Sustainability claims and advertising: fossil free versus KLM

Blogs Iris Graumans Floris de Vriend Energy & Sustainability
At a time when consumers are becoming increasingly aware of the environmental impact of their purchases, companies are embracing the call for sustainability. Promoting and advertising green initiatives and environmentally friendly features of products is no longer just a trend, but rather has become an essential part of advertising. Finding a balance between the desire to highlight sustainability initiatives while not misleading consumers is a challenge many companies face. This is also clearly illustrated by a recent ruling of a case between the Royal Dutch Airlines ("KLM") and the Foundation to Promote the Fossil-Free Movement ("Fossil-Free").

What is this case about?

Fossielvrij has initiated a class action against KLM in this case. Fossielvrij argues that KLM is engaging in greenwashing, by making vague and general advertising statements regarding environmental or sustainability benefits. This is allegedly evidenced by nineteen advertisements KLM has made, such  "Fly Responsibly", "Step by step to a sustainable future" and "Smaller carbon footprint, more forests". KLM also offered a CO2 offset product called CO2ZERO in the advertisements. According to the court, the use of the term "sustainable" is not unacceptable. But when using such vague terms about environmental benefits with social connotations, it is up to KLM to make clear what is meant in this case. Otherwise, there is a risk of creating the impression among consumers that there is no (or less) negative environmental impact than the reality. And that can be misleading.

The court's opinion

The court ruled that most of the advertisements KLM made were misleading. Those expressions create the impression that flying can be a sustainable business and that a "compensation" product actually reduces the impact of a flight on the climate. However, the CO2 emissions themselves are not reduced by a compensation product that involves reforestation. The impression created by KLM is incorrect and therefore unlawful under the Unfair Commercial Practices Act. Earlier (largely) the same expressions have been judged by the Advertising Code Committee ("RCC"). The RCC also ruled that the advertisements were misleading. KLM did not use the advertisements afterwards. KLM therefore does not have to rectify the statements. However, the court did advise KLM that in new communications it must inform consumers 'honestly and concretely' about its ambitions in the field of CO2 reduction, for example.

Actualities ACM

KLM is not the only company struggling with advertising 'sustainability claims'. This is also evident from rulings by the RCC and instructions from the Authority Consumer and Market ('ACM'). The ACM is increasingly actively monitoring sustainability claims. The ACM's increasing focus is evident from, among other things, the instructions it has issued to H&M and Decathlon and more recently to the Plus and Zalando (via the German regulator). The ACM also has an (updated) Sustainability Claims Guide published to help companies formulate sustainability claims. In it, the ACM provides five rules of thumb to avoid deception:
  1. Use accurate, clear, specific and complete sustainability claims;
  2. Substantiate your sustainability claims with facts and keep them current;
  3. Make fair comparisons with other products or competitors;
  4. Describe future sustainability ambitions in concrete and measurable terms;and
  5. Make sure that visual claims and labels are helpful to consumers and not confusing;

Future laws and regulations

There is also an increasing focus on sustainability claims within the EU. As part of the European Green Deal, work is underway on a ' Green claims directive' or Green Claims Directive. The directive aims to provide a clearer review framework for "green claims. The new proposed legislation includes transparency of sustainability claims with stricter requirements for substantiation. There will be specific requirements for environmental claims. Furthermore,  the draft directive creates an obligation for companies to have sustainability claims verified in advance by an independent verifier. This verifier will make a decision within 30 days and only approved claims may be used. It is further relevant that these obligations will not apply to micro-enterprises. For now, the rules do not yet apply but the directive is expected to be debated soon in the European Parliament (see current status here). After that, it still needs to be transposed into national laws and regulations. Are you facing sustainability claims for your company? Or do you wish to take action against sustainability claims? If so, please feel free to contact the writing of this blog, Iris Graumans or Floris de Vriend.