Environmental advocates Parents for Climate have issued a "wake-up call and invitation" to 13 energy retailers identified as using carbon offsets to market their products.
The findings follow legal challenge by the climate advocates that resulted in EnergyAustralia conceding "offsets do not prevent or undo the harms caused by burning fossil fuels", a case brought amid growing scrutiny of the integrity of carbon credits and the way they are used.
The "worst offenders", in Parents for Climate chief executive officer Nic Seton's view, claim their products are "carbon neutral" due to the purchase of offsets.
"Why that's a problem is because it's very confusing," he told AAP.
"A lot of people do not understand what carbon neutral means."
The implied "neutrality" is a red line for Mr Seton, who argues offsets cannot effectively compensate for burning fossil fuels.
Referring to revegetation and other emissions-curbing projects paid for by companies and governments to account for the greenhouse gases they are emitting, carbon offsets have been used in Australia for decades.
Proponents say they funnel money into emissions-reducing projects while critics are wary of integrity issues and worry offsets have moved well beyond their original intent as a last resort for hard-to-abate industries.
AGL, ActewAGL, Energy Locals, Engie, Pacific Blue Retail and Kleenheat were all found to be using carbon neutral in their marketing material in the environmental charity's assessment.
Several companies criticised in the report pointed to their involvement in the federal government's Climate Active scheme, which is supposed to certify their carbon neutral claims and prove offset integrity but is presently under review.
EnergyAustralia was once among them but has since been forced to dump its Climate Active-backed products, apologise to its customers, and acknowledge the shortcomings of offsets following legal challenge.
Some energy companies contacted by AAP have been assessing the language used to market their wares.
AGL said it was "actively reviewing" its approach to offset-based products" a spokesperson said, in part in response to the government's review of the Climate Active scheme.
"We are mindful of the limitations of offsets, including that offsets do not eliminate harms from emissions due to activities such as using energy from the grid," a spokesperson said.
An ActewAGL said it was refining the information on its website to "clarify how the carbon neutral gas opt-in product works".
"ActewAGL's carbon neutral gas opt-in product offers an interim option for these customers to contribute to emissions reduction efforts more broadly, whilst they are not in a position to make other changes in their home," it said.
A spokesperson for renewable energy generator and retailer Pacific Blue said it was making "regular updates" to its marketing material in line with consumer expectations.
Parents for Climate explicitly identified three companies making strides towards "responsible advertising and climate integrity" in the marketing of their energy products.
This included EnergyAustralia, as well as Nectr and Alinta Energy.
Mr Seton urged other energy companies to start "taking responsibility for emissions that they control and that they own".
"And doing that separate to any kind of offset use or investment in working or projects that are external to the company," he said.
The Department of Climate Change, Energy, the Environment and Water, which runs the Climate Active program, was contacted for comment, as well as companies listed as making carbon neutrality claims.
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