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The Australian Government has announced a proposed end to voluntary carbon-neutral certification through its Climate Active program
Climate Active will end on 30 June 2027, following a transition period.
Consultation is ongoing to decide whether the program should close entirely or whether selected voluntary standards and guidance should be retained after certification ends.
Current participants may remain certified during the transition, subject to existing licence arrangements and continuing reporting obligations. Participants who remain in the program will be expected to submit reports covering the periods for which they were certified, helping to substantiate historical carbon-neutral claims.
For participating organisations, the announcement raises an immediate question: what comes next?
Ending Climate Active creates an opportunity for something better
At first glance, ending Australia’s government-backed carbon-neutral certification program could appear to be a setback for voluntary climate action.
We see the potential for a different outcome.
Climate Active has played an important role in helping organisations:
- measure emissions
- invest in reductions
- address residual emissions through eligible offsets
- communicate their climate commitments through a recognised framework.
Those activities remain important. In our view, closing this program reflects a reporting environment that has become more demanding. Increasingly, stakeholders expect organisations to demonstrate the substance behind climate commitments, rather than rely principally on a certification mark or broad environmental claim.
The transition therefore presents an opportunity to move from certification-led climate communication towards a more comprehensive model built on reliable data, credible reductions, transparent reporting, effective governance and supportable claims.
Climate Active created valuable foundations
Climate Active has made a meaningful contribution to voluntary climate action in Australia.
For many businesses, it provided your first structured approach to greenhouse gas accounting and emissions management. Participating required you to define reporting boundaries, collect emissions data, identify reduction opportunities, purchase and retire eligible offsets, document your methodology and substantiate carbon-neutral claims.
This often required information to be drawn together from finance, procurement, property, travel, operations and supply-chain systems. In doing so, Climate Active helped many organisations develop capabilities that remain valuable well beyond certification.
The Australian Government has acknowledged that Climate Active helped fill a gap in the domestic market after beginning as the National Carbon Offset Standard in 2010. The Government lists the introduction of mandatory climate-related reporting, the maturation of international guidance and increasing demand for direct emissions reductions as reasons why there is now less need for government certification to incentivise voluntary action.
Organisations should seek to preserve the emissions data, governance practices and management systems developed through participation in the program.
Why expectations around climate claims have changed
The environment in which Climate Active operates has changed considerably.
Investors, customers, regulators, lenders and supply-chain partners increasingly want to understand not only the claim being made, but also how emissions were measured, which boundaries were applied, what reductions were achieved, how offsets were used and whether climate targets are supported by a credible delivery plan.
This reflects a broader movement away from label-based sustainability communication and towards evidence-based accountability.
The Australian Competition and Consumer Commission (ACCC) states that environmental and sustainability claims must be truthful and accurate and that businesses should have reasonable grounds for representations about future events. It also warns that a misleading impression can result from omitted information and from the overall presentation of a claim, not only from an expressly incorrect statement.
For financial products and investment-related communications, the Australian Securities and Investments Commission (ASIC) similarly identifies greenwashing as the misrepresentation of the extent to which a product or investment strategy is environmentally friendly, sustainable or ethical. ASIC emphasises the importance of complying with prohibitions on misleading and deceptive conduct and with applicable disclosure obligations.
Once Climate Active certification ends, your organisation may need to give even greater consideration to how your climate claims are framed and substantiated without the accompanying government certification framework.
Why the transition could support better climate reporting
The stated rationale behind ending Climate Active signals that voluntary climate action is becoming more important, not less.
Instead of a single certification program, we are moving towards more comprehensive corporate accountability. Stakeholders increasingly expect reliable greenhouse gas inventories, evidence of direct emissions reductions, credible transition plans, transparent explanations of offset use, effective governance and climate information capable of withstanding internal review or external assurance.
For organisations making genuine progress, this shift could be beneficial.
A certification mark can communicate that specified requirements have been met for a particular period and reporting boundary. It cannot, by itself, explain how climate-related risks affect strategy, how investment decisions support emissions reduction, whether the emissions trajectory is credible or how management responds when progress falls behind plan.
A more evidence-based approach gives organisations an opportunity to communicate these matters directly and with greater nuance.
This is not to suggest that certification had no value, or that every organisation will benefit automatically from its closure. The absence of a common domestic certification framework may create uncertainty, particularly for smaller organisations seeking a recognised voluntary pathway. There may also be no single like-for-like replacement.
The opportunity lies in how your organisation responds. Those that maintain credible emissions accounting, reduction planning, governance and transparent reporting can continue to demonstrate climate leadership. If you relied primarily on the certification label, you may need to reconsider both the substance of your climate strategy and how your claims are communicated.
Climate reporting does not end with Climate Active
The proposed closure does not reduce the need to understand and manage greenhouse gas emissions.
Reliable emissions information remains relevant to corporate strategy, customer and tender requirements, supply-chain questionnaires, investor and lender engagement, voluntary sustainability reporting, emissions-reduction planning and public environmental claims.
For entities within Australia’s mandatory climate-reporting framework, climate information is also becoming part of mainstream corporate reporting. AASB S2 requires applicable entities to disclose information about climate-related risks and opportunities that could reasonably be expected to affect their cash flows, access to finance or cost of capital over the short, medium or long term. Its core content covers governance, strategy, risk management, and metrics and targets.
What is the difference between Climate Active and mandatory sustainability reporting?
Climate Active and AASB S2 serve different purposes. Carbon-neutral certification is not a substitute for climate-related financial disclosure, and an AASB S2 report does not automatically replace the emissions-management discipline encouraged by Climate Active.
However, many of the underlying organisational capabilities are complementary. Clearly defined boundaries, reliable emissions data, documented methodologies, effective governance, internal controls and traceable evidence can support both voluntary climate action and mandatory reporting.
The practical question for organisations is how you will maintain credible climate performance and communication once a carbon-neutral label is no longer available.
Next steps for organisations currently certified with Climate Active
Current Climate Active participants should first determine what the transition means for your certification, licence agreement, reporting periods, use of trademarks and existing public claims.
Do not assume that the proposed closure removes your existing obligations. Climate Active’s participant information states that participants will be required to submit reports covering the periods for which they were certified. The Climate Active trademark may continue to be used while an active licence agreement remains in place, subject to the applicable user guide and licence conditions.
Establish a clear transition timetable covering outstanding reports, offset obligations, the cessation of trademark use and the review of websites, proposals and marketing materials.
A reliable greenhouse gas inventory remains the foundation of credible climate action.
Organisations should retain and strengthen the systems developed through Climate Active, including:
- documented reporting boundaries
- clear data ownership
- calculation methodologies
- emission factors
- estimation processes
- review controls.
A clear basis of preparation can help users understand how the inventory was developed, what it covers and where uncertainty remains.
This information is valuable even where an organisation is not currently subject to mandatory climate reporting. Customers, financiers and larger supply-chain partners may still request emissions information as part of their own reporting and procurement processes.
The transition provides an opportunity to reassess whether climate strategies place sufficient emphasis on reductions within your organisation’s operations and value chain.
Depending on the organisation, practical initiatives may include:
- energy efficiency
- renewable electricity
- fleet transition
- process improvements
- product redesign
- supplier engagement
- changes to procurement practices.
High integrity offsets may continue to form part of a broader climate strategy, particularly for residual emissions. However, organisations should communicate their use separately from direct emissions reductions so stakeholders can understand the respective contribution of each.
A target describes an intended destination. A transition plan explains the pathway.
A credible plan should connect emissions objectives with:
- accountable governance
- specific initiatives
- timing
- investment requirements
- operational dependencies
- monitoring processes.
It should also acknowledge uncertainties and constraints rather than imply a level of precision that the organisation cannot support.
Even where a formal transition plan is not mandatory, the process can help management turn a long-term ambition into practical decisions and measurable actions.
Climate information increasingly informs strategic, financial and public decision-making.
Boards and executive teams should understand which climate commitments the organisation has made, who owns the underlying data, how progress is monitored and who approves external claims.
They should also consider whether consistent information is being used across annual reports, sustainability reports, websites, tender submissions and investor materials.
Strong governance reduces the risk that public communications become disconnected from underlying performance.
The proposed end of certification is an appropriate trigger for your organisations to review its environmental and carbon-related claims.
Rather than replacing the Climate Active trademark with another broad label, organisations should consider whether more specific communication would be clearer and more credible. A well-supported statement might explain the reporting period, emissions boundary, reductions achieved, role of offsets, relevant exclusions and progress against targets.
The ACCC’s guidance emphasises that environmental claims should be clear, accurate and supported by evidence, and that businesses should consider the overall impression created by the claim.
Independent assurance can help organisations demonstrate that selected climate information is supported by appropriate evidence and prepared against suitable criteria.
The scope might include:
- a greenhouse gas inventory
- selected Scope 1, Scope 2 or Scope 3 emissions
- progress against specified targets
- climate-related financial disclosures
- climate claims.
Assurance is not a substitute for a sound climate strategy. Its value is strongest where reporting boundaries, methodologies, criteria and underlying evidence are clearly defined.
How RSM can help with climate action and assurance
The proposed end of Climate Active certification would not eliminate the need for high-quality climate accounting, reporting and assurance. It would change how organisations demonstrate credibility.
RSM can support organisations through the transition by assessing the implications for existing certification and claims, strengthening greenhouse gas inventories, documenting emissions methodologies and reviewing readiness for evolving reporting expectations.
We can also assist organisations to develop practical emissions-reduction roadmaps and transition plans, strengthen climate governance and controls, prepare AASB S2 disclosures where applicable, and obtain independent assurance over greenhouse gas inventories and climate claims.
The next phase of corporate climate accountability will place greater weight on the quality of emissions data, the credibility of reduction strategies, the transparency of offset use, the effectiveness of governance and the care with which claims are communicated.
For organisations prepared to embrace the shift, the proposed end of Climate Active can be an opportunity to move beyond certification and demonstrate the substance behind your climate commitments.
