Legal action against Santos attracts attention of watchdog

THE corporate regulator says it is “monitoring” legal action brought against Santos by climate-focused shareholder advocates as part of its action against misleading environmental disclosures.

In an internal memo, Australian Securities and Investments Commission officials note their interest in the legal proceedings are part of the agency’s work on sustainable finance.

“Currently, (the) office of enforcement has a number of greenwashing investigations,” reads the memo, prepared in September for use by the regulators’ staff at parliamentary hearings.

The document also notes most of these investigations are at an “early stage” and relate to suspected misleading statements on net zero targets, emissions reductions goals and whether companies are providing the screening on sustainable finance products.

“ASIC is monitoring the greenwashing case brought by the Australasian Centre for Corporate Responsibility ... regarding representations that Santos’ natural gas product is ’clean fuel’ and that Santos has a credible and clear plan to reach net zero emissions by 2040,” it reads. Further commentary about the proceedings have been redacted.

The ACCR filed against Santos in August 2021, alleging its description of natural gas as a “clean fuel” was a misrepresentation.

The ACCR also alleges the company is misleading investors about its plan to achieve net zero emissions by 2040, with Santos increasing its natural gas operations instead. The group claims Santos’ net zero pathway depends on an undisclosed assumption about the effectiveness of carbon capture and storage.

The matter is due before Federal Court judge Michael Lee next month before hearings later this year. ACCR executive director Brynn O’Brien said companies – “especially major listed emitters” – needed a credible plan to deliver net zero commitments.

“Investors rely on these company commitments in order to make serious decisions about the allocation of capital, including about how the retirement savings of Australian workers are invested,” Ms O’Brien said. “We think Santos’ . . . targets, and the feasibility of meeting them in real world terms, deserve close scrutiny. We have asked the courts to do that. If ASIC is also going to take a closer look, we certainly welcome that.”