Australian gentailer AGL has been served with a class action lawsuit in the Federal Court over its ‘carbon neutral’ gas and electricity products.
The proceeding alleges customers paid a premium believing AGL’s ‘carbon neutral’ products would offset the emissions linked to their energy use, when in fact the carbon credits AGL used to support those claims did not genuinely deliver that outcome.
The class action alleges AGL’s claims were misleading and deceptive within the meaning of the Australian consumer law, and amounted to a type of ‘greenwashing’.
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Law firm Slater and Gordon is seeking compensation for affected customers and an injunction to stop the unlawful conduct, alleging AGL breached Australian consumer law by misleading customers, selling products that did not provide the promised climate benefit, and
supplying products that were not fit for the purpose for which customers bought them.
AGL has sold the products for about a $1.50 add-on per week since July 2020.
Slater and Gordon legal counsel Cassandra Evans says customers paid extra to make a meaningful environmental difference.
“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,” she said.
“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?”
Evans says consumers should be able to trust environmental claims made about products and services.
“People spend their time and hard-earned money researching and choosing products and services that reflect their values and preferences.
“They rely on labels and claims to make informed decisions. Environmental claims must be clear and accurate. The products should match the promise.”
The case comes amid growing concern about ‘carbon neutral’ claims, carbon offsets, and greenwashing.
In July 2026, the Australian Government announced it would scrap the Climate Active program and move away from the term ‘carbon neutral’, citing concerns about the credibility of claims relying heavily on carbon offsets rather than direct emissions reductions.
In May 2025, EnergyAustralia apologised to customers and resolved legal action brought by Parents for Climate over its ‘Go Neutral’ product. It acknowledged that carbon offsets do not prevent or undo the harm caused by burning fossil fuels.
Evans says the EnergyAustralia outcome showed why AGL’s claims required close examination.
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“We say AGL should be held to the same standard. If this case succeeds, we expect strong scrutiny of ‘carbon neutral’ claims and for misleading products to be removed from the market,” she says.
This is the first class action brought by Slater and Gordon’s new Climate and Environment practice.
AGL issued a brief statement in response to the class action, saying, “AGL takes its compliance obligations seriously and intends to vigorously defend the proceedings.”
