EnergyAustralia settles landmark greenwashing claim

A first of its kind case in Australia has targeted ‘carbon-neutral’ marketing claims, marking the first time a major energy provider faced legal action for alleged greenwashing.

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EnergyAustralia, the third largest electricity and gas retailer in Australia, has reached an out-of-court settlement with climate advocacy group Parents for Climate to resolve a high-profile greenwashing case that alleged the energy retailer misled more than 400,000 customers through its now-defunct “Go Neutral” ­product.

The case, which was set to begin in the Federal Court last week, was the first of its kind in Australia targeting “carbon-neutral” marketing claims, and marked the first time a major energy provider faced legal action for alleged greenwashing.

Parents for Climate, a registered charity, argued that Energy­Australia’s promotion of its Go Neutral product gave consumers the impression they were meaningfully reducing emissions. In reality, the program relied on international carbon credits – some of which have been heavily criticised for questionable effectiveness in abating carbon pollution.

The settlement on Monday avoids what could have been a landmark trial with wide-­ranging implications for corporate climate marketing. Under the terms, EnergyAustralia acknowledged the product was “not the most effective” way to cut emissions and issued a formal apology.

While details remain confidential, the agreement sees all legal proceedings discontinued.

EnergyAustralia’s chief customer officer, Kate Gibson, said the company developed the program in good faith as part of its participation in the federal government’s Climate Active certification scheme, a voluntary initiative encouraging business to measure and offset emissions.

“In recent years, questions have begun to emerge about the benefits of carbon offsets, including those offered as part of certified government programs such as Climate Active,” Ms Gibson said. “EnergyAustralia accepts that there is legitimate public concern about the efficacy of these programs.”

The Go Neutral product has since been withdrawn.

Parents for Climate’s legal action was seen as a bold move by a relatively small charity, especially given the financial risk of a loss in court. The case garnered significant public attention amid growing scrutiny of corporate environmental claims and the broader integrity of carbon offset markets.

While the settlement spares EnergyAustralia from potential court-ordered penalties, it represents a reputational blow at a time when it is trying to improve public perception and accelerate its energy transition after years of financial turbulence.

The case also adds to growing unease surrounding the Climate Active scheme. Once a flagship government program to support corporate climate action, it has seen more than 100 companies – including Telstra, NRMA, and Australia Post – quietly exit in the past 18 months.

Most recently, $230bn super fund-backed IFM Investors also withdrew.

Critics have argued that reliance on low-quality international offsets undermines the credibility of net-zero claims, while supporters maintain the program offers an important framework for encouraging emissions accountability in the private sector.

The EnergyAustralia case is expected to serve as a cautionary tale for other businesses relying heavily on carbon offsets in their climate strategies. Legal experts suggest the settlement could encourage further litigation if companies continue to promote environmental claims without transparency or rigor.

With regulators and consumers increasingly demanding proof of real emissions reductions, corporate Australia may face a reckoning over how it markets its climate credentials.

Originally published as EnergyAustralia settles landmark greenwashing claim