A new natural gas well site under construction in Washington County, Pennsylvania
AFP

Australian gas giant Santos has found itself embroiled in a court battle over alleged "greenwashing" of its climate credentials.

The company claimed to have a clear plan to achieve net-zero emissions by 2040, but critics argued it hasn't yet erected a plan to meet the goals.

The lawsuit, filed by The Australasian Center for Corporate Responsibility (ACCR), accused the fossil fuel company of misleading investors by "greenwashing" its net-zero claims and emissions-free blue hydrogen projects.

Santos, a AU$22 billion company, faces the landmark lawsuit that utilizes a combination of consumer and corporate laws to challenge fossil fuel companies' clean energy claims, potentially setting a precedent for future cases, ABC News reported.

The lawyer representing Santos will deliver their opening defense statement on Monday.

Noel Hutley, the attorney for the ACCR, said that Santos' 2020 annual report, which included a plan to reach net-zero emissions by 2040, sent a "clear, powerful message" to investors. However, according to ACCR, Santos lacked a legitimate foundation upon which to make this claim.

"There is a clear, credible road map that [Santos chief executive Kevin Gallagher] set out and wanted the market to hold him accountable for," Hutley argued. "There was no statement that the collocation of events in the road map ... were merely a random collection of possibilities.

"That's not what [Santos] said. To say it was just possible, would have put it in the class of aspiration, which is what they [Santos] were seeking to say they had moved beyond."

Santos' barrister, Neil Young, denied the "greenwashing" claims, arguing that the company had only outlined emissions reduction targets, but didn't make any firm commitments.

"They are all targets, they're not promises or predictions to achieve those outcomes," he told Justice Brigitte Markovic, per The Senior.