EnergyAustralia has reached a settlement with Parents for Climate in a legal case that challenged the company’s ‘carbon neutral’ marketing claims. This case, the first of its kind in Australia, scrutinised the efficacy of carbon offset programs and raised concerns about corporate greenwashing.

EnergyAustralia, the third largest domestic polluter in Australia, acknowledged that its ‘Go Neutral’ carbon offsetting product did not negate the environmental impact of burning fossil fuels. The company has apologised to over 400,000 customers who participated in the ‘Go Neutral’ scheme. EnergyAustralia has withdrawn the product for new customers and is phasing it out for existing ones.

“Where a residential customer opted in to the ‘Go Neutral’ product, their electricity or gas use was still sourced predominantly from fossil fuels,” EnergyAustralia stated. The company further admitted, “Offsets do not prevent or undo the harms caused by burning fossil fuels for a customer’s energy use. Even with carbon offsetting, the emissions released from burning fossil fuels for a customer’s energy use still contribute to climate change.”

Kate Gibson, EnergyAustralia’s Chief Customer Officer, noted, “While EnergyAustralia participated in the Climate Active certified carbon offset program in good faith, today EnergyAustralia accepts that there is legitimate public concern about the efficacy of these programs.”

The case was brought by Parents for Climate, representing over 24,000 parents, grandparents, and carers in Australia. Nic Seton, CEO of Parents for Climate, commented, “This historic acknowledgement by EnergyAustralia, of the problems with carbon offsetting, is a huge step forward for their 1.6 million customers. It will set a new standard for the way carbon offset products are used by corporations and sold to consumers.”

Seton added, “We welcome the acknowledgement from EnergyAustralia. Not only does this acknowledgement send 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.”

The legal proceedings were handled by Equity Generation Lawyers. David Hertzberg, Principal Lawyer, stated, “This was the first case in Australia targeting the marketing of consumer products as ‘carbon neutral’.

“Our client argued that the promotion of EnergyAustralia’s ‘Go Neutral’ product amounted to misleading or deceptive conduct in contravention of the Australian Consumer Law.”

Hertzberg further explained, “As part of the settlement, EnergyAustralia has acknowledged our client’s key factual argument: that carbon offsets do not undo the climate harms of burning fossil fuels. That means that, even with carbon offsetting, Go Neutral customer’s energy usage still contributed to climate change.”

The case has highlighted broader concerns about the use of carbon offsets and the potential for misleading environmental claims. A report from Parents for Climate indicates that 5.2 million Australian parents believe they have been victims of greenwashing, with 59% changing providers due to misleading claims.

Internationally, the European Parliament has also deemed ‘carbon neutral’ claims based on offsetting as misleading. In Australia, the government is reviewing the Climate Active scheme, which EnergyAustralia was a significant participant in.

“Today’s outcome is a watershed moment in greenwashing litigation in Australia. Our client hopes it marks the beginning of the end for “carbon neutral” marketing based on offsetting and the beginning of the end of the use of offsets to distract from real action on climate change,” Hertzberg concluded.