Australasian Centre for Corporate Responsibility v. Santos Ltd

On Aug. 25, 2021, the Australasian Centre for Corporate Responsibility (ACCR), a shareholder advocacy organization, commenced proceedings in the Federal Court of Australia against Santos Ltd, an Australian oil and gas company, alleging that Santos had engaged in misleading or deceptive conduct in relation to statements about the climate impacts of its products and its emissions reduction plans. ACCR challenged representations made in Santos’ annual reports, investor briefings, and corporate communications that described natural gas as a “clean fuel” providing “clean energy,” and that stated the company had a clear and credible plan to achieve net-zero emissions by 2040. ACCR argued that these representations mischaracterized the climate impacts of natural gas and overstated the credibility of Santos’ transition strategy. According to ACCR, describing natural gas as “clean fuel” or “clean energy” failed to account for the substantial greenhouse gas emissions associated with the extraction, processing, and combustion of gas, including methane leakage. ACCR also alleged that Santos’ statements regarding its pathway to net zero were misleading because the company planned to expand gas production while relying heavily on carbon capture and storage (CCS) technologies and other assumptions that were not adequately disclosed. The claim was brought under provisions of the Australian Consumer Law and the Corporations Act 2001 (Cth), which prohibit misleading or deceptive conduct in trade or commerce and in relation to financial products and services. Following a trial, the Federal Court dismissed ACCR’s application. In a judgment delivered on Feb. 17, 2026, Justice Markovic held that the impugned statements did not constitute misleading or deceptive conduct. The Court examined each alleged representation and emphasized the importance of evaluating the statements in their full context, including the surrounding disclosures and the intended audience of investors and market participants. The Court found that Santos’ statements describing natural gas as “clean fuel” or “clean energy” were not misleading when read in context, noting that they were often accompanied by explanations acknowledging the emissions associated with natural gas and framing gas as comparatively cleaner than other fossil fuels such as coal. The Court also addressed ACCR’s challenge to Santos’ statements that it had a credible pathway to achieve net-zero emissions by 2040. Justice Markovic characterized these statements as forward-looking representations about future matters. Under Australian law, such representations are not misleading if the defendant had reasonable grounds for making them at the time. The Court concluded that Santos had established reasonable grounds for its statements, including its internal planning, modeling, and proposed use of measures such as carbon capture and storage, electrification of operations, and offsets. The Court further noted that the relevant corporate disclosures included qualifications and explanations of uncertainties, which reduced the risk that investors would interpret the statements as guarantees of future outcomes. Accordingly, the Court held that ACCR had not established that Santos had contravened the Australian Consumer Law or the Corporations Act, and the proceeding was dismissed.