ACCR v Santos: lessons for mandatory climate reporting and the future direction of ESG litigation in Australia

Why this decision matters 12 min read

On 17 February 2026, the Federal Court of Australia handed down its much-anticipated judgment in Australian Centre for Corporate Responsibility (ACCR) v Santos Limited (Santos) [2026] FCA 96 (ACCR v Santos). The court dismissed each of the ACCR's claims against Santos in relation to allegedly misleading or deceptive statements in Santos' 2020 Investor Day Presentation, 2020 Annual Report and 2021 Climate Change Report (Santos Documents). The court also ordered that the ACCR pay Santos' costs.

In this Insight, we consider the key takeaways from the decision, including some observations for reporting entities under Australia's new climate-related financial disclosure (CRFD) regime and what the decision may mean for the direction of ESG litigation in Australia. While the representations were concerned with climate, the decision has takeaways more generally, including as companies look at reporting on topics such as biodiversity and human rights.

Key takeaways 

• While regulatory enforcement action targeting alleged 'greenwashing' has become an increasingly familiar feature of Australia's ESG litigation landscape over the past decade, this decision is the first time an Australian court has ruled on a private greenwashing action against an Australian company over its public climate and sustainability-related claims.
• The decision is also one of the first cases globally to consider whether a company's public statements regarding its net zero emissions targets and transition plan are misleading.
• For entities required to prepare sustainability reports under the new CRFD regime, the case provides helpful insights regarding the steps they can take to mitigate greenwashing risk and how a court may approach similar allegations if disclosures are challenged by private litigants and regulators in future. These considerations are particularly topical for reporting entities as the temporary, modified liability settings under the CRFD regime fall away after the initial three-year transitional period.
• The decision is also relevant to assessment of 'bluewashing' risk, ie misleading or deceptive statements on human rights matters.

Who in your organisation needs to know about this?

Boards, in-house / general counsel, sustainability teams, regulatory and compliance, external and regulatory affairs teams.

Background

• In August 2021, the ACCR, a not-for-profit shareholder advocacy organisation, commenced proceedings in the Federal Court of Australia against Santos, alleging that the company breached the Corporations Act 2001 (Cth) (Corporations Act) and the Australian Consumer Law (ACL) by engaging in misleading or deceptive conduct concerning climate change-related representations contained in its public-facing documents. The proceeding was heard in October to December 2024 and, on 17 February 2026, the court handed down its judgment, dismissing each of the ACCR's claims of misleading or deceptive conduct and ordering it to pay Santos' costs.
• Since the proceeding was commenced, Australian companies have begun to transition away from voluntary climate-related disclosures to a mandatory disclosure regime introduced through amendments to the Corporations Act that came into effect from 1 January 2025. Capturing both listed and unlisted entities, the new reporting regime will make climate-related disclosures a 'business as usual' requirement for a substantial population of Australian companies and signals a significant shift in the way businesses prepare their annual reporting suite (see our earlier Insight).
• Although not directly concerned with companies' obligations under the CRFD regime, the decision has focused the attention of reporting entities and stakeholders alike on the potential greenwashing risks associated with sustainability reporting. The case also represents the latest example of a broader domestic and international trend of ongoing regulatory and stakeholder focus on companies' obligations when making public sustainability and climate commitments, and the onus of ensuring that such statements (which often involve representations as to future matters) are appropriately verified and have a reasonable basis.

The applicants' claims

The ACCR alleged that three sets of statements made in the Santos Documents (and corresponding omissions) were misleading or deceptive under the Corporations Act and the ACL:

1. Clean energy: statements that described Santos as a producer of 'clean energy' and natural gas as a 'clean fuel', through which the ACCR alleged Santos misleadingly conveyed that the consumption of natural gas involved no material emissions. The ACCR also claimed Santos failed to disclose that natural gas extraction releases significant CO₂ and methane and that alternative energy sources exist that do not produce material greenhouse gas (GHG) emissions. On that basis, the ACCR alleged that Santos' alleged clean energy representations and/or omissions were misleading given the contribution of natural gas to climate change.
2. Net Zero Roadmap: allegedly misleading or deceptive representations about Santos’ Net Zero Roadmap (Roadmap), including statements that Santos had a clear and credible plan to reduce Scope 1 and 2 emissions by 26-30% by 2030 and to achieve net zero by 2040 (the Targets). The ACCR further alleged that these statements omitted key assumptions underpinning the Roadmap, including the exclusion of emissions from blue hydrogen production, future oil and gas exploration, and reliance on speculative offsetting activities such as expanded carbon capture and storage (CCS). It also alleged that these omissions rendered Santos' representations about the Roadmap misleading and that the representations concerned future matters that were not based on reasonable grounds.
3. Zero-emissions hydrogen: finally, the ACCR claimed that statements describing Santos’ blue hydrogen as 'clean' or 'zero emissions' suggested that it could presently produce hydrogen with no production emissions because all Scope 1 and 2 emissions would be captured by CCS. It also alleged that Santos failed to disclose that blue hydrogen would increase its emissions. For these reasons, the ACCR submitted that the alleged representations and/or omissions were misleading, given it was not commercially or practically feasible to capture all associated emissions via CCS.

The court's decision

The court dismissed each of the ACCR's allegations of misleading or deceptive conduct against Santos.

Characteristics of the target audience

In reaching its conclusions, a key threshold issue for the court was to determine the likely characteristics of the target audience and the likely effect of the conduct on ordinary and reasonable members of that class.¹

While both parties agreed the target audience comprised existing and future investors in Santos, financial institutions and corporate advisers, they diverged on the specific characteristics to be ascribed to an ordinary and reasonable member of that broader class. In particular, the level of sophistication and knowledge of that hypothetical member in relation to climate change and whether they would be expected to be familiar with one of more of the Santos Documents.²

Justice Markovic settled on a middle-ground approach, holding that the relevant class comprised a large and diverse group of investors, both individuals and institutional.³ Her Honour considered that a reasonable member of this audience would (among other characteristics):

• have an interest in climate change and global warming (but with varying levels of knowledge and no assumed scientific training);
• understand that there is an ongoing energy transition (but not have detailed knowledge of the means or technologies to achieve that transition); and
• understand that oil and gas companies such as Santos would respond and/or adapt to technological or regulatory developments and may achieve their long-term strategic objectives in a variety of ways that would evolve over time.

Her Honour also found that they could have 'some degree of familiarity with' at least one of the Santos Documents.⁴

Key findings

Justice Markovic’s conclusions turned on what a reasonable member of this audience would have understood from Santos’ statements. In summary, Her Honour found that:

• Clean energy: a reasonable member of the target audience would have understood terms such as 'clean', 'zero emissions' and 'net zero' in a relative sense compared to higher-emitting fuels—and not to suggest that consumption of natural gas generated no emissions whatsoever.⁵ Her Honour accepted that a reasonable member of the target audience would understand that consumption of natural gas is a contributor to climate change and that Santos' characterisation of itself as a producer of 'clean energy' was aspirational in the context of its statements about the 'transition to a lower-carbon future' and 'the transition from natural gas to hydrogen'.⁶
• Net Zero Roadmap: a reasonable member of the target audience would have understood that long-range targets involve 'assumptions about future markets and developments, including regulatory developments, that were beyond Santos’ control'.⁷ Justice Markovic reasoned that the Roadmap was, as the name suggested, a 'roadmap' that 'implicitly and explicitly expressed a level of uncertainty'.⁸ Her Honour accepted that, while Santos' representations regarding its emissions-reduction targets were future matters, it had reasonable grounds for making the statements, which were based on reasonable assumptions and, therefore, were not deemed to be misleading.⁹ Her Honour noted that a reasonable member of Santos' target audience 'would not think that Santos had substantiated a range of future scenarios and undertaken detailed economic or market analysis'.¹⁰
• Zero-emissions hydrogen: a reasonable member of the target audience would have understood references to 'clean', 'zero emissions' and 'carbon neutral' hydrogen to mean that the production of hydrogen from natural gas with CCS results in no net emissions, rather than understanding it to mean hydrogen with no production emissions at all because all production emissions would be captured by CCS.¹¹

Extensive expert evidence was relied upon by the parties, covering multiple disciplines, including hydrogen production and transportation, carbon credit schemes, CCS, climate science and economics. The court critically examined some aspects of the ACCR's expert evidence, with social media comments and the relevant expertise of some experts receiving greater scrutiny, particularly in cross-examination. The judgment points to the continued prominence of expert evidence in climate litigation cases as well as the broader considerations the court will take into account when assessing the admissibility and relative authority of expert reports.

Implications and practical steps for climate reporting following the decision

The facts in ACCR v Santos preceded the introduction of mandatory climate-related financial disclosures under the CRFD regime. However, the decision still offers some important lessons for reporting entities to consider when seeking to mitigate potential greenwashing risks for sustainability reports, which align with the reporting requirements set by the Australian Accounting Standards Board under AASB S2 Climate-related Disclosures (AASB S2) and ASIC's Regulatory Guide 280 Sustainability Reporting (RG280) (which we discuss in our earlier Insight).

What the decision may mean for future ESG litigation in Australia

The number of private greenwashing litigation claims continues to grow globally. In Australia, it remains to be seen what impact the court's decision will have on stakeholder appetite to bring similar strategic litigation cases in the future, particularly in light of the court's orders as to costs (on a party-party basis at this stage). In any event, the case underscores the importance for businesses to exercise caution when making marketing and consumer-facing claims involving emissions-related, carbon neutral / offset, and sustainability claims, and to ensure that such claims are technically accurate or appropriately qualified, and targets are not set without a credible pathway for achieving them. The decision is also relevant to the approach to other ESG-related claims, including public reporting on topics such as biodiversity and human rights.

This is particularly important as more and more companies adjust to mandatory climate-related financial reporting (many for the first time) and as the initial three-year modified liability regime for sustainability reports comes to an end and ordinary liability settings are reinstated for all sustainability reports made in financial years commencing after 31 December 2027. While ASIC has indicated that the temporary modified liability settings are designed for it to take an educational role and focus on promoting compliance, it remains to be seen how the judgment may also inform the corporate regulator's own supervision and enforcement approach under the CRFD regime.