But in the case of Climate Active, it’s the government itself running the scheme — and promoting it.

While claiming to crack down on greenwashing, the Australian government has been quietly enabling it for years.

I previously worked on the Climate Active program and understand the intent behind it.

But intent is no substitute for integrity.

And the scheme’s reliance on carbon offsets — combined with limited transparency, no assessment of real-world emissions trajectories, and endorsement of claims that may be impossible to prove — has turned it into a high-risk proposition.

Climate Active is not just misleading — it’s dangerous. It exposes businesses to legal risk, investors to financial risk, and consumers to outright deception. And now, with Energy Australia taken to court over its long-standing “carbon neutral” claims, the consequences are finally surfacing.

Here’s how the scheme works. Climate Active certifies organisations and products as “carbon neutral” if they offset their emissions using carbon credits — even if those emissions are increasing.

The offsets themselves are often of questionable quality and permanence. But once the box is ticked, the government puts its name behind the claim.

Energy Australia sold its “carbon neutral” electricity product under this scheme for nearly a decade. It promoted the product as having no impact on the climate — and even as helping the climate — based on the purchase of offsets.

Now, the company faces litigation for misleading and deceptive conduct. But where is the accountability for the scheme that endorsed and promoted the product?

It’s easy to assume government-backed certification equals due diligence. But Climate Active has never verified the environmental integrity of the carbon credits used in these claims.

It does not require reductions in absolute emissions. It does not assess whether the business is reducing emissions across its entire operations. And its boundaries are so narrow that a gas company can increase gas production and still be certified as “carbon neutral.”

That’s not a hypothetical — that’s exactly what has happened. Cooper Energy was certified as carbon neutral by Climate Active in 2021. Since then, its gas production, emissions intensity, and absolute emissions have all increased. Yet the company has continued to claim carbon neutrality — backed by government certification.

Even companies with long-standing participation have started walking away.

PwC, one of the scheme’s earliest members, recently left Climate Active. During its time in the program, PwC’s own emissions increased.

These departures coincide with increased public and legal scrutiny, and reflect a broader recognition that the scheme may now be a reputational and legal liability.

More than 150 brands have now walked away from Climate Active. Yet the government continues to allow companies to use the Climate Active stamp to market themselves as climate responsible.

It continues to promote these companies on official websites. And it continues to suggest to the public that certification through Climate Active means something rigorous, science-based, and trustworthy.

It doesn’t. And that’s the problem.

This is not just a policy failure — it’s a governance failure. A government-endorsed scheme is helping companies make legally risky claims. Consumers are being misled into buying products and services they believe are better for the environment. Investors are putting money into firms they think are aligned with net zero — only to discover those firms are increasing emissions and relying on offsets that don’t do what they say they do.

The idea that companies are solely to blame for greenwashing falls apart when the government itself is certifying and amplifying those claims.

The ACCC has already acknowledged that the Climate Active brand may be misleading. Former chair Allan Fels has said it likely breaches consumer law. Even the department running the scheme has begun walking back its language — no longer calling Climate Active “one of the most rigorous in the world,” and instead advising businesses to do their own due diligence.

If you are a business still using Climate Active certification to promote your environmental credentials, you should know: That stamp does not protect you. It may, in fact, increase your risk. You can no longer claim ignorance. The carbon offset market is under sustained global scrutiny. The science around emissions reductions is unambiguous. And there is now legal precedent in play.

The government, meanwhile, continues to position Climate Active as a credible certification. But it has never conducted due diligence on its carbon offsets. It has no plan to do so under proposed reforms. It has not tightened the criteria to reflect actual emissions reductions. And it still allows fossil fuel companies and petrol sellers to participate.

This is not a case of a few bad apples exploiting a well-meaning system. This is a system designed to enable superficial compliance — and to shield both government and industry from accountability.

In the absence of real regulation, Climate Active became a convenient loophole. But now it’s a liability.

If governments won’t protect businesses from misleading frameworks they’ve created, if they won’t protect consumers from false signals, and if they won’t protect investors from misrepresented risks — then the courts will.

Energy Australia is just the beginning.