ACCR case against Santos dismissed

The Federal Court today found that Santos Ltd did not engage in misleading or deceptive conduct in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

In August 2021, ACCR commenced proceedings against Santos for its claims that natural gas was a ‘clean fuel’, that it could produce ‘zero emissions hydrogen’ and that it had a ‘credible’ and ‘doable’ plan to achieve net zero Scope 1 and Scope 2 emissions by 2040.

Today Justice Markovic dismissed the case, but the reasons for that ruling will not be published until Monday 23 February.

Commenting on the case, Brynn O’Brien, Co-CEO of ACCR, said:

“This was a landmark case that paved the way for others around the world to challenge corporate net zero claims in court.

“It has been a David versus Goliath battle and Goliath won this round. While the Court found that Santos’ conduct was insufficient to breach the law, the case has shone a powerful spotlight on how Santos’ plans were developed and used to secure market advantage.

“Evidence given by Santos’ own witnesses exposed reverse-engineering of emissions numbers and materials to meet top-down CEO demands. This is troubling behaviour and should reinforce investor concern about leadership and cultural issues within the company.

“The ruling puts the burden on investors to scrutinise every statement, every number and every assumption provided by companies in relation to climate commitments.

“It is crucial to note that the extraction and use of natural gas is a material contributor to climate change and global warming. Investors and the public must understand that gas is not a zero emission fuel.”

“This court case was not about punishing climate ambition, it was about standing up for market integrity and ensuring that investors are given all the information necessary to confidently assess emissions targets and net zero plans.

“Today’s result is disappointing. The finding is complex, with over 250 pages of reasons, and it has taken over a year for the Judge to make her ruling. We will take time to review it carefully before considering next steps and our options.”

Background

In 2021, the Australasian Centre for Corporate Responsibility (ACCR) represented by the Environmental Defenders Office along with Noel Hutley SC, Sebastian Hartford-Davis, Jerome Entwisle and Zoe Bush, commenced landmark proceedings in the Federal Court alleging that Santos Ltd breached provisions of the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to representations in its 2020 Annual Report, 2020 Investor Day Briefing and 2021 Climate Change Report.

This was the first court case in the world to challenge the veracity of a company’s ‘clean energy’ claims and its pathway to net zero.

The key allegations of misleading and deceptive conduct concern three major areas:

• representations that Santos is a producer of “clean energy” and that natural gas is a “clean fuel”.
• representations that hydrogen produced by Santos from natural gas with carbon capture and storage (blue hydrogen) is “clean hydrogen” and “zero emissions hydrogen”.
• representations that Santos had a clear and credible pathway to ‘net zero’ by 2040.

The Court heard the matter over three weeks in October, November and December 2024.