Groundbreaking court case in which a group of activists sues gas giant Santos for allegedly misleading investors

Gas giant Santos told investors it had a clear plan to achieve net zero emissions by 2040 but had no evidence to back it up, the Federal Court heard during the first morning of legal proceedings against the gas giant.

Shareholder activist group the Australasian Center for Corporate Responsibility (ACCR) filed a lawsuit in the Federal Court in 2021, accusing the fossil fuel company of misleading and deceptive conduct towards investors.

ACCR accused the company of “eco-shaming” in claims it will achieve net-zero emissions by 2040 and its blue hydrogen projects will be emission-free.

Santos Ltd, valued at approximately $22 billion, has onshore and offshore oil and gas projects in Australia, the United States, Papua New Guinea and East Timor.

ACCR says this is the first case of its kind in the world in which consumer and corporate rights are being used to challenge the veracity of a fossil fuel company’s claims that it can produce clean energy and achieve its net zero emissions target.

Santos allegedly sent a “clear and strong message”

In his opening statement, ACCR barrister Noel Hutley SC told the New South Wales Federal Court that Santos had sent a “clear and 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 did not have an adequate basis to claim it had a specific path to reduce emissions by 26-30 percent by 2030 and achieve full net-zero energy status by 2040, as outlined in its report to investors for 2020

In opening submissions, ACCR’s barrister, Noel Hutley SC, argued that Santos had told investors it had a roadmap to achieving net zero emissions but had no concrete evidence to support it.

“There is a clear and credible roadmap that Gallagher set out and wanted the market to hold to account,” Hutley said, referring to Santos CEO Kevin Gallagher.

“There was no statement that the set of events in the roadmap… was merely a random set of possibilities. That’s not what (Santos) said. To say that it is simply possible would be to put it in the aspirational class, which is whatever they (Santos) wanted to say they have gone beyond.”

Huntley argued that Santos had “gone out of its way” to tell investors that its plan to achieve net zero goes beyond “mere ambition… it is intended to be clear and tangible”.

“The reality of this case is that the so-called plan was not a plan at all, but a series of speculations without the appropriate modeling that would be reasonable for these types of statements.”

The court heard Santos argued that no reasonable investor would believe that the company envisaged achieving net zero by 2040 in the manner set out in the roadmap.

ACCR also argues that Santos misrepresented natural gas as “clean energy” and presented blue hydrogen (produced from natural gas) as emission-free.

The organization relies on a range of documents, including Santos’ 2020 annual report, briefings on the ASX Investor Day website and the 2021 Climate Report.

The process will take approximately three weeks.

More coming soon.