For New Zealand organisations grappling with climate and ESG-related disclosures, the Federal Court of Australia’s decision in Australasian Centre for Corporate Responsibility v Santos Limited [2026] FCA 96 provides a useful reference point.
The decision is one of the first cases internationally to consider the circumstances in which a company's public statements about climate-related targets may be misleading as a matter of consumer law. While the decision is not directly binding in New Zealand, it will likely be persuasive in future "greenwashing" litigation given the similarities between Australian and New Zealand consumer law.
Key takeaways from the decision include:
- Courts take a contextual approach when assessing whether climate statements are misleading, considering the target audience's characteristics and expectations.
- Disclosures about targets and plans will not be misleading simply because their achievement is uncertain, provided they are based on reasonable assumptions and framed using language that makes the level of uncertainty clear.
- Terms such as "clean energy" will be interpreted in context and by reference to industry usage.
- Well-governed, evidence-based and transparent climate targets are unlikely to be characterised as misleading.
In New Zealand, the introduction of mandatory climate-related disclosures has driven substantial progress in the way that organisations disclose information about their climate-related goals. However, regulators are sharpening their focus in this area and private litigation remains a risk, as demonstrated by a recent out-of-court settlement in greenwashing litigation brought against Z Energy.
How New Zealand consumer law applies to ESG and climate-related statements
Public statements about ESG and climate-related goals must comply with New Zealand consumer law, primarily the Fair Trading Act 1986 (FTA) and the Financial Markets Conduct Act 2013 (FMCA).
- The FTA prohibits misleading or deceptive conduct and unsubstantiated representations. Whether a statement is misleading is assessed objectively from the perspective of a reasonable person, focusing on the overall impression conveyed. Statements of intention may be misleading if not genuinely held, and opinions about the future must have a reasonable basis.
- The FMCA similarly prohibits misleading conduct and unsubstantiated representations in relation to financial products and services, with breaches giving rise to civil and criminal liability.
Reforms are underway to exclude statements in climate statements from unsubstantiated statement prohibitions, but this will not apply to statements made elsewhere (e.g. website information or investor presentations).
New Zealand's Advertising Standards Code also requires advertisements to be truthful and not misleading, as illustrated by a 2021 ruling against Firstgas Group for overstating the imminence of its "zero carbon gas" transition.1
While the New Zealand courts have not to date grappled with the types of issues raised in ACCR v Santos, public statements about climate targets, ambitions, goals and transition plans that involve uncertainty are permissible where they are supported by both genuine intention and reasonable assumptions. To reduce greenwashing risk, organisations should also ensure that any climate-related targets are accurately described by reference to the level of certainty and conditionality involved.
ACCR v Santos: the claims
The Australasian Centre for Corporate Responsibility (ACCR) alleged that Santos, a producer and supplier of natural gas, had engaged in misleading conduct in an annual report and other investor documents by:
- describing natural gas as “clean energy”; and
- representing that it had emissions reduction targets (including a "net zero" target) supported by a “Net Zero Roadmap”, and that it had a clear and credible plan to achieve those targets, without adequately disclosing that the target and roadmap:
- were based on a range of "unreasonable" assumptions about future markets, technologies and regulatory developments (including in relation to hydrogen and carbon capture and storage);
- involved nominal and/or speculative emissions reductions and offsets that lacked credibility; and
- did not account for certain anticipated emissions associated with growth and hydrogen production.
Audience and context matter
The Court held that whether a climate representation is misleading must be assessed in context, by reference to the likely characteristics and expectations of the target audience.
The relevant audience was investors interested in climate and the energy transition (but without assumed scientific expertise), who the Court considered would understand that transition pathways are long term, uncertain and likely to evolve.
The Court reiterated the orthodox principle in Australian and New Zealand consumer law that greenwashing risk is assessed by reference to the overall impression created, rather than by isolating individual words or phrases. The Court placed weight on contextual information that explained assumptions, uncertainty and the evolving nature of the transition.
Forward-looking statements must be supported by reasonable grounds
The Court emphasised that forward-looking statements, such as emissions reduction targets and transition plans, must be supported by reasonable grounds. They will be taken to be misleading unless the company can demonstrate a reasonable basis for them.
Importantly, the Court also considered that uncertainty of outcome does not make a target misleading. It is legitimate for targets to be based on assumptions about future developments, and a reasonable investor would understand that transition plans may need to adapt over time. Santos' assumptions were grounded in internal analysis and board level consideration, not "plucked out of the air". Accordingly, the Court considered that its disclosures were supported by reasonable grounds.
Consistent with that approach, the Court found that expressions such as “realistic and doable” or “clear and credible” would be understood as involving uncertainty. A plan described as realistic conveys that it can be achieved, not that it inevitably will be.
“Clean energy” and similar labels are not assessed literally
The Court rejected the argument that “clean” necessarily conveyed zero emissions. In context, the term conveyed that natural gas was cleaner than higher emitting fuels such as coal, not that it was emissions-free.
In relation to hydrogen, the Court accepted that terms like "clean hydrogen" and "zero-emissions hydrogen" had no settled meaning in 2020–2021 and were used interchangeably to refer to hydrogen produced with offsets and carbon capture. Industry usage, surrounding disclosures and common understanding at the time were all critical to how the representations would be understood.
Organisations in emissions-intensive sectors should not take this aspect of the decision as comfort that emissions-producing products can be described as "clean" without risk. Terms such as "clean" will be judged by context, industry practice and audience expectations, and vague or absolute language without supporting evidence will continue to carry greenwashing risk.