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Sydney Morning Herald
25-05-2025
- Business
- Sydney Morning Herald
Greenwashing is rife in Australia, but could its days be numbered?
Have you ever ticked the box to 'fly carbon neutral', had something delivered via 'carbon-neutral shipping' or chosen to pay a bit extra to buy 'carbon-neutral gas' from your energy retailer? These green premium products are marketed to us everywhere. They target eco-conscious consumers wanting to do the right thing and create the impression that by paying a premium, the carbon dioxide released into the atmosphere from flying, shipping or burning gas are neutralised or 'offset' with carbon credits. But the settlement of a recent court case has shown not only that this kind of marketing is misleading Australian consumers; it's also a form of greenwashing. This is a practice by which a business makes its products or services seem more sustainable than they are, usually in a bid to create a positive brand image or improve their reputation. According to a 2023 study by the Australian Competition and Consumer Commission, 57 per cent of businesses reviewed made concerning claims about their environmental credentials. This week, a case heard in the Federal Court of Australia offered us an up-close view of what this looks like in practice. In 2023, the advocacy group Parents for Climate first filed a greenwashing case against EnergyAustralia, arguing that the company's 'Go Neutral' gas product misled the more than 400,000 Australian customers who signed up. That's because the carbon offsets purchased by the company did not prevent or undo harms caused by burning fossil fuels. Loading In response to case, this week EnergyAustralia apologised to its customers and acknowledged that 'offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use. Even with carbon offsetting, emissions released from burning fossil fuels for a customer's energy use still contribute to climate change.' The acknowledgement from Australia's third-largest gas retailer that offsets don't neutralise pollution caused from burning gas marks a significant moment for corporate accountability. It also highlights the need for stricter rules on how companies use carbon credits and clearer guidelines around how they communicate this to customers and shareholders. Last year, Climate Integrity also referred Qantas to the ACCC for greenwashing, arguing that its 'Fly Carbon Neutral' option, which customers purchase for an additional fee, misleads customers about the impact of flying. Red Energy has also been approached by Climate Integrity regarding its 'carbon neutral' gas product, which uses a similar marketing tactic as EnergyAustralia.
The Age
25-05-2025
- Business
- The Age
Greenwashing is rife in Australia, but could its days be numbered?
Have you ever ticked the box to 'fly carbon neutral', had something delivered via 'carbon-neutral shipping' or chosen to pay a bit extra to buy 'carbon-neutral gas' from your energy retailer? These green premium products are marketed to us everywhere. They target eco-conscious consumers wanting to do the right thing and create the impression that by paying a premium, the carbon dioxide released into the atmosphere from flying, shipping or burning gas are neutralised or 'offset' with carbon credits. But the settlement of a recent court case has shown not only that this kind of marketing is misleading Australian consumers; it's also a form of greenwashing. This is a practice by which a business makes its products or services seem more sustainable than they are, usually in a bid to create a positive brand image or improve their reputation. According to a 2023 study by the Australian Competition and Consumer Commission, 57 per cent of businesses reviewed made concerning claims about their environmental credentials. This week, a case heard in the Federal Court of Australia offered us an up-close view of what this looks like in practice. In 2023, the advocacy group Parents for Climate first filed a greenwashing case against EnergyAustralia, arguing that the company's 'Go Neutral' gas product misled the more than 400,000 Australian customers who signed up. That's because the carbon offsets purchased by the company did not prevent or undo harms caused by burning fossil fuels. Loading In response to case, this week EnergyAustralia apologised to its customers and acknowledged that 'offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use. Even with carbon offsetting, emissions released from burning fossil fuels for a customer's energy use still contribute to climate change.' The acknowledgement from Australia's third-largest gas retailer that offsets don't neutralise pollution caused from burning gas marks a significant moment for corporate accountability. It also highlights the need for stricter rules on how companies use carbon credits and clearer guidelines around how they communicate this to customers and shareholders. Last year, Climate Integrity also referred Qantas to the ACCC for greenwashing, arguing that its 'Fly Carbon Neutral' option, which customers purchase for an additional fee, misleads customers about the impact of flying. Red Energy has also been approached by Climate Integrity regarding its 'carbon neutral' gas product, which uses a similar marketing tactic as EnergyAustralia.
The Advertiser
24-05-2025
- Business
- The Advertiser
Why the carbon offset 'swear jar' needs an overhaul
Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court. "What action we take will be dependent on that response," she said. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term." Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans." Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court. "What action we take will be dependent on that response," she said. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term." Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans." Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court. "What action we take will be dependent on that response," she said. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term." Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans." Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court. "What action we take will be dependent on that response," she said. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term." Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans."
West Australian
23-05-2025
- Business
- West Australian
Why the carbon offset 'swear jar' needs an overhaul
Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court based on its response. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term," she said. Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans."
Perth Now
23-05-2025
- Business
- Perth Now
Why the carbon offset 'swear jar' needs an overhaul
Carbon offsets seemed like an environmentally savvy investment for food packaging firm BioPak when the company invested in a solar power project in Southeast Asia. But over more than a decade, the project's price rose, its transparency fell and Gary Smith's firm started to question whether it was the best way to cut emissions. "My best description of carbon credits became a swear jar: I'm gonna do bad but I'll pay for it and then I'm all good, I can carry on," the BioPak chief executive told AAP. "You should be taking your funds and actively watching each dollar to see that it has an impact, in our opinion, and that's what we've done in our business." Rather than investing one per cent of the company's profits in carbon offsets, Mr Smith said it now spent money on ways to directly cut emissions from manufacturing, divert waste and educate consumers about composting. "We helped our partners rebuild a factory over the last 18 months and our energy use is 40 per cent of what it was - and that's a real impact," he said. "When I spent money on carbon credits, I had no measure to tell you that money resulted in carbon dropping from X to Y." The switch comes as more Australian companies scrutinise their investments in carbon offsets and whether it is legally sound to use them to claim their operations are carbon neutral. The re-think has been spurred on by power giant EnergyAustralia's apology to more than 400,000 customers as part of a legal settlement over alleged "greenwashing". But while the use, marketing and quality of carbon offsets is under scrutiny, some experts say there could still be a use for the system if there is significant reform. Carbon offsets are investments in environmentally friendly projects, such as renewable energy, revegetation or land care, that businesses can use to reduce their carbon footprints. Environmental group Parents for Climate triggered the latest wave of carbon offset soul-searching after reaching a settlement from its 2023 lawsuit against EnergyAustralia. Australia's third largest energy firm apologised to customers who felt misled by its carbon-neutral claims, clarifying that "offsets do not prevent or undo the harms caused by burning fossil fuels for a customer's energy use". The admission could be a game-changer for other high-polluting companies, the environmental charity's chief executive Nic Seton said, as it recognised carbon offsets did not undo emissions and should only be used as a last resort. "Not being able to make compensatory claims means companies are going to shift," he said. "There are a lot of companies out there making similar claims and we're very alive to that and we're going to be writing to all of them because we want to make sure they do it quickly." Green group Climate Integrity is also raising questions, sending a "letter of concern" to Red Energy to ask it to reconsider its "carbon neutral gas" product. The group set a Tuesday deadline for a response to its concerns, director Claire Snyder said, and will consider whether to take the company to court based on its response. "We're really hopeful that they'll see the writing on the wall from the Parents for Climate case and reconsider using carbon neutral (as a) marketing term," she said. Climate Integrity has also lodged a complaint with the Australian Competition and Consumer Commission about Qantas's "fly carbon neutral" offering that relies on carbon offsets. A Red Energy spokesman said the company was aware of the debate about the use of offsets and it would aim to meet customer needs. Qantas was committed to helping people compensate for some of the emissions associated with their flights by supporting projects outside the aviation sector, a spokesperson said. The companies might be some of many considering how they use and market carbon offsets after the legal precedent, Environmental Defenders Office lawyer Kirsty Ruddock said. While complaints and challenges about the use of carbon offsets were not new, the legal outcome demonstrated the stakes, which could be raised if class action lawsuits followed, she added. "It highlights the risk that lawyers have been talking about for some time ... about whether or not you need to be cutting to the chase and doing what the science says and reducing your emissions first, before you look at offsets," Ms Ruddock said. "Offsets do still have a role to play, but at the moment it's a bit of a work in progress because of all the issues that have been raised or found." The federal government program that sets carbon neutral standards and certifies products and companies, Climate Active, has come under criticism from many sources who have accused the organisation of sanctioning greenwashing. The organisation has attracted attention for certifying fossil fuel companies as carbon neutral due to their purchases of offsets. Former ACCC boss Allan Fels has called for its practices to be independently investigated, while more than 100 businesses have resigned as members of the scheme over the past 18 months, including Telstra, NRMA and Australia Post. A review of the program was launched in late 2023 but changes are yet to be announced, which Carbon Market Institute chief executive John Connor said was disappointing. EnergyAustralia's admission was "the nail in the coffin for the first phase" of carbon offsets, he said. But with changes to the way they were rated, governed and used, they could still be a valuable tool to help businesses reach net zero in a second phase. "Some people are saying we should kill Climate Active but there are perverse consequences if we do that," Mr Connor said. "We shouldn't be making those sorts of claims and we shouldn't just be focusing on neutrality, we should be making sure (businesses use) fair-dinkum decarbonisation plans."
