In a judgment published on 23 February 2026, the Federal Court of Australia has found that oil and gas giant Santos' climate-related claims about decarbonisation and net zero targets were not misleading in a 'greenwashing' lawsuit brought by a shareholder.

Executive Summary

On 17 February 2026, the Federal Court of Australia dismissed all misleading and deceptive conduct claims against oil and gas giant Santos, finding that the company's climate-related statements and net zero plan contained in its annual reports and investor presentations, when read in context, were not misleading or deceptive and in line with industry practice.

The Court's reasons for judgment were published on 23 February 2026, following a Federal Court hearing in late 2024. The Court dismissed the application and ordered the applicant to pay Santos' costs.

The Federal Court found it is not misleading to have ambitious climate targets or "roadmaps" as long as the company has a reasonable basis for the statements made in context, consistent with industry and regulatory understanding, and clearly communicated that these are subject to future technological, market and regulatory developments (or in other words, companies should avoid giving the impression of certainty about future unknown conditions).

Key Findings

• The Federal Court’s decision in Australasian Centre for Corporate Responsibility v Santos Limited provides clarity for Australian corporations on setting and communicating climate targets to investors and the public. The judgment underscores the importance of context, reasonableness, and transparency, while placing real limits on the scope of greenwashing claims under Australian law.
• The decision sets a significant precedent, confirming that aspirational, forward-looking climate disclosures by Australian companies—accompanied by reasonable assumptions and clear disclosures—do not breach misleading conduct laws when targeted at an audience made up of existing and potential investors. It also signals that future greenwashing litigation may require clear evidence of deception or a lack of verification, beyond disagreement over ambition or reliance on evolving technologies.
• The decision should provide a degree of reassurance to companies when making forward-looking statements, particularly with the first cohort of mandatory sustainability reporting to commence in early 2026, requiring large reporting entities to disclose how climate change affects their financial performance, business strategy and resilience and forming part of the company's annual reporting obligations.¹

Background

In response to growing investor pressure and regulatory scrutiny over climate concerns, companies around the world have set out climate targets to be carbon neutral within the next 20 to 30 years. The rise in net zero commitments by corporations has been accompanied by litigation risk: namely, whether companies can make forward-looking statements about climate risk and mitigation without misleading or deceiving investors or potential investors, i.e. to avoid greenwashing.

On 25 August 2021, the Australasian Centre for Corporate Responsibility (ACCR), a not-for-profit "shareholder advocacy and research organisation," and shareholder in Santos commenced proceedings against Santos Limited (Santos), alleging Santos engaged in "greenwashing" by making misleading or deceptive statements about its climate targets in its 2020 Annual Report, 2020 Investor Day Briefing and its 2021 Climate Change Report.^₂

A. ACCR Allegations

The ACCR alleged that Santos breached Australian consumer^₃ and corporations^₄ law by making misleading or deceptive statements about its climate credentials, emissions targets and Net Zero Roadmap, concerning three major areas:

1. Misleading "Clean Energy" Claims: The ACCR alleged that Santos represented itself as a producer of "clean energy" and claimed that its natural gas is "clean fuel", implying minimal environmental impact when in fact gas is not "clean" and Santos is a significant emitter of greenhouse gases. The ACCR argued these statements were misleading to the public and investors about the environmental impact of Santos' products.
2. Misleading Representations about Blue Hydrogen: The ACCR alleged that Santos represented it could deliver "zero-emissions" or "clean" hydrogen, and hydrogen with "no emissions in its production", when in fact Santos was proposing to produce blue hydrogen, which generates material additional emissions. The ACCR argued that these statements were misleading as they did not accurately reflect the emissions profile of the hydrogen Santos planned to produce.
3. Misleading Net Zero and Emissions Targets: The ACCR claimed that Santos made misleading representations in its Investor Day Presentation and Climate Change Report that it had a "credible" and "clear plan", based on reasonable assumptions, to reduce Scope 1_⁵ and 2^₆ greenhouse gas emissions by 26–30% by 2030 and achieve net zero by 2040.⁷ The ACCR alleged that Santos’ emissions reduction targets were based on baselines and assumptions that were not credibly modelled or justified, ignoring likely emissions growth from new projects and hydrogen production. Further, the ACCR alleged that Santos planned to expand its natural gas operations and that their plan depended on undisclosed assumptions about the effectiveness of carbon capture and storage (CCS) processes.^₈

Relief sought: The ACCR requested the Court to make declarations of contravention and issue an injunction (not damages), aiming to ensure climate commitments by companies are reasonable and not misleading.^₉

B. Santos' Defence

Santos disputed the ACCR's claims, stating its statements were not misleading or deceptive, its climate targets were reasonable, appropriately disclosed and aspirational, and the company's reporting and disclosures met legal and industry standards, especially given technological developments like CCS processes. Santos argued the intended audience of its statements (sophisticated investors and analysts) would understand the nuances and assumptions in the reports. The emissions and production targets were forward-looking, strategic ambitions, not guarantees, and these were underpinned by reasonable analysis and expert advice, and that assumptions and any uncertainties were transparently disclosed.

C. The Court's Reasoning

The Court dismissed all of the ACCR’s claims, marking the first judicial consideration of the integrity of a company's climate-based forward-looking statements at a critical time coming into Australia's mandatory sustainability reporting regime.

The judgment begins with a definition: “Greenwashing, a term coined relatively recently, occurs when a company makes itself, its products or services appear more environmentally friendly, sustainable or ethical than they are in fact." (at [1]).

Her Honour then set out around 100 pages of facts (taken from the lay and expert evidence), followed by 150 pages of legal reasoning, about the work done by the company to derive the statements and plan, whether the statements were as to future matters, who the intended audience for the statements were and why the company's statements were not misleading or deceptive.

Net zero statements and the Australian Consumer Law

The Court found that net zero statements are statements as to future matters, so fall within section 4(1) of the Australian Consumer Law. The effect of this finding is that companies must establish that there was a reasonable basis for a statement as to a future matter at the time that the statement was made. If a person makes a representation with respect to any future matter and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading. The onus shifts to the statement maker to prove that a statement as to a future matter had a reasonable basis at the time it was made and is not misleading or deceptive. The test is objective: did Santos, at the time of making the representations, have facts sufficient to induce in the mind of a reasonable person a basis for making the representation? The facts are viewed objectively, rather than from the perspective of the maker of the statement.

Audience for net zero statements

The Court considered in detail the question of who comprised the target audience for Santos' disclosures regarding its net zero targets and sustainability statements. The competing arguments were as follows:

• The ACCR argued that the target audience was broad and diverse, encompassing all existing and potential investors in Santos, including both institutional and individual investors, with varying levels of sophistication and knowledge. The ACCR emphasised that the audience was not homogenous and included small shareholders who might have less sophistication, as well as institutional investors who were highly interested in emissions reduction strategies. The ACCR submitted that the audience would have a range of reasonable responses and that it was not necessary to identify the audience more precisely.
• Santos, on the other hand, argued that the target audience was a more specific subset: those investors and stakeholders who would take the trouble to read the relevant publications or attend the Investor Day, and who had a sufficient interest in climate change and the impact of fossil fuel companies to pay attention to the statements. Santos contended that this audience was relatively sophisticated and aware of the broader context of the energy transition and the uncertainties involved in long-term targets.

The Court ultimately concluded that the target audience was neither as narrow as Santos contended nor as broad as the ACCR submitted. The court found that the target audience comprised a large and diverse group of investors, both individuals and institutional, who had an interest in the impugned representations. The court was persuaded by the prominence given to the statements in Santos' publications and the objective evidence of interest from a wide range of stakeholders, including correspondence from international project finance lenders and equity investors seeking clarity on Santos' emissions reduction strategy. The court stated:

"First, the target audience comprised a large and diverse group of investors, both individuals and institutional, and the impugned representations were of interest to that audience. The 2020 Annual Report discloses that as at 31 January 2021 there were 127,809 shareholders in Santos. As Santos seemed to acknowledge, existing and potential shareholders may have variable characteristics." ^₁₀

The Court accepted that the impugned representations were of interest to both individuals and institutional clients.

Santos' representations were not misleading or deceptive

Santos’ climate-related statements and targets were not misleading or deceptive, either as to present or future matters.^₁₁ The company had reasonable grounds for its assumptions and for using industry-standard terminology (such as “clean energy” or “zero emissions hydrogen”). The Court accepted that Santos’ decision to assume flat emissions and production after 2025 was a strategic choice informed by management expertise, not an unreasonable or misleading assumption.^₁₂

While ambitious, Santos’ assumptions about hydrogen and CCS were backed by internal and external studies and ongoing project development, providing a reasonable basis for their inclusion in the roadmap.^₁₃ The Court accepted that Santos had reasonable grounds for making the forward-looking statements and predictions as shown by internal analysis, expert advice, board discussions, and ongoing stakeholder engagement.^₁₄

Natural gas accepted as a transition fuel

The role of natural gas as a transition fuel is widely debated in greenwashing cases worldwide. Climate advocates argue, as ACCR did in this case, that natural gas is not a "clean" fuel. The Court found that, in industry context, terms like “clean energy” and “zero-emissions hydrogen” were understood as relative (i.e., cleaner than coal/diesel, or net zero after offsets and CCS), not as absolute guarantees of no emissions. In doing so, the Court recognised the role of natural gas as a transition fuel to a lower-carbon future. The Court found reasonable investors and the public would not interpret these terms to mean absolute zero emissions or no environmental impact and were therefore not misled by the statements.

Carbon offsets are appropriate, with transparency

The Court found Santos’ disclosures were sufficiently transparent about the reliance on offsets and the uncertainties involved. Words like “credible”, “realistic”, and “clear” were found to reflect reasonable, aspirational aims, rather than promises or guarantees. The Court found it was reasonable for Santos to rely on the development of carbon markets and policy frameworks for offsets and CCS by 2040, in line with government trends and industry practice. The Court held that reasonable investors would expect plans to change over time and would not view such targets as guarantees.^₁₅

Relevance of future (blue) hydrogen markets

The Court found that Santos had considered the potential market for hydrogen, both domestically and for export, and that there was a reasonable basis for its assumptions about future market development. The Court noted that Santos' strategy was contingent on the development of a large-scale hydrogen market and that this was supported by external studies, government support, and internal analysis. Her Honour found: "I do not accept that the 'Hydrogen with CCS' component of the Net Zero Roadmap was speculative. The evidence does not suggest that Santos merely plucked figures out of the air or that it made assumptions without foundation. It considered the potential market for hydrogen out to 2040 and whether there were any potential major impacts on its ability to take market share based on the material available to it at the time and its understanding of the market "^₁₆ This finding meant that it was reasonable for Santos to rely on an assumption as to contribution to Scope 3 GHG reductions by supplying hydrogen to its customers.

Not misleading by omission

Many of the arguments raised by ACCR focused on whether statements made by Santos were misleading by omission. For example, that Santos did not disclose in its 2020 Annual Report that the end use of natural gas releases material amounts of carbon dioxide (CO₂) and methane (CH₄) into the atmosphere, nor that these gases contribute to climate change and global warming.¹⁷ Further that Santos omitted certain key assumptions from its announcements, which, assessed objectively, the target audience would have been entitled to expect or infer would be disclosed such as that the Targets and Net Zero Roadmap did not account for emissions associated with the production of blue hydrogen. The Court found no misleading omissions or concealment of critical information by the company.   

Key takeaways on best practice on climate-related disclosure

• Australian courts expect climate and net zero disclosures to be based on reasonable grounds, transparently communicated, and properly documented.
• Aspirational or long-term targets are acceptable, but you must be able to show why you believe they are achievable.
• Robust governance, clarity in language, and full disclosure of material assumptions and uncertainties are your best defences against “greenwashing” claims under Australian law.
  • Best practice would be to involve subject matter experts, relevant project teams and executives across an organisation in preparing climate-related disclosures. The Court observed favourably that the company had involved employees at different levels and in different roles across the organisation in gathering input and information in order to prepare its net zero plan.
  • Obtain a diversity of views and stress-test assumptions with internal and external experts to assist in building a body of work that demonstrates the reasonableness of a statement to be made by the company. Keep a record of these deliberations and reasoning for statements being made.
  • Avoid statements being misleading by omission by providing full disclosure of material assumptions and uncertainties. This includes reliance on carbon offsets / CCS and the degree to which and circumstances in which this will occur.

_{¹Corporations Act 2001 (Cth) s 292.}

_{²Australasian Centre for Corporate Responsibility v Santos Limited [2026] FCA 96 (ACCR v Santos), para [2].}

_{³Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth) ss 4, 18, 33.}

_{⁴Corporations Act 2001 (Cth) ss 769C, 1041H.}

_{⁵ Scope 1 emissions are direct emissions from a company’s activities, ACCR v Santos, para [129(1)].}

_{⁶ Scope 2 emissions are indirect emissions from the generation of energy purchased or acquired by the company, ACCR v Santos, para [129(2)].}

_{⁷ Scope 3 emissions (being all indirect emissions not included in Scope 2) only arose indirectly and contextually, not as a standalone legal issue.}

_{⁸ ACCR v Santos, para [5].}

_{⁹ACCR v Santos, para [6].}

_{¹⁰ ACCR v Santos, para [494], [563].}

_{¹¹ ACCR v Santos, para [528].}

_{¹² ACCR v Santos, para [648].}

_{¹³ ACCR v Santos, para [475].}

_{¹⁴ ACCR v Santos, para [463], para [464] citing Australian Competition and Consumer Commission v ACM Group Limited (No 2) [2018] FCA 1115 at [173] (Griffiths J).}

_{¹⁵ ACCR v Santos, para [490].}

_{¹⁶ ACCR v Santos, para [710].}

_{¹⁷ ACCR v Santos, para [128]. Leaving aside any debate as to whether or not this would have been an accurate disclosure, had it been included.}