In a historic legal settlement, EnergyAustralia has publicly admitted that carbon offsets do not undo the harms of burning fossil fuels and issued an apology to more than 400,000 customers of its ‘Go Neutral’ carbon offsetting program.

The resolution follows a landmark case brought by advocacy group Parents for Climate, marking the first time in Australia that a company has been held to account over “carbon neutral” greenwashing claims.

EnergyAustralia, the nation’s third largest domestic greenhouse gas emitter and the biggest participant in the government’s Climate Active carbon neutral certification scheme, acknowledged several key points as part of the settlement.

The company conceded: “Where a residential customer opted in to the ‘Go Neutral’ product, their electricity or gas use was still sourced predominantly from fossil fuels,” and, “Offsets do not prevent or undo the harms caused by burning fossil fuels for a customer’s energy use.

“Even with carbon offsetting, the emissions released from burning fossil fuels for a customer’s energy use still contribute to climate change.”

Parents for Climate CEO Nic Seton described the outcome as a “historic acknowledgement” and said: “Not only does this acknowledgement send a powerful message that the era of unchecked greenwashing is over, but it’s incredibly reassuring to see the commitment from one of the largest energy retailers in the country to want to do better for their customers and the climate.”

Seton added: “Climate claims must be backed by real action — not marketing spin.

“Today, EnergyAustralia’s statement makes clear that offsets should not be used as a licence to pollute.”

The settlement comes amid growing national scrutiny of corporate environmental claims.

A recent report from Parents for Climate found that 5.2 million Australian parents believe they’ve been misled by greenwashing, with 87 per cent calling for greater accountability for false or exaggerated claims.

EnergyAustralia has now withdrawn its Go Neutral product for new customers and will phase it out for existing customers by June 2025, shifting its focus to direct emissions reductions.

The case is expected to set a new standard for transparency and integrity in corporate climate claims and has intensified calls for regulatory reform of carbon offset marketing in Australia.