Energy Australia Held Accountable in Greenwashing Case

By Akshara Abimanju & Bianca Hoare

Contextualising Greenwashing

With net zero as a global goal, it’s encouraging to see companies placing greater emphasis on sustainability. Yet, these efforts are often undermined by greenwashing — the use of false or misleading claims to exaggerate a product or service’s environmental credentials. Following on from our October 2024 newsletter, Greenwashing in the construction industry, we highlight the renewed immediacy of its claims for environmental transparency, now more urgent in light of the recent case against EnergyAustralia — a watershed moment as the first in Australia to directly challenge the marketing of “carbon neutral” consumer products.

EnergyAustralia’s ‘Go Neutral’ didn’t go far enough

Legal action launched by advocacy group Parents for Climate alleged the company engaged in misleading or deceptive conduct by marketing its ‘Go Neutral’ product as “carbon neutral.”

Specifically, under the Australian Carbon Credit Unit (ACCU) Scheme, introduced in 2011, companies can offset their emissions by purchasing tradeable carbon credits which represent one tonne of carbon dioxide equivalent (tCO₂-e) avoided or removed.

The problem, particularly in the context of EnergyAustralia’s claims, is that avoidance credits, as opposed to the more stringent removal credits, don’t remove greenhouse gases from the atmosphere. Without true ‘additionality’ — where emissions reductions wouldn’t have occurred without the project — the offsets don’t genuinely counterbalance emissions. Instead, they risk contributing to a net increase in atmospheric GHGs. As such, presenting their energy as “carbon neutral” on the basis that emissions were effectively “cancelled out” to deliver a “positive impact on the environment” was ultimately found to be misleading.

While the settlement terms remain confidential, EnergyAustralia was likely required to take corrective action. They have since issued a public apology, conceding that offsets fail to undo the harm caused by burning fossil fuels and committed to phasing out its “Go Neutral” product completely.

Implications for the Construction Industry

While the EnergyAustralia case may stand out as the first — and so far only — successful challenge to the marketing of consumer products as “carbon neutral,” it should be seen in a broader context. It marks a likely watershed moment, with far-reaching implications not just for the energy sector but for any industry making environmental claims, construction included.

Unfortunately, the construction industry has also developed a reputation for greenwashing — often through familiar tactics dressed in sector-specific language. These include:

• Promoting “eco-concrete” as low-emission, while ignoring the significant CO₂ footprint of cement production
• Advertising the use of recycled materials, even when they make up only a small fraction of the total build
• Claiming carbon neutrality through offsets, without taking meaningful steps to reduce emissions from construction activities themselves

In the construction sector, where emissions are vast and supply chains complex, carbon offsetting can become a tempting tool for presenting operations as more sustainable than they truly are. Like EnergyAustralia’s “Go Neutral” scheme — found misleading for relying almost entirely on avoidance credits while still emitting through fossil fuel use — construction companies risk overstating environmental performance by claiming carbon neutrality through offsets alone. Projects may include renewable energy use or low-carbon materials, yet without rigorous verification, baseline comparisons, and genuine additionality, such claims can mislead consumers and regulators alike.

These risks are only heightened by the intersecting disclosure schemes now reshaping the regulatory landscape. Most notably, the January 2025 implementation of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill imposes new climate-related financial disclosure obligations. Essentially, large construction companies are now required to publish detailed annual climate statements outlining their emissions, climate risks, and decarbonisation strategies. For further insights on these disclosure schemes, see our previous February issue ‘A Rock and a Hard Place: Climate Related Financial Disclosures and their relevance to the construction industry’.

In tandem with growing public scrutiny and tightening enforcement from regulators, these measures make it increasingly difficult for vague or overstated sustainability claims to withstand legal and reputational scrutiny.

Ultimately, the EnergyAustralia case serves as a cautionary precedent: sustainability claims must be grounded in real, measurable decarbonisation, not just purchased offsets that delay meaningful change. To achieve this and minimise risk, construction entities can ensure truthful environmental reporting by proactively embedding clear, specific, and verifiable climate performance requirements, including accurate data collection and comprehensive Scope 3 emissions reporting, into their project contracts with subcontractors and consultants.

Contact Crisp Law for advice and information:

Telephone: +61 2 8042 8701

Email: admin@crisplaw.com.au

Website: https://crisplaw.com.au/

References:

Australian Government – Clean Energy Regulator, n.d. Australian Carbon Credit Unit (ACCU) Scheme: How it works. [online] Clean Energy Regulator. Available at: https://cer.gov.au/schemes/australian-carbon-credit-unit-scheme#:~:text=How%20it%20works,their%20project%20stores%20or%20avoids. [Accessed 11 Jun. 2025].

Bluebeam, 2023. Greenwashing: What construction needs to avoid and why. [online] Bluebeam Blog. Available at: https://blog.bluebeam.com/greenwashing-what-construction-needs-to-avoid-and-why/ [Accessed 11 Jun. 2025].

Equity Generation Lawyers, n.d. Australian Parents for Climate Action v EnergyAustralia. [online] Equity Generation Lawyers. Available at: https://equitygenerationlawyers.com/case/ap4ca-v-energyaustralia/ [Accessed 11 Jun. 2025].

Industry.gov.au, 2024. Net zero sector plans: Industry, resources and built environment. [online] Australian Government Department of Industry, Science and Resources. Available at: https://www.industry.gov.au/news/net-zero-sector-plans-industry-resources-and-built-environment [Accessed 11 Jun. 2025].

ScienceDirect, 2021. Greenwashing in environmental, social and governance disclosures: A review of the literature. [online] Available at: https://www.sciencedirect.com/science/article/abs/pii/S221067072030682X [Accessed 11 Jun. 2025].

ScienceDirect, 2022. Corporate greenwashing: Causes, consequences and detection. [online] Available at: https://www.sciencedirect.com/science/article/pii/S2666790822001367#bib1 [Accessed 11 Jun. 2025].

The Sustainable Agency, n.d. 10 greenwashing examples you should know. [online] The Sustainable Agency. Available at: https://thesustainableagency.com/blog/greenwashing-examples/ [Accessed 11 Jun. 2025].

UNSW, 2024. Explainer: What is greenwashing and bluewashing? [online] UNSW Sydney. Available at: https://www.humanrights.unsw.edu.au/research/commentary/explainer-what-is-greenwashing-bluewashing [Accessed 11 Jun. 2025].

Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth).