Gas giant Santos told investors it had a clear plan to reach net zero emissions by 2040 but there was no evidence to back this up, the Federal Court heard on the first morning of the gas giant’s trial.
The landmark lawsuit over alleged greenwashing of the company’s climate credentials was launched in 2021.
Shareholder activist group the Australasian Center for Corporate Responsibility (ACCR) has alleged that the fossil fuel company has engaged in misleading and deceptive conduct towards investors.
The ACCR has accused Santos of “greenwashing” in its claims that it would achieve net-zero emissions by 2040 and that its blue hydrogen projects would be emission-free.
Santos is defending the claims and his lawyers will make their opening statements later today and tomorrow.
The ASX-listed company, valued at approximately $22 billion, operates onshore and offshore oil and gas projects in Australia, the US, Papua New Guinea and East Timor.
The ACCR says this is the first case of its kind in the world where consumer and business laws are being used to challenge the veracity of a fossil fuel company’s claims that it can create clean energy and meet its net zero emissions target reaches.
Santos is said to have sent ‘a clear, strong message’
In his opening statement, ACCR barrister Noel Hutley SC told the NSW Federal Court that Santos sent “a clear, strong message” to investors in its 2020 annual report, setting out a path to achieving net zero emissions by 2040.
The shareholder advocacy group argues that Santos had no good basis for claiming it had a set path to reduce emissions by 26 to 30 percent by 2030 and achieve full net-zero status by 2040, as it stated in a 2020 report outlined to investors.
“There is a clear, credible roadmap that Santos CEO Kevin Gallagher has set out and that he wanted to be held accountable by the market,” Hutley argued.
“There was no explanation that the combination of events on the roadmap… was just a random collection of possibilities.
“That’s not what (Santos) said. To say it was just possible would have put it in the category of aspirations, and that’s what they (Santos) were trying to say they had moved on from.”
Mr Huntley said Santos “went out of his way” to tell investors that his net zero plan went beyond “mere ambitions… to be clear and tangible”.
“The reality of this case is that the so-called plan was not a plan at all.
“It was a series of speculations without the kind of modeling that is reasonable for these kinds of statements.”
The court heard that Santos would argue that no reasonable investor would have believed that the company predicted it would reach net zero by 2040 in the specific manner set out in its roadmap.
The ACCR also states that Santos misrepresented natural gas as “clean energy” and portrayed blue hydrogen (which is produced from natural gas) as emission-free.
The organization is relying on a barrage of documents, including Santos’ 2020 annual report, briefings on ASX’s Investor Day site and a 2021 climate report.
The trial will last approximately three weeks.