Background

Santos Limited (Santos) is an Australian producer and supplier of natural gas and is listed on the Australian Securities Exchange. The shareholder advocacy group, the Australian Centre for Corporate Responsibility (ACCR) is and was at the relevant time a shareholder of Santos.

In 2020 and 2021, Santos published several documents (the Documents):

1. Investor Day Presentation published on 1 December 2020
2. 2020 Annual Report published on 18 February 2021
3. 2021 Climate Change Report published on 18 February 2021.

Within those documents, ACCR alleged that Santos made several representations (the Representations):

1. It is a producer of 'clean' energy, and that natural gas was a source of 'clean' energy.
2. It has a clear and credible plan to reduce Scope 1 and 2 emissions by 26-30% by 2030 (the 2030 target), achieving net zero by 2040 (the Net Zero Roadmap).
3. It can deliver 'zero-emissions' or 'clean' hydrogen with no emissions.

ACCR disputed the Representations, arguing that when considering the full factual environment, Santos had engaged in a form of greenwashing. Specifically, Santos' conduct was misleading or deceptive, or likely to mislead or deceive, in contravention of the Corporations Act 2001 (Cth) (Corporations Act) and Australian Consumer Law (ACL) [4]. ACCR also claimed that environmental targets published by Santos were representations as to “future matters”, which placed an evidentiary onus on Santos to establish it had reasonable grounds for publishing the targets. ACCR sought a declaration of contravention and an injunction against Santos.

Submissions

During hearings occurring between October and December 2024, an extensive number of lay and expert witnesses provided evidence on behalf of both parties along with a consideration of the appropriate legal principles and background to the Documents.

ACCR and Santos made submissions on the Representations as follows:

Clean Energy

ACCR submitted natural gas could not be considered a clean energy source, and that a heavy emitter of greenhouse gases, Santos could not hold itself out as a producer of clean energy.

Santos argued that it had not conveyed that the consumption of natural gas produced no emissions, and no reasonable member of the target audience for the Documents could have been led into making that error.

The 2030 target and Net Zero Roadmap

The 2030 target and Net Zero Roadmap is made up of several key projects and components including extensive use of Carbon Capture and Storage (CCS) technology, the production of lower carbon 'blue hydrogen' and the use of carbon credits.

ACCR submitted that the 2030 target and Net Zero Roadmap did not account for expected increases in Scope 1 and 2 emissions associated with hydrocarbon growth and exploration, and the aforementioned blue hydrogen production plans. Furthermore, the plans relied on unproven or speculative technologies, without transparent disclosure or validation.

Santos submitted that the Net Zero Roadmap was constructed using assessments about potential developments and opportunities. These developments may favour the creation of CCS hubs and the emergence of markets for hydrogen. A reasonable member of the intended audience would have understood this and been aware that the targets were the culmination of many years work and Santos' knowledge of these sectors.

Clean hydrogen

ACCR submitted that Santos had made statements relating to the production of zero-emissions or clean hydrogen that were misleading and/or deceptive. It argued that the production of blue hydrogen does in fact create additional material emissions.

Santos disputed that it had conveyed it could produce hydrogen with no emissions, arguing that the terms used were widely used market terms. Adjectives such as 'clean' and 'carbon neutral' were used as descriptor to refer to hydrogen produced from natural gas with CCS and using offsets for residual emissions.

Future matters

ACCR submitted that emission reduction targets and ambitions published by Santos were representations as to 'future matters'. Under Australian law, if a representation about a 'future matter' is challenged, the evidentiary onus falls on the maker of the representation to establish reasonable grounds for making the representation at the time it was made. 

Santos disputed that the targets were representations as to 'future matters' and instead, that they were representations concerning present intention or belief.  

Judgment

Justice Markovic dismissed ACCR’s application, finding that the representations made by Santos were not misleading or deceptive in the manner alleged.

To give context to the parties' submission and the policy backdrop, the Court reflected on the Paris Agreement and the Task Force on Climate-Related Financial Disclosures.

The judgment examined the relevant statutory provisions in detail, particularly the requirements for establishing 'misleading conduct' under section 18 of the ACL and section 1041H of the Corporations Act. The Court considered the nature of the representations, the characteristics of the target audience, and the context in which the statements were made.

The judgment accepted that many of Santos’ representations related to future matters and long-term objectives such as the Net Zero Roadmap. The Court found that statements such as “Santos has today announced an ambitious roadmap to net-zero emissions by 2040” and that Santos has a “realistic roadmap, real activities and a plan to achieve net zero by 2040” were “inherently statements about the future”. That the statements included an element of opinion or belief did not change that characterisation.[5]

Santos argued that it was "appropriate to attribute to investors a degree of knowledge and awareness about matters relevant to the investment."[6]  Santos submitted that an investor would have been aware of the mainstream view that natural gas had an important role in both the Australian and global energy transition,[7] and that targets were long-term, uncertain and subject to factors outside Santos' control.[8]

The Court was not prepared to assign a specific set of characteristics to the target audience, instead finding that investors and analysts in the energy sector are generally sophisticated and capable of interpreting forward-looking statements with appropriate caution. The law does not require absolute certainty in corporate disclosures about future matters, but rather, contemporaneous reasonable grounds for the representations made.

Using this assessment with reference to the other Representations made, the Court found as follows:

• The use of terms 'clean energy' and 'clean fuel' would not have been understood by the reasonable member of the target audience as meaning that "the consumption of natural gas did not release material GHGs… or contribute to global warming"[9], among other points. That representation was therefore not misleading or deceptive. 
• Referring to the identification of 'clean' and 'zero-emissions' hydrogen, the Court found that the reasonable member of the target audience would understand that Santos was referring to the production of hydrogen from natural gas with CCS and offsets, and therefore that representation was not liable to mislead.
• Regarding the 2030 target and Net Zero Roadmap, Santos had provided sufficient evidence of its strategic planning, investment in CCS, and ongoing engagement with climate science to establish it had a reasonable basis to make those claims at the time the claims were made. To arrive at this conclusion, the Court carefully considered the contemporaneous evidence Santos led to support its claim that it had reasonable grounds for making the representations. 
• The Court stated that the term 'roadmap' "implicitly and explicitly [expresses] a level of uncertainty."[10] There were uncertainties regarding pathways to net zero from a regulatory and technological standpoint yet Santos’ disclosures were appropriately qualified and did not amount to misleading conduct, especially when read in context. Santos was not "committing to undertake a series of inflexible steps to achieve the 2030 Target and the Net Zero Roadmap"[11] rather a series of "long-term objectives which necessarily and reasonably remained subject to uncertainty and contingencies".[12]

Broader Implications

To date, there have been limited greenwashing decisions involving fossil fuel companies and their climate-related strategies. In October 2025, a Court in Paris found that advertising promoted by TotalEnergies was likely to mislead consumers due to their ongoing involvement in the production and investment of fossil fuel but did not consider TotalEnergies' climate strategies or emissions targets.

Therefore, this decision, and more specifically how the Court reached its decision with reference to the available evidence, will be of great interest.

Dan Robinson notes:

"For Australian corporates and their insurers concerned about greenwashing litigation risk, the decision emphasises that ambitious targets and forward-looking climate-related statements are not necessarily at risk of being misleading or deceptive. However, corporates must ensure that they have reasonable grounds on which to base forward-looking statements. If the statements are challenged, the evidentiary onus will fall on the corporate to establish the existence of reasonable grounds. 

"Furthermore, the judge's comments make clear the importance of using appropriate language when setting targets. Santos was found not to mislead or deceive in respect of its representations, with the Court emphasising that measured descriptors such as 'realistic and doable' clearly set expectations as lower than certainty."

Simon Konsta comments:

"This decision will be of interest to corporates in the UK. Companies and their directors must be mindful of the growing trend of climate-related shareholder litigation across the world. 

"In the UK, actions related to climate-related strategies and disclosures may occur pursuant to section 90 and 90A of the Financial Services and Markets Act. These provisions create potential liability for false or misleading statements provided in prospectuses and listing particulars, or liability for dishonest statements or omissions in periodic reports such as annual reports.

"The emphasis in the Federal Court decision on careful consideration of contemporaneous evidence when making decisions about the future of a company, may remind some in the UK of the failed ClientEarth v Shell case. Although not alleging greenwashing, this derivative shareholder action also involved activists challenging the climate strategy of a fossil fuel company. Holding a small shareholding in Shell, the activists claimed the board of directors had failed in their duties under the UK Companies Act to promote the company's success and to act with skill and care by not setting appropriate emissions targets.

"The High Court found the activist group was unable to prove that the directors' approach to climate risk was unreasonable. The directors recognised that Shell faced significant risks from climate change, but recognising those risks alone did not justify allowing the action. The court required clear evidence of a breach of duty in how the directors had managed the company's climate-related risks, having regard to their duties to best promote the success of Shell, and the range of decisions reasonably available to them at that time.

"The ACCR v Santos decision underscores the need for corporates to ensure they have contemporaneous evidence in support of representations it may make. It is a welcome judgment however, in the way it attributes a reasonable level of knowledge and awareness to investors."

At the time of publication, it is not known if ACCR will appeal the judgment.