14 May 2025, Sydney - In an Australian first, EnergyAustralia will appear in the Federal Court today as part of a landmark legal case brought by Parents for Climate, alleging the energy giant misled over 400,000 customers about the climate impact of its “Go Neutral” product.

The formal hearing begins today and is expected to last two weeks, where Parents for Climate and EnergyAustralia will present expert evidence in the Federal Court on the marketing of the energy firm’s “Go Neutral” product. It marks the first time an Australian energy retailer has faced legal action for alleged greenwashing. It is also 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 alleges 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 argues 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.”

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A growing list of businesses have withdrawn from Climate Active, including high profile participants like Australia Post, Telstra and PwC.

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.

Nic Seton, CEO of Parents for Climate, said: “If we succeed in this case, it will send a powerful message: the era of unchecked greenwashing is over. Companies will need to stop relying on junk offsets as a license to pollute and start cutting emissions at the source. Climate claims must be backed by real action - not marketing spin.

“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. 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 emissions are being addressed when they’re not. 

“Parents want the truth, and they want climate solutions that actually protect their kids’ future. This case could raise the bar for transparency, integrity, and accountability across all corporate climate claims. 

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

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.

Why this matters

The case will bring 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. We’re bringing this case because parents want truth in advertising and real solutions for their kids’ future, not greenwashing dressed up as climate action.”

David Hertzberg, Principal Lawyer at Equity Generation Lawyers, representing Parents for Climate said, “This is the first case in Australia targeting the marketing of consumer products as 'carbon neutral'.

"Our client argues that EnergyAustralia's promotion of its “Go Neutral” product amounts to misleading or deceptive conduct in contravention of the Australian Consumer Law.

“The heart of our client’s claim is that “Go Neutral” customers’ energy usage still contributed to climate change, but EnergyAustralia’s marketing suggested the opposite.

“Parents for Climate will argue that burning fossil fuels creates emissions, and offsets do not permanently remove them.  That means that offsets cannot undo the climate harms caused by burning fossil fuels.  Burning fossil fuels always contributes to climate change, with or without offsets.  

"If our client is successful, it will force EnergyAustralia to own up to the problems with the way it marketed its “Go Neutral” product.  It would also set a precedent in relation to similar ‘carbon neutral’ style claims, helping to strip back some of the greenwashing faced by everyday consumers.  More broadly, it may help to change how we view the role of carbon offsets in tackling climate change.

"Consumers deserve to know the truth about what they are buying. And our client will argue the truth is that fossil fuel energy can never be 'carbon neutral’."

Court documents, including witness statements and legal arguments, will be made publicly available as proceedings progress.

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: [email protected]

ADDITIONAL BACKGROUND:

Legal claims set out in the pleadings are available HERE

Who is 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 plan 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