19 May 2025, Sydney - In a landmark greenwashing legal case brought by Parents for Climate, EnergyAustralia has publicly acknowledged that offsets do not undo the harms of burning fossil fuels and apologised to more than 400,000 customers of its ‘Go Neutral’ carbon offsetting product. 

Parents for Climate welcomes this acknowledgement and apology from EnergyAustralia, marking a major win.  It is the first legal case of its kind in the country to protect the public from “carbon neutral” greenwashing. 

The settlement is a groundbreaking resolution to this historic legal action, and represents a significant step forward in holding companies accountable for environmental claims.

Parents for Climate CEO, Nic Seton, and Equity Generation Lawyers Principal Lawyer, David Hertzberg outside the court

As part of the settlement, EnergyAustralia – Australia's third largest domestic polluter and currently the largest participant in the government’s Climate Active carbon neutral certification scheme – has publicly acknowledged the following:

• “Where a residential customer opted in to the ‘Go Neutral’ product, their electricity or gas use was still sourced predominantly from fossil fuels.”

• “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.”

• “Storing carbon in plants is not equivalent to keeping it stored in fossil fuels (by not burning those fossil fuels in the first place)”

• “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.” Kate Gibson, EnergyAustralia’s Chief Customer Officer

• There are legitimate concerns that “carbon neutrality marketing based on the use of carbon offsets … may cause some consumers to think there is no environmental impact from a product or service offered by a business”.

• There are legitimate concerns that companies “us[e] offsets instead of reducing their own emissions”.  Ms Gibson said: “Carbon offsets should not be used to delay or diminish the important work that needs to be done to actively decarbonise.”

• There are legitimate concerns about the quality of carbon offset projects, including the permanence, additionality and certainty of the benefits claimed by those projects.

• “[I]t is important for organisations to provide clear and transparent information to consumers on where and how offsets have been used and what those offsets can achieve.”  

• “Carbon offsetting is not the most effective way to assist customers to reduce their emissions and [EnergyAustralia] apologises to any customer who felt that the way it marketed its ‘Go Neutral’ products was unclear.” 

The full statement from EnergyAustralia is available here.

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.

“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. 

“At Parents for Climate, we consider the approach and conduct that was taken by the company to be greenwashing. Climate claims must be backed by real action - not marketing spin. Today, EnergyAustralia’s statement makes clear that offsets should not be used as a license to pollute. It is no longer tenable to market polluting products as “carbon neutral” and lead customers to believe that by signing up they are doing good for the planet. 

“Parents have spent too long trying to make careful, considered decisions about where their money goes - especially in a cost-of-living crisis - but corporate greenwashing has pushed them off track. We launched this case as it’s deeply frustrating and emotionally exhausting to navigate a maze of vague claims and false promises. Greenwashing undermines trust and gives the dangerous illusion that coal and gas pollution is being addressed when they’re not. 

“Parents want the truth, and they want climate solutions that actually protect their kids’ future.“

“This isn’t just about EnergyAustralia - it’s about holding companies to a higher standard across the board. Greenwashing isn’t harmless. It’s costing families money, delaying climate action, and eroding trust.”

“We look forward to working with EnergyAustralia as it shifts its focus to direct emissions reductions.  We hope that EnergyAustralia’s approach can set a new standard of transparency, integrity, and accountability across all corporate climate claims. 

“We also call on the Federal Government to see the writing on the wall and dump Climate Active’s “carbon neutral” certification.  Today, Climate Active’s biggest participant has come out and acknowledged the key problems with carbon offsetting.  The Climate Active program clearly cannot continue in its current form.

“Finally, this outcome is validation for the scientists, carbon market experts and community groups who have for years been speaking out against the way carbon “offsets” are used by corporate Australia and in government policy as a false solution to the climate crisis.  Today, Australia’s third largest domestic polluter has added its voice to the chorus - carbon offsets do not undo climate harms, and they should not be used to distract from real solutions.  All levels of government need to make offsetting spin a thing of the past.”

David Hertzberg, Principal Lawyer at Equity Generation Lawyers, representing Parents for Climate added, “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.

“The parties have now agreed to settle the case.

“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.

“Our client hopes that today’s clear statement from EnergyAustralia sets a new standard for corporate conduct around the use of offsets and climate claims.

“Companies need to seriously consider whether the environmental claims they make stack up - particularly, as this case shows, when claiming that their polluting products are “carbon neutral”.

“We are lucky in Australia to have strong consumer protection laws, but it took a lot of courage for Parents for Climate to stand up and take legal action against EnergyAustralia.  And that courage has paid off.

“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.”

A growing national issue

This legal case is part of a much broader national reckoning with corporate greenwashing. A recent report from Parents for Climate reveals:

• An estimated 5.2 million Australian parents believe they’ve fallen victim to greenwashing
  
• 59% have already cancelled or changed providers - including banks, energy companies, super funds and insurers - because of misleading environmental claims
  
• 97% feel misled or lied to, with 83% feeling extremely misled
  
• 87% believe companies should be held more accountable for false or exaggerated green claims.

With 12.1 million parents and carers in Australia, this group represents one of the largest and most influential consumer and voting blocs in the country. They are increasingly taking action, using their purchasing power to demand integrity and impact - not spin.

Greenwashing legal case

EnergyAustralia was initially due to appear in the Federal Court on Wednesday, May 14, to mark the beginning of a formal hearing expected to last up to two weeks. It is the first Australian court case brought against a company for “carbon neutral” marketing and follows a decision by lawmakers in the European Parliament to ban this conduct overseas.

Parents for Climate launched the legal case alleging that EnergyAustralia misled its customers about its “Go Neutral” product. The retailer told customers that its fossil fuel-based energy was “carbon neutral” and that customers “had a positive impact on the environment” on the basis that EnergyAustralia had “offset” emissions by buying carbon credits.  However, Parents for Climate argued that “offsetting” does not undo the damage from burning fossil fuels and “Go Neutral” customers' energy usage still contributed to climate change.

Parents for Climate estimates that “Go Neutral” customers spent hundreds of millions a year on fossil fuel energy, while being led to believe that it is “carbon neutral”. 

In September 2024 – more than a year after Parents for Climate filed its lawsuit – EnergyAustralia quietly withdrew its “Go Neutral” home energy product for new customers. By December, the company announced it was phasing the product out for existing customers from 15 March 2025 onwards. However, in a customer statement, the company noted it would continue to ‘offset’ emissions on behalf of customers until June 2025. EnergyAustralia said it had “made a commercial decision to close “Go Neutral” while we focus on reviewing and updating our plan to help our customers reduce their emissions.”

Climate Active

Parents for Climate’s court case comes at a time when the practice of “offsetting” is under increasing scrutiny.  

The Government’s troubled Climate Active scheme is under review, with the Government currently proposing the term “carbon neutral” is dropped altogether. Industry bodies, including the prominent Voluntary Carbon Markets Initiative, have taken a similar stance.

A growing list of businesses have withdrawn from Climate Active, including high profile participants like Australia Post, Telstra and PwC. EnergyAustralia is the largest user of Climate Active certification of any company in Australia. 

Internationally, the European Parliament has directed that any “carbon neutral” style claim based on “offsetting” is always misleading.  A number of overseas court decisions have also found “carbon neutral” style marketing to be misleading, including the 2024 judgment in the Netherlands that Dutch airline KLM’s “carbon neutral” claims were misleading and unlawful.

EnergyAustralia produces and sells electricity and is Australia’s third largest domestic greenhouse gas emitter, producing 17.4 million tonnes of CO2 equivalent in 2022/23 and 16.6 million tonnes of CO2 equivalent in 2023/24.

Why this matters

The case has brought into focus several urgent questions about the role of carbon offsets in corporate climate claims - and whether they justify broad claims like “carbon neutral.” As regulators and consumers alike demand more transparency, businesses using environmental marketing face growing legal and reputational risks.

Greenwashing misleads the public and misrepresents the fight against climate change to the next generation. It disadvantages companies with legitimate claims and it can help justify a “business as usual” approach to the energy transition. Parents for Climate is calling for stronger regulation, clearer standards, and real action to ensure companies can’t hide behind vague or deceptive environmental claims.

Seton added: “Using offsets is not an adequate basis for making carbon neutral claims, period. Carbon pollution cannot be neutralised or negated by so-called “offsets”. Any further use of carbon offsets should be reserved for the hardest to abate emissions where other technology is not yet available. And those offsets must be credible, independently verified, and part of a broader plan to cut emissions at the source. Right now, cheap and junk offsets are being used as a license to pollute. We need the government and regulators to set clear rules, provide strong oversight, and for companies to be honest about what offsets can, and can’t, do. Customers deserve the truth, not marketing spin.”

“The facts are clear. Carbon offsets should be a last resort. Too many companies are using offsets to delay real climate action - and that’s not just misleading, it’s dangerous. The federal government has failed to deliver a high-integrity program for voluntary offsets, so we're taking matters into our own hands. Parents want truth in advertising and real solutions for their kids’ future, not greenwashing dressed up as climate action.”

Court documents made publicly available can be found here

Parents who want to support Parents for Climate’s work against misleading advertising can sign their open letter to power companies at https://www.parentsforclimate.org/greenwashing 

-Ends-

Notes to Editors:

Media Contact:

Ella O’Neill | 0410149003 | [email protected]

ADDITIONAL BACKGROUND:

Legal claims set out in the pleadings are available HERE

Who was the claim against?

EnergyAustralia produces and sells electricity and is Australia’s third largest greenhouse gas emitter, producing 16.5 million tonnes of CO2 equivalent in 2023/24.

The claim focuses on EnergyAustralia’s “Go Neutral Electricity” and “Go Neutral Gas” products. 

What did the “Go Neutral” products do?

“Go Neutral” consumers purchased energy from EnergyAustralia which is mainly sourced from burning fossil fuels.  EnergyAustralia promised to purchase carbon credits to “offset” the associated emissions.  EnergyAustralia customers paid no additional fee to opt into these products.

Why does Parents for Climate say EnergyAustralia’s claims are misleading?

Parents for Climate alleges that EnergyAustralia’s marketing of its “Go Neutral” products amounts to misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law.

 EnergyAustralia made a number of claims on its website, including that:

• “Go Neutral” electricity and gas is “carbon neutral”;
• Emissions created by “Go Neutral” electricity and gas are “cancelled out” or “negated”;
• By opting into “Go Neutral” products, consumers “have a positive impact on the environment”.

Parents for Climate alleges that these and other representations are misleading to consumers.  This is because, in short, carbon credits do not eliminate emissions.  Fossil fuels are used to create the majority of energy sold by EnergyAustralia, the emissions created last thousands of years in the atmosphere, and these emissions are not cancelled out by the carbon credits EnergyAustralia buys.  Parents for Climate argues that EnergyAustralia buying carbon credits to “offset” emissions is not equivalent to avoiding creating the emissions in the first place.  

A carbon credit or offset represents one tonne of carbon dioxide equivalent deemed to be stored or avoided by a project.  There are, broadly, two types of carbon credits: (i) avoidance credits, which claim to reduce or avoid future emissions of other emitters; and (ii) removal credits, which claim to remove emissions from the atmosphere and store them for the period of the offset project.

Parents for Climate argues that:

• Using carbon credits that are avoidance based credits, which claim to reduce forecast greenhouse gas emissions, does not physically remove any greenhouse gases from the atmosphere.  That means that emissions from “Go Neutral” energy are not “cancelled out”, and the overall result is net positive emissions released into the atmosphere.  Over 99% of carbon credits used by EnergyAustralia are avoidance credits.  An example of an avoidance credit project is a program to enhance energy efficiency (e.g. updating inefficient cook stoves or replacing incandescent light bulbs with fluorescent LED lights) or the deployment of renewable energy to replace planned fossil fuel power plants (e.g. a wind farm).
• Using carbon credits that are removal based credits, which involve taking CO2 from the atmosphere and storing it in organic matter, results in carbon being shifted from a near-permanent form of storage in fossil fuels in the ground (e.g. coal and gas) to a short-term and unstable form of storage in biotic sinks (e.g. trees or soil).  That means that emissions from “Go Neutral” energy that are based on removal credits are not “cancelled out” fully or permanently, and the overall result is net positive emissions released into the atmosphere.  An example of a removal credit project with short lived storage is a project which involves growing trees or soil carbon enhancement.
• As a result, among other things, “Go Neutral” customers’ energy use is not “carbon neutral”, their emissions have not been “cancelled out” and they are not having a “positive impact on the environment”.

What is the impact of EnergyAustralia misleading consumers of the “Go Neutral” Products?

As a consequence of EnergyAustralia’s alleged greenwashing of its energy products, consumers who may otherwise have changed their behaviour to limit their emissions or to purchase energy sourced from renewable sources may not do so. For example, a consumer considers whether to use their clothes dryer or to instead hang their washing to dry.  The consumer who has “carbon neutral” electricity may choose to use the dryer, believing that using the dryer has no negative carbon/ climate impact.  Likewise, a consumer interested in protecting the climate may be misled into believing that the “Go Neutral” products have the same environmental impact as a power plant sourced from renewable energy.  

Key Findings from Parents for Climate’s new report on greenwashing:

The survey polled 446 parents from across Australia and found that:

• 43% have experienced greenwashing from a household service (energy provider, bank, super fund)
• 36% haven’t experienced greenwashing directly themselves, but have seen companies claim to be more environmentally friendly than they are 
• 59% cancelled a service or changed company due to concerns around greenwashing
• 27% raised their concerns with the company
• 24% spread the word on social media or directly with newspapers
• Within the next six months:
  • 45% plan to talk to their friends and family and warn them about the energy, banking, insurance company they are using
  • 26% plan to leave their energy, banking, insurance provider when their plan is up
  • 18% even plan to leave their energy, banking, insurance provider before the end of their contact
• 90% of parents firmly believe greenwashing from household providers is getting worse, with 
  • 35% of this state the situation has worsened more than ever in the past year, with a growing number of companies misusing environmental claims for their own benefit
• 87% believe companies need to be held more accountable
• 85% strongly feel the government needs to create stricter regulations around sustainability claims
• 76% believe there needs to be greater fines imposed for companies
• 57% believe companies shouldn’t be able to sell the products associated with these claims
• 97% of parents feel misled or lied to, with four in five (83%) feeling extremely misled
• 68% of parents purposely look at a company’s environmental credentials and claims when signing up a household service provider (e.g. energy provider, bank, super fund.
• 29% say they also look at a company’s environmental credentials when making purchasing decisions, but see it as more of a bonus
• 77% would switch to a company that transparently and actively acted on its sustainability targets and claims

A summary of survey results can be found HERE

5.2 million figure / Australian Census: 

• There were 5.5 million (5,552,973) couple families and one million (1,068,268) lone parents.
• Total: 12,174,214 parents and carers
• 43% of 12,174,214 parents = 5,234,912 parents (5.2 million)
• Reference: https://www.abs.gov.au/statistics/people/people-and-communities/household-and-families-census/latest-release

About Parents for Climate:

Parents for Climate represents over 24,000 parents, grandparents and carers from Australia. We are Australia’s leading organisation for people who care about a safe future for kids and advocating for a safe climate. Our supporters come from across the political spectrum, all Australian electorates, and from a wide range of socio-economic backgrounds. We seek non-partisan responses to climate change and its impacts. 

We advocate for Australian governments and businesses to take urgent action to cut Australia’s carbon emissions to net zero as quickly as possible. We encourage Australia to demonstrate leadership on the world stage through positive and proactive domestic action and calling for other nations to take the necessary steps to protect our children’s futures. For more information, visit www.parentsforclimate.org