long-term corporate planning. Assuming the New Zealand courts adopt a similar approach, New Zealand businesses that invest in rigorous processes, transparent disclosure and carefully qualified language should be well positioned to defend any challenges to their climate communications.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
