World-First Lawsuit Over Clean Energy And Zero Emissions Claims

On August 25, 2021, the Environmental Defenders Office (EDO), acting on behalf of the Australasian Centre for Corporate Responsibility (ACCR), filed a consumer protection lawsuit with the Federal Court of Australia in respect of certain ESG related statements made in a gas company's 2020 Annual Report (the Report).

This is the first lawsuit in the world that challenges the veracity of a company's net zero emissions target, and in relation to the viability of carbon capture and storage and the environmental impacts of hydrogen as an energy source, increasingly touted as the key elements in gas companies' pathways toward net zero emissions.

Claims - clean fuel and a net zero pathway

In the Report, the company, Santos, described itself as a "clean energy" provider, and claimed that natural gas is a "clean fuel". Furthermore, the company claimed that it has a "clear and credible" pathway to achieve "net zero" emissions by 2040 via the carbon capture and storage technology and the transition to a hydrogen business.

In the press statement, Elaine Johnson, EDO Director of Legal Strategy, said ACCR is filing this action to hold Santos and other gas companies accountable for "their product and its future in a highly carbon-constrained global economy". She commented that "if companies are telling investors they have a credible pathway to net zero emissions, they need to have robust, sound plans to back them up". She further stated that "companies have a legal obligation to be upfront and honest with investors in their annual reports" as it would be paramount for investors to "assess which companies will survive and thrive in a rapidly changing global energy economy".

Comments

As this case and other recent global developments demonstrate, ESG disclosures already present litigation and regulatory risks. We expect this trend to continue as stakeholders and regulators critically evaluate corporate disclosures on ESG related matters.

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