Australasian Centre for Corporate Responsibility updates case against Santos in Federal Court

Today, the Australasian Centre for Corporate Responsibility (ACCR) filed a Further Amended Originating Application and Further Amended Concise Statement in its proceedings against Santos over alleged greenwashing.

In 2021, ACCR commenced landmark proceedings in the Federal Court alleging that Santos Ltd breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to its “clean energy” claims and its net zero plan in its 2020 Annual Report.

This was the first court case in the world to challenge the veracity of a company’s net zero emissions plan.

In August 2022, ACCR amended its case to include alleged greenwashing in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report, following additional information produced by Santos in the litigation discovery process.

In February 2023, the Federal Court ordered a court-supervised conferral between the parties' respective lawyers, for the purpose of clarifying and reducing the issues in dispute in the proceedings.

Following the conferral process, ACCR has sought and obtained leave of the Court to further amend its case, which it filed today.

The purpose of the amendments is to reduce as far as possible the issues that will need to be heard and determined by the court, and to clarify ACCR’s claims in light of information that has arisen in the conferral process.

The key allegations in today's Further Amended Concise Statement are:

• Santos’ representation that the natural gas it produces is “clean energy” was misleading or deceptive, as the extraction and use of natural gas as an energy source is a material contributor to climate change and global warming;

• Santos’ representations that blue hydrogen (hydrogen produced using natural gas with carbon capture and storage (CCS)) is “clean” or “zero emissions” were misleading or deceptive, as blue hydrogen production would increase Santos’ greenhouse gas emissions and it was not practical or commercially viable for Santos to capture all of the increased emissions using CCS.

• Santos’ net zero roadmap, which is described as “clear and credible”, was misleading or deceptive, including because Santos failed to disclose that:

  • its net zero plan did not account for expected production and/or emissions growth from oil and gas exploration opportunities beyond 2025;
  • CCS itself results in emissions when used for enhanced oil recovery, which ACCR says Santos was considering;

• the ‘CCS Expansion’ portion of the net zero plan actually reflected offsets which Santos would apparently seek to procure.  It did not represent modelled reductions in Santos’ own emissions, but instead is a nominal number making up the difference to net zero;

• the ‘Hydrogen with CCS’ portion of the net zero plan also reflected offsets which Santos would apparently seek to procure.  Again, it did not represent modelled reductions in Santos’ Scope 1 and 2 emissions, but instead depended upon Santos receiving offsets for reducing its customers’ Scope 1 and 2 emissions through the sale of blue hydrogen.

The parties to the proceedings will return to Court on 6 October 2023 for further directions.

Background

ACCR claims that by making the above representations, Santos has engaged in conduct that was misleading or likely to mislead in contravention of s 1041H of the Corporations Act 2001 (Cth) and/or s 18 of the Australian Consumer Law (ACL) (Schedule 2 of the Competition and Consumer Act 2010 (Cth)). Further, in making representations that gas is a ‘clean’ fuel or energy source, and blue hydrogen is ‘zero emissions’ or ‘clean’, ACCR claims that Santos engaged in conduct that was liable to mislead the public as to the nature, characteristics, suitability and quality of Santos’ goods (being ‘natural’ gas and blue hydrogen), contrary to s 33 of the ACL.