EnergyAustralia has publicly apologised and settled a landmark greenwashing lawsuit over its ‘Go Neutral’ carbon offset program, acknowledging that offsets “do not prevent or undo the harms” of burning fossil fuels for customers’ energy use.
In a Monday statement, the company, one of Australia’s largest energy firms, said it would move away from offering carbon offsets to help customers reduce their emissions. Instead, it will focus on direct emissions reductions.
It is a significant development for Australia’s energy sector, which questions loom about whether carbon offsets effectively neutralise the environmental impact of burning fossil fuels. It comes amid a growing focus in the environmental, social and governance (ESG) space on concerns about greenwashing, or failing to deliver on promises of an environmental benefit.
“Today, EnergyAustralia acknowledges that carbon offsetting is not the most effective way to assist customers to reduce their emissions and apologises to any customer who felt that the way it marketed its Go Neutral products was unclear,” the company said.
‘Historic acknowledgement’
The Federal Court suit, launched in 2023 by the advocacy group Parents for Climate, alleged the energy retailer misled more than 400,000 customers by marketing its electricity and gas products as “carbon neutral” through the purchase of carbon offsets.
The case had been set for trial last week before the parties agreed to settle.
The Go Neutral initiative, launched in 2016, claimed to offset emissions from customers’ energy usage by investing in carbon credits, including international projects.
The settlement marks the first time an Australian energy company has faced legal action over greenwashing claims related to carbon neutrality.
Parents for Climate CEO Nic Seton called the outcome a “historic acknowledgement” of problems with carbon offsetting and emphasised the need for genuine environmental accountability in corporate practices.
“Not only does this acknowledgement sent a powerful message that the era of unchecked greenwashing is over, but it’s incredibly reassuring to see the commitment from one of the largest energy retailers in the country to want to do better for their customers and the climate,” Seton said.
“Climate claims must be backed by real action – not marketing spin,” he added. “Today, EnergyAustralia’s statement makes clear that offsets should not be used as a licence to pollute.”
Climate Active issues
The group also raised concerns about EnergyAustralia’s participation in the federal government’s Climate Active certification, questioning its effectiveness in ensuring true emissions reductions.
EnergyAustralia chief customer officer Kate Gibson said that while the company participated in the Climate Active program in good faith, it now recognises public concerns regarding the efficacy of such offsetting schemes.
She affirmed the company’s commitment to focusing on more direct emissions reduction strategies to support its 1.6 million customers in lowering their environmental impact.
“Carbon offsets should not be used to delay or diminish the important work that needs to be done to actively decarbonise,” Gibson said. “EnergyAustralia is now focused on more effective ways of helping its customers to directly reduce the emissions associated with their energy use.”
Greenwashing threat
The Go Neutral program was discontinued for new customers in July 2024, with plans to phase it out entirely by mid-2025.
The case highlights the increasing scrutiny of environmental claims made my corporations, with the risk of greenwashing heightening the importance of transparent, effective measures to fight climate change.
As the energy sector continues to navigate the transition to sustainable practices, the settlement underscores the critical role of accurate marketing and the potential legal ramifications of misleading environmental claims.