Energy Australia is being taken to court by Parents for Climate over claims it “greenwashed” marketing by misrepresenting its “Go Neutral” product as carbon neutral.
The landmark legal case is set to commence today and is the first case in Australia to be brought against a company for “carbon neutral” and “greenwashing” marketing.
The Parents for Climate group launched their legal action against Energy Australia in 2023. The group alleges Energy Australia misled more than 400,000 customers about its “Go Neutral” product by claiming their electricity and gas would be carbon neutral because the company was offsetting the pollution by buying carbon credits.
The lead lawyer in the case, David Hertzberg, explained the key argument will be that Energy Australia allegedly engaged in misleading conduct – in contradiction of the Australian Consumer Law – since burning fossil fuels creates emissions and offsets don’t permanently remove them.
A spokesperson for Energy Australia told B&T that it is has been “working closely with Parents for Climate over the last number of months” and is confident that the pair will be able to resolve the issue together.
“EnergyAustralia remains committed to decarbonising by investing in and supporting assets that enable the clean energy transformation, and helping our customers to directly reduce their emissions,” the spokesperson said.
Energy Australia remains a member of the federal government’s Climate Active certification scheme. Most of the carbon credits it bought were from international projects, as well as one “carbon farming initiative” involving planned burning in the Kimberley region, according to The Guardian.
Companies that join the voluntary scheme report their emissions and the offsets they are buying. This means they can tell customers they are certified and claim their products are carbon neutral.
More than 100 companies have reportedly left the Climate Active scheme in the past two years, including Australia Post, the Cbus superannuation fund, Telstra, Canva and PwC.
The federal environment department said it is planning the future direction of the Climate Active program. The program continues to operate as usual, “certifying entities that have met the requirements,” a spokesperson told The Guardian.
The term “greenwashing” was first used by New York environmentalist Jay Westerveld in 1986, when he described the hotel industry’s practice of placing notices in bedrooms promoting the reuse of towels to “save the environment”.
Since then, companies ranging from H&M to Lululemon have been called out for alleged greenwashing practices.
Over the last two years, there has been a steady stream of notable greenwashing cases in the Federal Court, including ASIC’s case against superannuation fund Mercer that prompted a $11.3 million penalty fee for misleading statements about “Sustainable Plus” investments. Then came the ACCC’s case against the GLAD kitchen and garbage bag manufacturer, Clorox Australia, for their ‘partly made of recycled ocean-plastics’ claim being allegedly false.
Most recently, The Australian Association of National Advertisers (AANA) launched its new Environmental Claims Code (the Code) in March 2025.
The initiative aims to reinforce the advertising industry’s commitment to responsible advertising practices and its role in supporting government efforts to dismantle greenwashing.
The Code aims to complement the Australian Competition and Consumer Commission’s (ACCC) Guidance on Environmental Claims, to ensure that environmental messaging is truthful, transparent, and verifiable.
Other certification bodies, such as B Corp, echo similar aims, with PR nightmares for participating brands who fail to uphold its standards.
In this emerging business landscape, it’s crucial that everyone from consumers to brands understands the power of words and how they might be interpreted by the law and bodies such as the ACCC. If environmental messaging wasn’t already on the agenda for you, this news should make you reconsider.
