We would anticipate that the government would shut down a private company if it operated a plan that deceived customers, boosted investor confidence, and put its clients at risk of legal action.
However, the government itself is in charge of managing and advancing Climate Active.
The Australian government has been covertly supporting greenwashing for years, despite its claims to be taking action against it.
I have worked on the Climate Active program before, so I know what the goal is. However, integrity cannot be replaced by intent. Furthermore, the scheme's dependence on carbon offsets, lack of openness, acceptance of claims that might be impossible to verify, and lack of evaluation of actual emissions trajectories have made it a high-risk venture.
Climate Active is harmful in addition to being deceptive. It exposes investors to financial danger, businesses to legal peril, and customers to plain deceit. The repercussions are now becoming apparent when Energy Australia was sued for its long-standing "carbon neutral" claims.
This is how the plan operates. If a company or product uses carbon credits to offset its emissions, even if those emissions are rising, Climate Active certifies it as "carbon neutral." The offsets themselves are frequently of dubious durability and quality. However, after checking the box, the government endorses the assertion.
For almost ten years, Energy Australia used this program to sell its "carbon neutral" electricity product. By promoting the purchase of offsets, it claimed that the product had no effect on the climate and even helped it.
The business is currently being sued for engaging in fraudulent and misleading behavior. However, where is the accountability for the product's promotion and endorsement scheme?
It is simple to believe that due diligence is equivalent to government-backed certification. However, Climate Active has never confirmed that the carbon credits employed in these assertions are environmentally sound.
Reductions in absolute emissions are not necessary. It does not evaluate if the company is cutting emissions in all areas of its activities. Furthermore, because its limits are so strict, a gas business can grow gas output and maintain its "carbon neutral" certification.
That is not merely a hypothetical situation; it has actually occurred. In 2021, Cooper Energy received Climate Active's carbon neutral certification. Since then, it has grown its emissions intensity, absolute emissions, and gas production. However, the business has persisted in asserting its carbon neutrality, which is supported by official certification.
Even businesses that have been involved for a long time have begun to leave.
One of the original participants in the program, PwC, has departed Climate Active. Throughout its participation in the program, PwC's own emissions rose.
These changes show a wider understanding that the plan would now be a burden in terms of both reputation and the law, and they correlate with heightened public and judicial scrutiny.
As of right now, almost 150 brands have abandoned Climate Active. However, the government still permits businesses to advertise that they are environmentally conscious by using the environmentally Active stamp.
It still advertises these businesses on its official websites. Additionally, it keeps conveying to the general public that accreditation via Climate Active denotes something exacting, grounded in research, and reliable.
It doesn't. And the issue is that.
This is a governance failure as well as a policy failure. A program supported by the government is assisting businesses in making legally dubious claims. Customers are being duped into purchasing goods and services they think are more environmentally friendly. Investors are funding companies they believe are committed to net zero, only to find out later that those companies are increasing emissions and using offsets that do not work as promised.
When the government itself is endorsing and promoting those claims, the notion that businesses are exclusively to fault for greenwashing disintegrates.
The Climate Active brand may be deceptive, as the ACCC has already admitted. According to former chair Allan Fels, it probably violates consumer legislation. The agency in charge of the program has already started to backtrack, no longer referring to Climate Active as "one of the most stringent in the world" and instead recommending companies to conduct their own due diligence.
You should be aware that the Climate Active accreditation does not provide you with any protection if your company continues to use it to highlight its environmental credentials. In fact, it might make you more vulnerable. Ignorance is no longer an excuse. The market for carbon offsets is being closely watched worldwide. There is no question about the science behind reducing emissions. Additionally, there is currently a precedence in the law.
In the meanwhile, the government nevertheless promotes Climate Active as a reliable certification. However, it has never thoroughly examined its carbon offsets. Under the suggested reforms, it has no intention of doing so. The criteria have not been tightened to account for real emissions reductions. Additionally, it still permits participation from gasoline vendors and fossil fuel businesses.
This is not an instance of a few shady characters taking advantage of a well-intentioned system. This method is intended to facilitate flimsy compliance and to absolve the government and business of responsibility.
Climate Active turned into a handy loophole in the lack of any legislation. However, it is now a liability.
The courts will step in if governments refuse to shield companies from deceptive frameworks they have developed, consumers from misleading signals, and investors from dangers that have been misrepresented.
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