Over the years, greenwashing and potential liability and litigation risks has become a subject of increasing interest. Greenwashing essentially entails the practice of overemphasising a company's environmental credentials, often by misinforming the public or understating potentially harmful activities. Today on 20 March 2024, the Amsterdam District Court presented a judgment in a class action against KLM and rules that its marketing claims are considered to be misleading.
The Fossielvrij-case against KLM
The judgment from the Amsterdam District Court follows from the class action lawsuit initiated by interest organization Fossielvrij against the Royal Dutch Airlines (KLM) (please see our earlier commentary on this class action here). According to Fossielvrij, KLM's marketing claims in their Fly Responsibly campaign, which include "Be a hero, fly CO2ZERO" and "CO2 neutral" claims, are a misleading and an unlawful attempt to make KLM's activities appear more environmentally friendly than they actually are. Such marketing claims allegedly qualify as unfair and misleading commercial practices, as sanctioned by consumer protection law (in the Netherlands: article 6:193b, article 6:193c and/or article 6:193d Dutch Civil Code).
Briefly put, the District Court of Amsterdam found that KLM's marketing claims contained misleading environmental claims, characterized by vague and generalized statements about so-called environmental benefits. In addition, KLM was found to have overemphasised the positive impact of measures such as sustainable aviation fuels and reforestation, leading to a false impression of the sustainability of flying with the airline. This failure to provide accurate and specific information to consumers constitutes a breach of fair advertising, as sanctioned by consumer protection law. KLM had already announced that it ceased the marketing claims in question and KLM is therefore not obliged to rectify them. Furthermore, KLM retains the right to continue to promote flying without being obliged to warn consumers of the unsustainable nature of its current flying practices. However, if KLM chooses to communicate its greenhouse gas reduction ambitions, it is obliged to do so in a truthful, substantiated and accurate manner (and therefore refrain from greenwashing claims), thus the Amsterdam District Court. In light of the above, the Amsterdam District Court granted 15 of the 19 claims of Fossielvrij.
The judgment of the Amsterdam District Court follows on the previous assessment of the Dutch Advertising Code Committee (RCC), an independent committee handling complaints regarding deceptive commercial advertising. On 8 April 2022, the RCC – briefly put – deemed KLM's marketing claims misleading. Fossielvrij used the RCC decision as basis for its claims in the class action against KLM.
What to expect next?
The Fossielvrij-case and the Amsterdam District Court's judgment highlight the potential liability and litigation risks with respect to making 'sustainable' or 'green' claims, if these claims turn out to be unfounded or untrue and therefore misleading. As underlined by the Amsterdam District Court, companies should abstain from overemphasising a company's environmental credentials.
Both legislation and litigation on ESG is developing rapidly, among which greenwashing. Noteworthy is for example the upcoming Green Claims Directive and (upcoming) guidelines from supervisors and legislations on the use of sustainability claims in particular sectors (please see our earlier blog and newsflash on this).
The increase in ESG liability and litigation risks on greenwashing is expected to relate not only to the environmental aspect of ESG (greenwashing). In the future, it may also relate to misleading statements about social and governance aspects of ESG (also referred to as social washing and blue washing). Social washing concerns misleading claims about, among other things, respect for human rights (within the supply chain), and blue washing concerns misleading statements about the integration of ESG into a company's corporate governance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
