The Australian Climate Active program is at a crossroads. More companies are stepping away from the certification, citing concerns about the integrity of carbon offsets, legal risks, and a shift towards direct emissions reductions. With this transition, a major question arises: if companies are leaving Climate Active, where will their climate investment dollars go?
At NetNada, we work with businesses navigating the complex landscape of carbon accounting, emissions reduction, and certification. We’ve seen first-hand the value Climate Active has provided in giving businesses a framework for voluntary carbon neutrality, but we also acknowledge the concerns driving companies away.
This blog breaks down the state of Climate Active, the debate surrounding its future, and what comes next for corporate climate action in Australia.
Why Companies Are Leaving Climate Active
The hesitation around Climate Active stems from several factors:
1. Public Perception & Greenwashing Risks
Public trust in carbon offsetting has eroded, with increasing scrutiny over the quality of carbon credits and the validity of carbon neutrality claims. Companies worry that continuing to rely on offsets—rather than direct decarbonisation—could expose them to accusations of greenwashing.
2. Focus on Direct Emissions Reduction
Many businesses are shifting focus from purchasing offsets to cutting their own emissions. While this is an important step in long-term decarbonisation, some argue that it shouldn’t come at the expense of investment in high-quality climate projects.
3. Legal & Reputational Risks
High-profile legal challenges against carbon neutrality claims have raised concerns. With regulators tightening oversight, companies are now more cautious about how they communicate their sustainability commitments.
4. Uncertainty Over Climate Active’s Future
The government is reviewing Climate Active, considering significant changes—or even discontinuation. This uncertainty makes businesses hesitant to invest in a program that may no longer exist in its current form.
5. Weak Incentives for Supporting Australian Offsets
While Climate Active was designed to support Australia’s carbon offset market, most companies still opt for cheaper international credits. Today, 80% of offsets in Australia’s voluntary market are sourced from global projects, while only 20% are Australian Carbon Credit Units (ACCUs). The high cost of ACCUs (~$35 AUD per tonne) is a key deterrent.
The Bigger Debate: Can Climate Active Be Fixed?
Critics argue that Climate Active lacks standardisation and allows too much flexibility in emissions reporting. For example, some certified businesses exclude major Scope 3 emissions from their carbon neutral claims, making it difficult to compare one certification to another.
However, there is still a case for keeping Climate Active—if it undergoes major reform.
For the program to remain relevant, there must be:
- Stronger integrity rules to ensure offsets are used appropriately
- Standardised emissions boundaries to prevent selective reporting
- A clear role for high-quality offsets alongside direct emissions reductions
- More incentives to support Australian carbon credits & climate projects
At its best, Climate Active provides structure and transparency to corporate climate action. But for it to be a credible and valuable program, it must adapt to new expectations for emissions reductions and offset use.
Where Will Corporate Climate Investment Go Next?
As companies move away from Climate Active, the question remains: where will their sustainability budgets go?
Some options include:
- Internal Carbon Pricing & Ringfencing – Setting an internal carbon price and using those funds for emissions reduction projects.
- Energy Efficiency & Renewables – Investing in solar, wind, electrification, and operational improvements.
- Supply Chain Decarbonisation – Engaging suppliers to measure and cut Scope 3 emissions.
- High-Integrity Offsets – Choosing verified, high-impact carbon credits if offsets remain part of the strategy.
- Nature-Based Solutions – Investing in reforestation, regenerative agriculture, and biodiversity projects in Australia.
The key is ensuring that climate funding doesn’t disappear altogether. Whether through direct reductions, offsets, or new sustainability frameworks, corporate action must continue to evolve.
What’s Next?
Climate Active’s future depends on its ability to reform and regain business confidence. At the same time, companies must take a balanced approach—reducing emissions where possible while still supporting high-impact climate projects.
With major players like Telstra and Australia Post stepping away, the industry is watching closely to see how corporate Australia will redefine its approach to net zero.
Want to dive deeper into this debate?
This blog is based on insights originally shared in the LinkedIn newsletter License to Operate. To explore the full discussion, read the original post here.
