Coordinated EU-Wide Crackdown on Airline Greenwashing

Coordinated EU-Wide Crackdown on Airline Greenwashing

May 3, 2024, Covington Alert

On April 30, 2024, the European Commission and the EU Network of Consumer Protection Cooperation (“CPC Network”), including the consumer protection authorities of Member States, announced that they sent letters to 20 European airlines identifying several types of potentially misleading green claims and sustainability‑linked commercial practices. The letters invite the airlines to respond with measures to address the concerns within 30 days. The Member States of the CPC Network may take enforcement action, including sanctions, if they are dissatisfied with the targeted airlines’ response.

The letters sent to 20 airlines authorities’ first major coordinated anti‑greenwashing enforcement action, and the first that explicitly references the EU’s new anti‑greenwashing rules. The outcome of this enforcement action will likely set the tone for future EU‑level coordinated actions, and potentially for national‑level enforcement of the anti-greenwashing rules. The coordinated action also reflects recent trends in national anti‑greenwashing enforcement, including sector‑specific investigations, and explicit targeting of airlines by NGOs and civil litigants. Covington is closely monitoring the latest developments in greenwashing and green claims legislation and enforcement in the EU, UK, and US, and can assist clients to effectively navigate these emerging regulatory challenges while meeting their business objectives.

Green Claims Crackdown: What Happened?

The coordinated action against the airlines is based on alleged non-compliance with the EU’s consumer protection legislation, Directive 2005/29 on Unfair Commercial Practices (“UCPD”). Under the UCPD, national authorities of each Member State are generally responsible for enforcement. However, where there are instances of cross-border or EU-wide infringements, Member State enforcement authorities may cooperate under the CPC Network. The CPC Network is comprised of the Commission and the national consumer protection authorities of each Member State. The Commission can alert the CPC Network and coordinate EU-wide enforcement action to tackle practices which harm a large majority of EU consumers. 

The coordinated action against the 20 airlines was triggered by a complaint filed by European Consumer Organisation (“BEUC”) against claims made by 17 airlines in June 2023. According to available information, the Commission and CPC authorities identified a number of potentially misleading practices used by airlines, including:

• Implying that paying an extra fee for climate projects or alternative fuels can effectively reduce or neutralize CO2 emissions without adequate justification.
• Using terms like “sustainable aviation fuels” without transparently explaining their environmental impact.
• Employing absolute terms like “green,” “sustainable,” or “responsible” without proper context or supporting evidence.
• Claiming progress towards “net-zero” greenhouse gas emissions or future environmental performance without clear commitments, targets, or independent monitoring.
• Providing consumers with CO2 emissions calculators for specific flights without sufficient scientific validation or information on calculation methods.
• Presenting flight CO2 emissions comparisons without adequate and accurate details on the comparison criteria.

Each of these practices could be a potential breach of the EU’s Unfair Commercial Practices Directive, as amended by the EU’s recently adopted Greenwashing Directive (see below). The practices may also be breaches in principle of the proposed rules for substantiating green claims under the EU’s proposed Directive on substantiation and communication of explicit environmental claims (“Green Claims Directive”, see our update on the proposed legislation here), although this legislation is still being discussed by the European Parliament and Council for adoption and thus is not enforceable. For more information on the EU’s new anti‑greenwashing rules and enforcement trends, please see our dedicated webinar here.

How Does This Action Affect Other Companies?

The coordinated action is not only the first of its kind, but its timing is also reflective of the increasing enforcement focus on green claims. These are the main takeaways for other companies active in the EU:

• Precedent‑setting application of new EU anti‑greenwashing rules: This coordinated action comes barely a month after the EU adopted its first explicit rules on anti-greenwashing. On March 26, 2024, the EU’s Directive empowering consumers for the green transition through better protection against unfair practices and better information (“Greenwashing Directive”) entered into force. As we reported here, the Greenwashing Directive introduces specific rules for sustainability and environmental claims, and completely prohibits some types of claims, such as claims based on offsetting greenhouse gas emissions and unsubstantiated generic environmental claims. EU Member States must implement the Greenwashing Directive over the coming 18 months, but some countries, like France and Spain, have already started preparing for implementation.
  
  In this context, the coordinated action will likely set a precedent on the application and enforcement of the new anti greenwashing rules. Companies should take note of the Commission’s approach — individual EU Member States are likely to treat the Commission’s approach as guidance for national level enforcement. In principle, the Commission’s example could set a “floor” for countries that might otherwise be reluctant to take action.

• Parallel to existing national enforcement: There has been a significant rise in both public and private enforcement against greenwashing and misleading commercial practices under existing consumer protection laws across various countries, including France, Germany, the Netherlands, and the UK. However, this action against airlines marks the first major EU‑wide coordinated anti‑greenwashing enforcement action by national authorities. It seems that enforcement authorities are catching up to the fact that modern marketing campaigns are often coordinated across jurisdictions. Moving forward, companies will need to be aware of regulatory risk and trends on both a national and supra‑national level, and the different risk profile and penalties that each enforcement level carry.
• Sector‑focussed approach to enforcement: The Commission’s action refers to 20 individual airlines, but effectively targets the consumer aviation industry as a whole. This sector‑focussed approach is becoming more common in anti‑greenwashing enforcement. The UK, for example, has launched several sector‑specific investigations in recent years (e.g., into fast fashion, and household goods). This approach presents a number of potential advantages for regulators. It is potentially more resource efficient for the regulator than many individual investigations. It allows the regulator to come to well‑publicized conclusions about specific commercial practices without the risk of attempting specific enforcement against individual companies (which the companies might appeal). However, the approach can also give individual companies clear guidance on their own practices, without necessarily singling them out, or forcing  an admission of “guilt”.
• Scrutiny of airlines – for now: Airlines have come under particular pressure recently from regulators and individual and NGO litigants for their environmental claims and practices. For example, a Dutch Court recently found that the airline KLM has violated Dutch consumer law by making misleading environmental claims in its advertisements and marketing. In the UK, the Advertising Standards Authority has upheld a number of recent complaints against airlines (see here and here).
  
  However, other sectors have already been the subject of scrutiny. For instance, in November 2023, BEUC and ClientEarth filed a complaint with the European Commission and the CPC Network calling on them to launch a coordinated action on misleading green claims for plastic bottles. Hence, and depending on the outcome of the current action against airlines, we could start to see more coordinated EU-wide enforcement against companies in other sectors. 

Next Steps

The European Commission and CPC Network have called upon companies to submit a response within 30 days, detailing their proposed strategies to address concerns regarding their environmental marketing assertions under EU consumer law. Upon receiving the companies’ feedback, the European Commission will convene meetings with the CPC Network and the airlines to deliberate on the proposed solutions. Additionally, the Commission will oversee the execution of the agreed-upon modifications.  

If the airlines fail to take measures to address the concerns, the CPC Network may take further enforcement measures, including sanctions. Under the UCPD, a company found responsible for a cross-border or EU-wide infringement can face significant fines. The maximum amount of fine varies between EU Member States, but must be at least 4% of the company’s annual turnover in the Member State or Member States concerned.

How Can We Help?

Covington is actively monitoring the latest developments in greenwashing and green claims and is committed to assist clients to effectively navigate these emerging regulatory challenges while meeting their business objectives.

If you would like to discuss your claims, or any other issue raised by this action, please reach out to our ESG team members.