Australian Government to Scrap Climate Active ‘Carbon Neutral’ Certification

Overview

On 24 July 2026, the Australian Government’s Department of Climate Change, Energy, the Environment and Water (DCCEEW) announced plans to discontinue the Climate Active certification programme and phase out the government-backed “carbon neutral” brand. A public consultation paper has been released, with submissions open until 18 September 2026, seeking feedback on two primary options: fully closing the Climate Active programme outright, or ending the certification scheme while retaining select voluntary technical standards and guidance materials. Either path leads to the same outcome for the thousands of Australian businesses, councils, property developers, and product manufacturers currently holding or actively pursuing Climate Active certification: the government-backed trademark they have built sustainability strategies around will cease to exist.

Climate Active traces its origins to the National Carbon Offset Standard (NCOS), established in 2010, which itself replaced the earlier Greenhouse Friendly programme. Over more than fifteen years, the programme became the de facto gold standard for voluntary carbon neutrality claims in Australia, covering everything from individual products and buildings through to entire organisations and events. Its discontinuation is not a minor administrative update. It represents a fundamental repositioning of how the Australian Government expects businesses to account for and communicate their climate-related performance, moving away from government-endorsed offset purchasing toward verifiable, mandatory financial disclosure and direct emissions reduction.

For environmental professionals advising developers, corporate occupiers, councils, and infrastructure proponents, this change has immediate practical consequences. Clients who have structured their sustainability marketing, building certifications, procurement criteria, and stakeholder communications around the Climate Active trademark now face a transition period of uncertain duration, during which the legal and reputational risks associated with carbon neutrality claims are shifting rapidly. Understanding the regulatory architecture driving this change, and what replaces it, is essential preparation for any practitioner operating in the sustainability, ESG, or corporate environmental advisory space.

Key details of the Climate Active phase-out and the regulatory drivers behind it

The DCCEEW consultation paper presents the closure of Climate Active as a deliberate policy response to a changed regulatory environment, rather than a reflection of programme failure. The department’s stated rationale is that the voluntary certification context has been overtaken by mandatory frameworks, rendering a government-backed offset certification scheme both redundant and potentially misleading. The consultation period closes on 18 September 2026, after which the government is expected to announce its preferred option and a formal transition timeline. No definitive closure date has been confirmed as of the time of writing, but the direction of travel is unambiguous.

The primary legislative driver behind this shift is the rollout of mandatory climate-related financial disclosures under AASB S2, the Australian Accounting Standards Board’s climate disclosure standard, which aligns with the International Sustainability Standards Board (ISSB) framework. Group 1 entities, the largest Australian corporations by revenue and asset size, are already subject to mandatory reporting obligations with limited assurance requirements. Group 2 entities, medium-sized corporations, commenced their first mandatory reporting period from 1 July 2026, with reports not yet due at this stage. Full reasonable assurance, equivalent to an audit-level standard, does not apply across all groups until financial years commencing on or after 1 July 2030. This staged rollout means that the obligations are live and escalating, not theoretical.

Alongside AASB S2, the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) continues to govern the measurement and reporting of greenhouse gas emissions and energy data for corporations meeting applicable thresholds. The Safeguard Mechanism, which operates under the NGER Act, sets baseline emission limits for Australia’s largest industrial facilities, with those baselines declining over time in alignment with Australia’s emissions reduction targets. The Australian Carbon Credit Unit (ACCU) Scheme remains operational, but the regulatory and reputational environment around offset purchasing has deteriorated significantly. Multiple independent reviews, including the 2023 Chubb Review of the ACCU scheme, have scrutinised the integrity of Australian carbon offsets, and the prospect of relying on ACCU purchases alone to support a carbon neutrality claim is now a legally and commercially precarious position.

Advocacy organisations including the Climate Council and Parents for Climate have publicly welcomed the closure of Climate Active, on the grounds that the programme allowed organisations to claim carbon neutrality through offset purchasing rather than genuine emissions reduction at the source. This criticism is relevant to the legal risk dimension: the Australian Competition and Consumer Commission (ACCC) has sharpened its focus on environmental and sustainability claims under the Australian Consumer Law, publishing specific greenwashing guidance and taking enforcement action against misleading green marketing. Any business that continues to market itself as “carbon neutral” after the Climate Active trademark is withdrawn, without a substantiated and independently verifiable basis for that claim, faces materially elevated exposure under consumer protection law.

Australian context: how this shift intersects with existing environmental and disclosure frameworks

For Australian environmental practitioners, the closure of Climate Active does not occur in isolation. It lands within a disclosure and compliance landscape that is simultaneously becoming more prescriptive at the federal level and more contested at the level of individual claims. The convergence of AASB S2 obligations, ACCC greenwashing enforcement, and the declining credibility of offset-based neutrality claims means that practitioners advising clients on sustainability positioning must now navigate a more complex and legally consequential environment than at any previous point in the programme’s history.

Under AASB S2, entities subject to mandatory climate disclosure are required to report Scope 1, Scope 2, and material Scope 3 emissions in accordance with the Greenhouse Gas Protocol or an equivalent methodology. This is a material shift from the Climate Active model, which allowed certified entities to offset residual emissions rather than requiring their full measurement and public disclosure within an auditable financial reporting framework. The implication for practitioners is significant: clients who previously managed their climate narrative through certification are now required to measure and disclose emissions comprehensively, and to have those disclosures assured by an independent third party on a progressively stricter standard over time.

The NGER Act and Safeguard Mechanism add a further layer of obligation for clients operating large industrial facilities. For these entities, the question is no longer whether to report, but how to manage declining baselines and what role, if any, ACCUs play in a compliance strategy as distinct from a voluntary marketing strategy. Practitioners should note that the integrity standards applicable to ACCUs in a Safeguard compliance context are distinct from those that previously applied under Climate Active, and clients should not assume that units that satisfied the certification programme’s requirements will automatically satisfy emerging disclosure and compliance standards.

From a state and territory perspective, planning and development approvals in jurisdictions including New South Wales, Victoria, and Queensland increasingly reference sustainability performance requirements that have historically pointed toward Climate Active or equivalent voluntary standards. As the federal programme winds down, there is likely to be a transitional period during which state-level planning instruments and sustainability requirements reference a certification standard that no longer exists or is no longer actively administered. Practitioners advising on development approvals, environmental impact assessments, and infrastructure projects should audit any existing conditions or commitments that reference Climate Active and begin engaging with relevant consent authorities about how those references will be interpreted going forward.

Procurement frameworks at both the federal and local government level similarly require review. Many councils and government agencies have embedded Climate Active certification as a preferred or required standard in tender documents, supplier codes of conduct, and procurement policies. The phase-out creates an obligation for procurement teams and their advisers to identify and update these references, and to determine what equivalent standard, if any, will be recognised in place of Climate Active certification for the purposes of demonstrating carbon neutrality or low-emissions performance.

What practitioners should be doing now

The consultation period represents an opportunity for organisations with a material interest in the outcome to engage directly with DCCEEW before the preferred option is confirmed. Submissions close on 18 September 2026, and practitioners advising clients who hold Climate Active certification, who have made public commitments referencing the programme, or who operate in sectors where the certification has been embedded in procurement or planning requirements should consider whether a submission is warranted.

Beyond the consultation, the more immediate practical task is a structured audit of where Climate Active appears in a client’s external commitments. This includes sustainability reports, investor disclosures, product labelling, building tenancy documentation, planning conditions, and supplier agreements. Each of these touchpoints carries a different risk profile depending on the nature of the commitment and the audience to whom it was made. Commitments made in investor disclosures or product labelling carry the highest regulatory exposure under consumer protection and corporations law; commitments made in internal strategy documents carry the least.

Practitioners should also begin advising clients on the transition from offset-based neutrality claims to science-aligned emissions reduction targets. The Science Based Targets initiative (SBTi) provides a credible international framework for setting and verifying emissions reduction targets consistent with limiting global warming to 1.5 degrees Celsius. While SBTi certification is not a direct replacement for Climate Active, it provides a defensible and internationally recognised basis for climate-related claims that is less vulnerable to the integrity criticisms that have increasingly attached to offset-based approaches.

Finally, practitioners should be alert to the ACCC’s continued focus on greenwashing. The commission’s 2023 guidance on environmental claims makes clear that vague or unqualified carbon neutrality claims are a priority enforcement area. As the Climate Active trademark loses its government backing, any organisation that continues to use carbon neutral language in its marketing without a clearly disclosed and independently verifiable methodology is exposed. The practical advice is to ensure that any retained climate claims are specific, qualified, and supported by disclosed methodology — and to treat the phase-out of Climate Active as a prompt to review all environmental marketing claims, not merely those that directly referenced the certification.

References and related sources

• Primary source: www.dcceew.gov.au
• ccarbon.info
• gbca.org.au
• climatecouncil.org.au
• miragenews.com

How iEnvi can help

iEnvi provides specialist consulting services relevant to this topic. Our team includes CEnvP Site Contamination Specialists with experience across contaminated land, groundwater, remediation, ecology, and regulatory compliance.

• iEnvi contaminated land investigation services
• iEnvi remediation and validation services
• iEnvi expert services and independent review services

---

This is an iEnvi Machete news summary. Prepared by iEnvi to summarise the source article for contaminated land, groundwater, remediation, approvals and site risk professionals.

Published: 26 Jul 2026

Need advice on this topic? Speak to an iEnvi expert at info@ienvi.com.au or 1300 043 684, or contact us online.