The fine print matters in the Federal Court's landmark Santos ruling, a UNSW expert says.
The Federal Court's dismissal of a greenwashing case against Santos is not a free pass for companies to overstate their climate credentials, says UNSW climate litigation expert Dr Riona Moodley .
In reasons handed down this week, Justice Natalie Markovic rejected allegations brought by the Australasian Centre for Corporate Responsibility (ACCR) that Santos misled investors through language including "clean energy", "clean hydrogen" and a pledge to reach net-zero emissions by 2040.
The Court found the statements were not misleading or deceptive in the way alleged. But Dr Moodley, from the UNSW Institute for Climate Risk & Response, says the ruling turns squarely on the evidence Santos was able to produce - and on how a reasonable investor would interpret the claims in context.
"This isn't a green light for companies to say whatever they like about their climate credentials," she says.
"The Court was asking how a reasonable member of the target audience would understand those words, read in light of the surrounding material."
At the heart of the case were claims that Santos produces "clean energy" and that gas is a "clean fuel"; that hydrogen made from gas with carbon capture and storage - so-called blue hydrogen - is "clean" or "zero emissions"; and that the company had a "clear and credible pathway" to achieve net zero by 2040.
"ACCR argued these claims painted a misleading picture of Santos' environmental footprint, given its continued and substantial reliance on fossil fuel production," Dr Moodley says.
Justice Markovic disagreed. She found the term "clean energy", could have been understood by the audience in relative terms - "cleaner than coal or diesel" - rather than as a literal assertion of zero greenhouse-gas emissions. The Court applied the same contextual reasoning applied to "clean hydrogen".
In the Court's view, a reasonable investor would interpret the claims as referring to hydrogen produced with carbon capture and storage and offsets, not as completely emissions-free.
"In contrast to other more recent greenwashing cases, there is a sense that the Court gave Santos considerable latitude in not only its use of the term 'clean' to describe its operations, but also how it represented its net-zero and emissions reduction targets," Dr Moodley says.
The decision, she says, has implications for investors and the public because it suggests that they must now be more cautious when assessing corporate sustainability claims.
She says the judgment is likely to play an important role in guiding how companies represent their climate transition strategies and the types of disclosures they make.
"This is the first 'test case' on net-zero emissions claims. It will certainly not be the last," Dr Moodley says.
This is the first 'test case' on net-zero emissions claims. It will certainly not be the last.
"Beyond its immediate implications for consumers and investors, the case is significant in developing the legal thresholds that apply to corporate representations about net-zero pathways."
Justice Markovic rejected the challenge to Santos' claims that it had a realistic and credible pathway to achieve emissions reduction targets by 2030 and net zero by 2040, on the basis that the company had reasonable grounds for making those representations at the time.
"Based on the evidence put before it, the Court was satisfied that Santos's executive strategic decision-making - including assumptions and planning processes - provided a reasonable foundation for the representations it made, even though the ultimate achievement of net zero remained uncertain," Dr Moodley says.
The ruling placed significant weight on governance processes and internal documentation.
"Companies making climate commitments must be able to point to contemporaneous analysis - emissions modelling, strategic sustainability plans and board deliberations - to substantiate their claims," she says.
"If you're going to publish ambitious, forward-looking climate targets, you need the paper trail to back them up.
If you're going to publish ambitious, forward-looking climate targets, you need the paper trail to back them up.
"The test is whether there was a reasonable basis for representations made on climate targets and goals at the time they were made."
Investors and companies on notice
The decision, Dr Moodley says, also carries implications for investors.
"It signals that investors can't simply take climate claims at face value," Dr Moodley says. "They may need to interrogate sustainability disclosures and net-zero pathways more closely."
But she cautions against interpreting the ruling as a retreat from accountability.
"The central point is that Santos was able to convince the Court it had reasonable foundations for its claims. Importantly, it had evidence supporting its internal processes and decision-making," she says.
"It doesn't mean other companies can make aspirational targets without doing that work."
In that sense, she says, the case reinforces the importance of robust climate-transition governance and disclosure practices.
With regulators and investors scrutinising net-zero pathways more closely, companies will need to ensure their climate representations are grounded in defensible analysis.
A global litigation wave
The judgment lands against a backdrop of tightening regulatory scrutiny in Australia and abroad.
In recent years, the Australian Securities and Investments Commission (ASIC) has made greenwashing an enforcement priority and won several high profile cases.
Globally, climate litigation cases are continuing to grow in number. According to the United Nations Environment Programme's 2025 Global Climate Litigation Report , more than 3000 climate-related cases have been filed across 55 jurisdictions and regional courts.
"In the US and Europe in particular, courts are being asked to interrogate long-term emissions targets, the use of carbon credits and whether transition plans are genuinely credible," Dr Moodley says. "Australia is very much part of that wave.
"International cases are examples of how outcomes may differ, depending on the specific circumstances of a case."
In 2024, a French Court ruled that multinational TotalEnergies had made misleading green statements , ordering the oil company to remove messages about aiming for carbon neutrality from its website.
"That comparison shows the threshold applied in one jurisdiction at one point in time is not necessarily the threshold that will apply elsewhere - or in future cases," Dr Moodley says.
"The broader trend has been towards holding companies to a fairly exacting standard, particularly in investor-facing documents.
"In that context, the Santos decision should be read carefully and narrowly."
