One of Australia’s largest energy companies, EnergyAustralia, has apologised to the 400,000 customers who had joined its carbon offset program, which since 2016 had promised to offset the emissions generated by their electricity and gas consumption. In a statement, the company acknowledged that carbon offsetting “is not the most effective way to help customers reduce their emissions,” and apologised to “any customer who feels that the way go neutral products were marketed was not clear enough.” The apology comes two years after the organisation Parents for Climate initiated legal action against the company, alleging deceptive and unfair practices for claiming it was reducing emissions—among other things, through the purchase of carbon credits.

This is the first time an Australian energy company has faced legal action over alleged greenwashing. According to the plaintiffs, it is a “historic acknowledgement” and a sign that “the era of unchecked greenwashing has come to an end.”

In Europe and the United States, two other cases have emerged in recent months. One is a class action lawsuit filed against Apple in the US in 2023, in which the company was accused of misleading consumers by promoting several Apple Watch models as carbon neutral. Plaintiffs pointed out that the offset projects linked to Apple’s claim do not represent actual emissions reductions, as they involve areas that have been protected for decades and would have remained so regardless of Apple’s investment.

More recently, a German court ruled against Adidas for misleading advertising after the company claimed it would be carbon neutral by 2050, without providing clear and specific information on how it plans to achieve that goal. The court specifically ordered the company to stop promoting the statement: “We will be carbon neutral by 2050: Adidas is committed to a set of ambitious targets that will pave the way to climate neutrality across our entire value chain by 2050.” The reason: the statement does not clarify whether offsets will be used to achieve the goal, and the term “climate neutrality” is ambiguous and potentially misleading to consumers if not accompanied by clear and verifiable information. The ruling paves the way for action against other brands that have pledged to become climate neutral without explaining how they intend to do so.

Thea solution: a decarbonisation plan

These three cases highlight not only that greenwashing is under increased scrutiny, but also that greenhouse gas offset projects are being increasingly called into question. In the case of Adidas, “the solution would have been to have a solid decarbonisation plan that prioritises emissions reductions and enables progress to be assessed, where offsetting practices are deferred to a later stage or used as a complementary—not central—tool within the decarbonisation strategy,” says Jordi Oliver, CEO of inèdit. This aligns with the Science Based Targets initiative, which recently authorised its signatories to use carbon offsets—but only for “residual emissions.”