Court Says Santos Did Not Mislead About Green Plans

A big court case against the oil and gas company Santos has finished. The court decided that Santos did not lie to people about its plans to be more environmentally friendly. The group that brought the case said this was not fair.
By Newsroom | Environment, Business |

The Australasian Centre for Corporate Responsibility (ACCR) has seen its landmark greenwashing case against Santos, an oil and gas company, dismissed by the Federal Court of Australia. The case, which alleged that Santos engaged in misleading conduct regarding its environmental targets, was heard over three weeks between October and December 2024. Justice Brigitte Markovic announced the dismissal, with the detailed reasons for her decision to be published later in February 2025.

The legal challenge, brought by the ACCR, centered on claims that Santos misled investors about its ability to achieve net-zero emissions and the environmental credentials of natural gas. This case was notable as the first of its kind globally to utilize consumer and corporate laws to scrutinize a fossil fuel company's environmental claims. The ACCR, a shareholder activist group, argued that Santos's public statements about being a "clean energy" provider and its "net zero roadmap" were deceptive. Santos, in its defense, contended that a reasonable investor would not have expected all aspects of its net-zero plan to be fully realized or detailed at the time of the statements. The dismissal of this case raises questions about the legal framework for holding corporations accountable for their environmental representations.

The case brought by the ACCR against Santos focused on representations made by the company regarding its environmental performance and future emissions targets.

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  • Allegations of Deception: The ACCR contended that Santos engaged in misleading and deceptive conduct. This included claims about natural gas being a "clean fuel" and the company's commitment to achieving net-zero emissions.

  • Investor Understanding: Santos's defense, as presented by its legal team, was that no reasonable investor would have assumed the company had every detail of its net-zero plan finalized. They argued that statements related to the transition role of natural gas and its comparative emissions to coal were presented in context.

  • Company's Position: Santos refuted the accusations, asserting that its statements were not promises or predictions of absolute certainty but rather reflections of its strategic plans and the evolving nature of its transition towards cleaner energy.

  • Shareholder Activism: The ACCR, acting as a shareholder activist group, aims to hold corporations accountable for their environmental impact and to encourage honesty in climate change commitments. The group stated the lawsuit was filed to uphold the public interest in ensuring corporate climate change promises were reasonably grounded.

Evidence and Arguments Presented

During the three-week hearing, both the ACCR and Santos presented arguments and evidence to the Federal Court.

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  • ACCR's Evidence: The ACCR referred to documents they believed indicated Santos was aware that certain operations, like hydrogen production, would increase direct emissions. They argued this was not adequately disclosed in Santos's net-zero roadmap and reports. The group sought court declarations of misleading conduct and injunctions to prevent future deceptive practices and compel corrective notices.

  • Santos's Defense: Neil Young KC, representing Santos, disputed the interpretation of these documents. The company argued that references to natural gas as a clean fuel related to its role as a transition fuel and its lower greenhouse gas emissions compared to coal. Santos also emphasized that investors would have understood that a roadmap would not necessarily contain fully established projects.

Court's Decision and Reasoning

Justice Brigitte Markovic presided over the case and delivered the dismissal of the lawsuit.

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  • Dismissal of Claims: The Federal Court found that Santos did not breach corporate and consumer laws with its representations about environmental goals.

  • Publication of Reasons: The full and detailed reasons for Justice Markovic's decision are scheduled to be released publicly on February 23, 2025. This delay is to allow Santos time to redact any sensitive commercial information.

  • Focus on Credibility: Researchers noted that the case was significant for its examination of the credibility of corporate climate promises.

Implications and Precedent

The outcome of this case has potential ramifications for how corporate environmental claims are scrutinized.

  • Corporate Accountability: The ACCR's intention was to make corporations more environmentally conscious and honest. The dismissal, however, means this specific challenge did not result in the desired accountability through this legal avenue.

  • Precedent Setting: As the first case of its kind globally to use consumer and corporate law against a fossil fuel company for alleged greenwashing, its proceedings and eventual dismissal were closely watched for their potential to set a precedent. The lack of a finding of greenwashing in this instance may influence future attempts to litigate similar claims.

  • Investor Scrutiny: The case highlighted the growing scrutiny on corporate climate pledges from activist groups and investors alike, aiming to ensure these commitments align with genuine environmental action.

Expert Analysis

Experts in corporate law and environmental advocacy have offered perspectives on the case's significance and outcome.

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  • Ella Vines, a researcher at Monash Business School Green Lab, highlighted the case's role in questioning the credibility of corporate climate promises.

  • The Australasian Centre for Corporate Responsibility (ACCR) has consistently aimed to ensure companies meet targets aligned with international agreements like the Paris Agreement. Their holding of shares in companies like Santos is a tactic to influence corporate behavior from within.

Sources

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Frequently Asked Questions

Q: What was the case about?
A group said Santos, an oil company, told people untrue things about its plans to be greener and reach "net zero" emissions.
Q: Did the court agree with the group?
No, the court said Santos did not mislead people and did not break the law.
Q: When will we know the full reasons?
The judge will share the full reasons for the decision in February 2025.
Q: What does this mean for other companies?
This case was the first of its kind. Its outcome might make it harder to take companies to court for saying they are green.