The rapid rise of greenwashing litigation

What is greenwashing and why is it done?

Greenwashing is generally defined as the practice of making false, unsubstantiated or exaggerated claims about the environmental benefits of a product, service or company. It is a marketing technique employed by organisations to make them seem more environmentally friendly, sustainable and socially responsible than they really are.

Organisations use such tactics in order to improve their public image, attract environmentally conscious customers or gain a competitive edge in the market. This includes governments, politicians and other state actors that employ greenwashing to paint their actions or inactions as environmentally friendly in an attempt to sway public opinion in their favour.

However greenwashing results in consumers being misled and can hinder genuine sustainability efforts by diverting attention and resources away from more meaningful environmental initiatives.

Greenwashing litigation on the rise

Greenwashing litigation involves individuals, consumer advocacy groups or regulatory bodies bringing lawsuits against entities that make false or misleading statements about their environmental or sustainability practices.

In line with the significant increase in recent years of climate change litigation, a consequence of the ever-increasing awareness of the impacts of climate change and the urgency of taking action to contain it (for more information about this type of litigation see here), greenwashing litigation cases have also risen sharply. Research recently published by the Grantham Research Institute found that a total of 81 greenwashing cases against companies were filed around the world between 2015 and 2022. Of these, 27 were filed in 2021 and 26 were filed in 2022, compared with just 9 cases in 2020 and 6 cases in 2019.

The aim of such litigation is to hold organisations accountable for their deceptive marketing practices through seeking remedies such as monetary damages, injunctive relief or corrective action. In addition, greenwashing litigation is frequently undertaken with a broader objective in mind: to prevent companies from misrepresenting their environmental accomplishments in a manner that undermines the implementation of necessary measures to address climate change. This is because greenwashing can create a false perception that companies are making significant strides in addressing climate change. This can lead to complacency and a delay in implementing the substantial changes needed in order to transition to a low carbon economy and help tackle the negative effects of climate change. Furthermore, greenwashing misleads consumers who may end up choosing certain products over truly sustainable alternatives. This can hinder the development and adoption of technologies and practices that would have a much larger impact on mitigating climate change.

Recent examples of greenwashing and greenwashing litigation

ASA bans Shell Adverts

In June 2023, a poster, a TV advert and a YouTube advert for Shell were all banned by the Advertising Standards Authority (ASA) for misleading the public on the climate and environmental benefits of the group's products overall.

The poster, seen in Bristol on 20 June 2022, featured large text that stated, “BRISTOL is READY for Cleaner Energy”. This was accompanied by text at the bottom of the poster, that read “In the South-West 78,000 homes use 100% renewable electricity from Shell Energy” above smaller text that stated, “Shell Energy’s renewable electricity is supplied by the National Grid and certified by Renewable Energy Guarantees of Origin, matching electricity bought with the equivalent amount from 100% renewable sources”.

Shell claimed their intention behind adverts such as this poster, was "to raise consumer awareness of, and increase demand for, the range of lower emissions energy products and services they offered". Indeed, Shell pointed to recent market research which showed that 83% of customers primarily associated their brand with the sale of petrol, whilst a much smaller proportion were familiar with Shell’s lower-carbon energy products and services, including renewable electricity and electric vehicle (EV) charging. The purpose of the adverts, therefore, was to bridge that gap in consumers’ knowledge by providing more information about their newer products. Shell claimed further that any mention of high-carbon Shell products would have been counterproductive and would only dilute the impact of the adverts’ positive environmental message.

However, the ASA considered the overall impression given by the poster and the other adverts, was that low-carbon energy products comprised a significant proportion of the energy products Shell invested in and sold in the UK in 2022 or were likely to do so in the near future. This was despite the fact that large-scale oil and gas investment and extraction comprised the vast majority of the company’s business model in 2022 and would continue to do so in the near future. Given this, the ASA concluded that further information about the proportion of Shell’s overall business model that comprised lower-carbon energy products was material information that should have been included. As a result, the adverts were found to have breached a number of the UK advertising codes. This included CAP 11.1 which states that "the basis of environmental claims must be clear. Unqualified claims could mislead if they omit significant information". The ASA consequently ordered that such adverts "must not appear again in the form complained of".

Landmark greenwashing lawsuit against KLM airline

A ground-breaking lawsuit against Dutch airline KLM, challenging its allegedly misleading advertising, was recently granted permission to proceed to a full hearing by a Dutch court.

The lawsuit, filed in May 2022 and said to be first of its kind to challenge airline industry greenwashing, was brought by Fossielvrij NL, an environmental campaign group in the Netherlands. The lawsuit is supported by ClientEarth and Reclame Fossielvrij. It concerns the legality of the airline’s climate adverts and offset marketing which allegedly breaches EU consumer law standards by creating the false impression that its flights do not contribute to the growing climate crisis. KLM had argued that the lobby group is not the proper body to bring such a case, but the court has now ruled that the group qualifies as an appropriate organisation to pursue this claim under Dutch class action regulations.

Since 2019, KLM has been running its 'Fly Responsibly' campaign in which KLM claims that it is moving towards a more sustainable future. The advertising campaign included wording such as "With Fly Responsibly, KLM is taking the lead in realising a more sustainable future for aviation". Since 2008 KLM has also offered the 'CO2ZERO' programme under which customers can compensate for the CO2 emissions of their flight for a few euros. This money is said to go towards planting new forests or preserving existing forests in which trees grow that absorb CO2 emissions.

In their pre-action letter to KLM, Fossielvrij NL stated that whilst "the only feasible way to reduce aviation emissions in line with the Paris Climate Agreement target is to reduce the number of flights", KLM "continue to strive for year-on-year growth in aviation, which will further increase the impact of aviation on the climate". As a result, KLM's advertising was said to create "the overall misleading impression that KLM and the aviation industry are making flying sustainable".

In response to this lawsuit, KLM have since dropped its 'Fly Responsibly' adverts. However, this has failed to put the matter to rest. As Hiske Arts, campaigner at Fossielvrij NL, said "KLM continues to greenwash its growth ambition through other climate messages. It is important that the Court assesses the full spectrum of KLM’s statements, because as long as the biggest polluters continue to lull us to sleep through their slick marketing campaigns, climate action will not happen.” With a full hearing due, it remains to be seen what judgement, if any, will be made against KLM.

Conclusion

The rise of greenwashing litigation means that organisations now more than ever before must be extra vigilant in the area of advertising and marketing. Every attempt must be made to not over-state any climate actions that a company is taking towards net-zero commitments. By extension, lawyers will also need to ensure when advising companies in relation to the preparation of advertisements that disinformation regarding climate change and action is avoided.

Finally, with environmental and other ESG related litigation continuing to increase year on year, it's likely that the rise of greenwashing litigation will continue with the aim of holding organisations to account and helping to push forward the changes needed in order to tackle the ongoing climate crisis.

If you would like more information on any aspect of the above article, please get in touch with your usual Howard Kennedy contact or Gabi Luknar (Gabi.Luknar@howardkennedy.com).