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".
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.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.