A parent activist group has reached a settlement with one of Australia's largest energy companies after mounting a court challenge claiming customers were misled about greenhouse gas emissions.
Parents for Climate was set to claim in the NSW Federal Court that EnergyAustralia misled more than 400,000 customers using its Go Neutral products.
It was claimed the company marketed the products as "carbon neutral" due to the purchase of offsets, saying consumers would have a "positive impact on the environment" by purchasing them.
But the court was told on Thursday the parent group would file to discontinue proceedings as a settlement had been reached between the parties, with a statement on the agreement to be issued on Monday.
Parents for Climate has more than 20,000 members.
The lawsuit would have been the first greenwashing case launched against an energy firm in Australia.
The charity, represented by Equity Generation Lawyers, was seeking a declaration that EnergyAustralia misled customers about greenhouse gas emissions, a corrective statement to customers and restrictions on its future marketing.
Parents for Climate chief executive Nic Seton said Australia's rules on environmental claims, including guidance issued by the Australian Competition and Consumer Commission, were not strong enough to prevent greenwashing.
"Our own analysis of energy companies here in Australia is that this practice is quite common and does need to change."
EnergyAustralia withdrew its Go Neutral products for new customers in November, but a spokesperson for the company said it was committed to offering customers clean energy solutions.
The company is one of Australia's largest energy retailers, with 1.6 million customers, and operates two coal-fired and four gas-fired power plants across NSW, Victoria and South Australia.
It ranked as Australia's third-highest emitter in 2023-2024, according to statistics from the Clean Energy Regulator, and produced 16.5 million tonnes of carbon emissions.
The Australia Institute said the federal government was failing to protect consumers and businesses from misleading claims and harmful practices.
It said the government promoted carbon offsetting and certified claims of "carbon neutrality" by big emitters through its Climate Active scheme.
The institute has filed a complaint with the consumer watchdog saying Climate Active may be misleading and deceptive under consumer law.
