AGL Energy is staring down a costly lawsuit over its campaign to charge customers extra for what it claimed was carbon-neutral gas and electricity, in the first greenwashing class action to be brought in Australia.
Launched on Tuesday in the Federal Court, the lawsuit alleges that AGL has misled hundreds of thousands of households and businesses since July 2020. These customers paid $1.50 extra for the company’s “carbon-neutral” energy, according to Slater and Gordon, the law firm bringing the claim.
AGL allegedly promised that carbon credits would be used to offset these customers’ emissions. But according to Slater and Gordon, the offsets did not work, meaning AGL’s claims were misleading to its customers.
A similar lawsuit, brought by Parents for Climate Action against power company EnergyAustralia over its Go Neutral product, settled in May.
That lawsuit was not a class action, but as part of the settlement, EnergyAustralia accepted that “carbon offsets do not prevent or undo the harms caused by burning fossil fuels”. In July, the federal government scrapped a long-running but widely criticised scheme that allowed companies to claim “carbon-neutral” status if they met standards.
The AGL class action is the first claim brought by Slater and Gordon’s new climate and energy practice.
“The case comes down to some simple questions. Does this product do what it says on the tin? Did the people, or the planet, get what was promised?” said Cassandra Evans, legal counsel at Slater and Gordon.
“Living costs are already high. Families and small businesses squeezed budgets to pay extra because they believed they were reducing the climate impact of their energy use.”
As well as misleading customers, the lawsuit alleges that AGL breached consumer law by selling products that failed to provide the promised “climate benefit”, and by supplying products that were not fit for purpose.
Slater and Gordon is running the case on a no-win, no-fee basis, meaning group class action members will not have to cover the firm’s costs if the lawsuit fails. There is no separate litigation funder.
After the action was launched, AGL’s share price slipped from $8.87 to $8.69, or about 2 per cent, recovering to $8.74 when markets closed.
In a statement, AGL said it intends to “vigorously defend the proceedings”. “AGL takes its obligations under Australian consumer law seriously and remains committed to providing clear and accurate information to customers about its products and services,” the company said.