The landmark legal settlement secured by the small non-profit group, Parents for Climate, has put Australia’s biggest energy companies and corporate brands on notice – and thrown a spotlight on the government-backed certification scheme that enabled years of misleading green claims.
Last week, EnergyAustralia admitted that the pollution caused by burning coal and gas cannot be undone by buying carbon offsets – a core feature of its now-abandoned ‘Go Neutral’ product, certified under the federal government’s Climate Active program.
Parents for Climate CEO Nic Seton told the SwitchedOn Australia podcast the outcome has significant implications for other energy providers – including AGL, Origin, Engie, Alinta, Red Energy, and Powershop – and the hundreds of other corporations, such as Coles, Qantas, KPMG, Medibank and Westpac, which continue to rely on Climate Active certification to justify “carbon neutral” claims.
“Every other company that’s undertaking that as part of their decarb strategy will need to review the integrity of their plans and make adjustments,” said Seton.
“Whether you’re making poor marketing claims or inadequate carbon decarbonisation strategies you now are exposed to a level of risk that previous to this case, wasn’t as clear.”
Despite growing concern over the credibility of carbon neutral claims, Seton says the government continues to endorse and certify the same practice that enabled Energy Australia to mislead more than 400,000 customers for nearly a decade.
“They are still maintaining a program called Climate Active, which essentially endorses, supports and certifies these claims,” he said.
“It’s like a kind of state-sponsored greenwashing … companies can claim to be carbon neutral and cancel out their emissions with a government sticker and tick of approval.”
Seton is calling for urgent action from the government and federal regulators to uphold the public interest.
A spokesperson for the Department of Climate Change, Energy, the Environment and Water (DCCEEW), which manages the Climate Active program, told Renew Economy that the Australian Government is considering the future direction of the Climate Active program.
“We recognise that Climate Active needs reform and that work is under way as a priority that will involve proper consultation.”
“Offsets are playing an important role in the transition to net zero emissions, and the Government recognises that they need to have integrity and a strong and credible reputation.”
However, the decades old Climate Active program, which certified Energy Australia’s Go Neutral product, has already been under review for more than three years – a strategic review was initiated in May 2022 – and continues to process applications as usual.
This is despite some major companies already withdrawing from the program, including Telstra, the Brisbane City Council, and Australia Post, citing concerns about greenwashing and the credibility of carbon neutrality claims.
“Ultimately, we want Climate Active to be as strong as possible,” Seton says. “If it’s going to be there, just make it high integrity… either strengthen it and make it effective, or have a hard look at whether it’s appropriate to keep it going and regulate it promptly.”
Renew Economy also approached the ACCC for comment on the case against Energy Australia but they failed to respond to our requests before publication deadline.
“The regulators, the ACCC, they know this is an issue, but we’re not seeing any transparent action from them. We don’t know what they’re doing, and it effectively leaves us wanting.”
Seton is blunt when he says it should never have fallen to a small group of parents and volunteers to force this sort of accountability on a major Australian company through the courts.
“We realised that government wasn’t going to do anything about it. The regulators won’t do anything about it. The companies were very happily getting away with it,” Seton said. “And so it really does fall down to civil society.”
Seton described the effort, and the toll it took on their three and a half staff, as risky and exhausting.
“We’ve had long, late-night discussions as a volunteer board, trying to figure out how to manage all of the considerations to try and achieve something that’s in the public interest,” he said. “It was quite scary. For us, it’s quite courageous – we’re not lawyers.”
Parents for Climate are now writing directly to other companies still marketing carbon neutral energy products under the Climate Active brand.
And whilst it is unlikely they will be in a position to take legal action against these companies, Energy Australia’s admission paves the way for further legal cases if they continue to make false and misleading claims.
“The outcome of this case means that this argument that we’ve just taken to Energy Australia could pretty much be applied to any of those companies,” he said. “All of the other participants now need to work out whether they’re going to keep going with that potentially misleading, deceptive conduct, or whether they’re going to match that level of transparency and follow EnergyAustralia.”
And while Seton remains proud of what his small team has achieved, he is clear about where responsibility lies.
“We need leadership at the government level and at the corporate level – and unfortunately, that’s lacking at the moment.”
Parents for Climate’s settlement with EnergyAustralia followed two years of legal action after their initial attempts to negotiate a solution were rebuffed.
“They were very reluctant to directly address the issue we were raising,” said Seton. “It took taking them all the way to court to get them to cross the line of truth.”
EnergyAustralia’s Go Neutral product was an electricity and gas offering, available since 2016, and marketed as a product that would “cancel out” the climate impact of burning fossil fuels through the purchase of carbon offsets.
“They used words like carbon neutral… and even claimed the product had a positive impact on the environment.”
On the eve of the trial, EnergyAustralia finally admitted “that the harms caused by burning coal and gas cannot be undone or prevented by buying offsets or using carbon credits to claim to offset the energy and somehow make it carbon neutral.”
“That’s a huge admission by a major utility company,” said Seton. “As far as we can tell, this is possibly the most significant admission of those facts of any company in the world today.”
Seton says the settlement also exposes deeper problems with the carbon offset market itself. “Carbon credits are of varying quality … some of the credits that EnergyAustralia was purchasing to make this claim were heavily criticised. Those projects [were of] very questionable quality.”
“We’re not even sure that the credits that they were buying had any positive effect at all.”
Parents for Climate have had several people write to them following the settlement saying that they were under the impression they were doing the right thing for the environment.
“They were frustrated with having been misled by Energy Australia,” said Seton, and surprised that the government and regulators had enabled them.
Seton believes the EU is setting the pace for reforming carbon credits – they’ve banned the kind of marketing claims made under Go Neutral.
But until our government and regulators take action, Australian consumers will be left vulnerable to corporate greenwashing.
You can hear the full interview with Nic Seton on the SwitchedOn Australia podcast.
