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January 9, 2023

Australian regulator issues new greenwashing fine

Black Mountain Energy fined over allegedly false or misleading sustainability statements.

Australian oil and gas company Black Mountain Energy has paid a A$39,960 ($27,060) fine in response to infringement notices issued by the Australian Securities and Investments Commission, which accused the company of greenwashing.

ASIC issued three infringement notices on December 20 2022 to the listed company “in relation to concerns about alleged false or misleading sustainability-related statements made to the Australian Securities Exchange” between December 23 2021 and September 8 2022, it said.

The three statements in question updated investors on ‘Project Valhalla’ – an energy project in Western Australia, which the company says is based in the eighth-largest undeveloped gas reservoir in the world and the last non-developed basin in Australia. 

BME claimed that the greenhouse gas emissions from Project Valhalla would be net zero. ASIC had concerns that there was either no “reasonable basis to make the representations”, or that these statements were inaccurate.

On January 5, the commission announced that BME had paid its fine, adding that payment of an infringement notice was not an admission of guilt or liability.

Credibility concerns

According to its infringement notices, BME’s statements in an investor presentation published on December 23 2021 regarding Project Valhalla included claims that it would have “an industry-leading ESG scorecard” and net zero carbon emissions. 

BME also said it would minimise carbon emissions on its site and would use “high-integrity” carbon credits to eliminate Scope 1 and Scope 2 emissions. “BME is developing an unconventional drilling approach for low-impact, low-risk, carbon neutral natural gas,” according to the presentation.

These claims amounted to representations that BME was creating a natural gas project with net zero carbon emissions, and that the greenhouse gases linked to the project would be net zero, ASIC said. It added that these were false or misleading because the company “had not progressed any specific works related to its net zero aim and had not allocated funding for such works”.

BME had not performed any specific modelling of carbon dioxide emissions that might be generated by the project, and “did not have a credible or feasible plan for an ‘unconventional drilling’ approach”. The company’s net zero emissions target, meanwhile, would only apply if it was able to reach the project’s production stage, and was not intended to apply for exploratory or development work.

Following the announcement that BME had paid its fine, ASIC deputy chair Sarah Court said: “ASIC issued eight infringement notices for alleged greenwashing in 2022 and has started the year with further action against a listed company. 

“ASIC will continue to closely monitor sustainability claims and take action where we consider representations cannot be substantiated or are factually incorrect.”

In a statement, BME said it “has elected to pay the penalty of $39,960 on a no-admissions basis”. The payment was made on January 3.

Photo credit: Dreamstime

A service from the Financial Times