Court Says Santos Did Not Mislead Investors About Climate Goals

The Federal Court in Australia has decided that the energy company Santos did not break the law by talking about its climate goals. A group had said Santos misled people who invested in the company. The court said Santos did not mislead them, but more details will come later.
By Newsroom | Business, Environment |

A significant legal challenge against the energy company Santos, brought by the Australasian Centre for Corporate Responsibility (ACCR), has been dismissed by the Federal Court of Australia. The ACCR had accused Santos of misleading investors about its environmental targets, particularly regarding its net-zero emissions roadmap and claims that natural gas is a clean or transition fuel. While the court found that Santos did not breach corporate and consumer law with its representations, the full reasoning behind Justice Brigitte Markovic's decision is pending public release, with sensitive information to be redacted.

Key Developments in the Greenwashing Accusation

The case, initiated by the ACCR, centered on allegations that Santos engaged in misleading and deceptive conduct towards investors. The ACCR, a shareholder activist group, contended that Santos's public statements about its environmental goals and the nature of its operations were not adequately substantiated, particularly concerning its net-zero roadmap and the classification of natural gas as a clean energy source. This lawsuit marked a notable instance of a corporate responsibility group utilizing consumer and corporate laws to challenge fossil fuel companies' environmental claims.

The Court's Proceedings and Ruling

The Federal Court heard arguments over a three-week period spanning October, November, and December 2024. The ACCR sought declarations that Santos had engaged in misleading conduct and requested injunctions to prevent future deceptive practices and to compel a corrective notice regarding the environmental impacts of Santos's operations.

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  • Arguments Presented:

  • The ACCR argued that Santos's statements about natural gas being a clean or transition fuel were misleading.

  • They also contended that Santos was aware that certain projects, like hydrogen production, would increase direct emissions, information not adequately reflected in its net-zero roadmap.

  • Santos's Defense:

  • Santos's legal team argued that no reasonable investor would have expected the company to have every detail of its net-zero plan finalized at the time of the statements.

  • The company disputed the interpretation of documents presented by the ACCR.

On February 17, 2025, Justice Brigitte Markovic announced the dismissal of the case, finding that Santos did not breach corporate and consumer law with its representations of environmental goals. The detailed reasons for this decision are expected to be released around February 23, 2025.

Investor Scrutiny and Corporate Responsibility

The case has been highlighted as a crucial moment for the credibility of corporate climate promises. The ACCR stated that the lawsuit was filed not to seek damages, but to uphold the public interest in ensuring that corporate climate change commitments are based on reasonable grounds. The organization, which holds shares in companies like Santos, aims to pressure them to align with international climate agreements such as the Paris Agreement.

This legal challenge was seen as a potential precedent-setter for future cases concerning "greenwashing" – the practice of making misleading claims about environmental benefits. The outcome, regardless of the final detailed judgment, underscores the increasing scrutiny faced by corporations regarding their environmental, social, and governance (ESG) disclosures and their role in the global transition to cleaner energy sources.

Conclusion and Future Implications

The Federal Court's dismissal of the greenwashing case against Santos signifies a reprieve for the company in this specific legal action. However, the underlying issues of corporate accountability for environmental claims and investor transparency remain central to ongoing discussions about climate change and corporate responsibility. The eventual release of Justice Markovic's full judgment will provide deeper insights into the legal reasoning that led to the dismissal and may influence future challenges of this nature.

Sources:

Read More: Court Says Santos Did Not Mislead About Green Plans

Frequently Asked Questions

Q: What was the case about?
A group said Santos told investors wrong things about its plans for net-zero emissions and if gas is clean fuel.
Q: Did the court agree with the group?
No, the court said Santos did not break the law with its statements.
Q: When will we know more?
The judge will share the full reasons for the decision soon, after removing private details.
Q: Who brought the case?
The Australasian Centre for Corporate Responsibility (ACCR), a group that owns shares in companies, brought the case.