Netherlands Update: From CO2 neutral to reduction of CO2 footprint. Is there again deception?

“Flying shame”. The word that was nominated in 2018 as the “Van Dale word of the year” and also a feeling that aviation likes to take away from us. This also applies to KLM. But to what extent are companies allowed to take away this feeling by making reassuring claims?

This is the second time in a short period of time that KLM has been involved in proceedings in connection with the sustainability claims it makes. In 2021, the Advertising Code Committee (“RCC”) already ruled on KLM’s statements on a button “Compensation of CO2 emissions. Neutralize your impact on the environment with the CO2ZERO service.”, on a banner with the headline “Be a hero, fly CO2ZERO” and a button that reads “CO2 neutral KLM compensates for the CO2 emissions of your KLM Holiday flight.” According to the RCC, these claims by KLM about neutralising emissions were absolute and misleading. KLM adjusted its statements accordingly. In 2022, KLM will no longer make any claims about neutralising the impact on the environment. However, customers can now pay a small contribution under the heading of the “CO2ZERO program” and thus reduce their CO2 footprint. The judge will soon rule on whether these claims about compensating CO2 emissions are acceptable.

In this blog, we discuss the relevant laws and regulations regarding sustainability claims and look ahead to the judge’s judgment.

Regulation of CO2 claims

The Netherlands has no specific legislation for CO2 claims. However, sustainability claims, like any other claim, must be in accordance with the rules for advertising: the Unfair Commercial Practices Act and the Dutch Advertising Code.

Unfair Commercial Practices Act

The main rule is that a trader should not provide factually incorrect information or information that misleads or is likely to mislead the average consumer. If he does, then there is an ‘unfair commercial practice’ within the meaning of Article 6:193c paragraph 1 of the Dutch Civil Code. This also applies to sustainability claims.

The Netherlands Authority for Consumers and Markets (“ACM”) monitors compliance with the Unfair Commercial Practices Act and is authorised to impose fines. In the Sustainability Claims Guideline, ACM gives companies access to what they should pay attention to when making sustainability claims on the basis of five rules of thumb.

In any case, sustainability claims must be clear, truthful and relevant. Regarding the use of general and absolute claims, the ACM says that companies should avoid them. Such claims quickly give the impression that a product as a whole has (large) sustainability benefits or has only a limited negative effect on sustainability. Also, these types of claims quickly cause confusion about the specific sustainability benefits, and these types of claims often cannot be proven. Are absolute claims still being used? Then the benefits should be clear as much as possible and the claim should not suggest a greater benefit than the product actually has. Due to the lack of case law on sustainability claims, it is not yet clear how strictly the AMC will apply this guideline in specific cases, and whether the court in civil cases will use this guideline as a connecting factor.

Dutch Advertising Code

In addition to the Unfair Commercial Practices Act, the Netherlands also has a system of self-regulation for advertising: The Dutch Advertising Code. Within that system, the RCC assesses complaints from consumers and companies in which it tests the relevant expression against one of the different types of advertising codes. One of those codes is the Environmental Advertising Code (“MRC”). On that basis, an environmental claim must not be misleading and must be demonstrable and correct.

Like ACM, the RCC sets stricter requirements for absolute claims. This follows, among other things, from a statement by the RCC about shell’s advertising: “Make the difference, Drive Co2-neutral“. The RCC ruled as follows:

‘In this context, the Commission reiterates that Article 3 of the MRC requires environmental claims to be demonstrably accurate, which implies a heavy burden of proof for the advertiser. In that light, the contested statements regarding “Make the difference, Drive CO2 neutral” are too absolute, because with too much certainty a result is guaranteed, which is not certain. It has not been demonstrated that the CO2 emissions from kilometres driven do not have any negative impact on the environment, although this is claimed.‘

On the accuracy of the claim, the RCC ruled:

“Even if the information is factually correct, the claim should be a true and accurate representation of the extent of the environmental benefit, and not overly rosy a picture of the benefit achieved.”

(…)

“The fact that it can be assumed that there is some compensation does not alter the fact that there is (and remains) uncertainty about the comparability of CO2 emissions on the one hand and compensation on the other, and (therefore also) about the precision with which the effect of compensation measures can be measured.”

It also follows that companies should avoid absolute claims, because these types of claims must be correct, while in many cases they are difficult to prove.

Compensation claims

Where KLM first talked about “CO2-neutral” flying, it now makes claims about the possibility of reducing the CO2 footprint of consumers. It still does this under the heading of the “CO2ZERO programme”. On the same page, the customer is provided with an explanation of this program:

“If you travel by plane, you cause CO₂ emissions. To reduce these emissions, we are working all kinds of projects.”“

“With our CO₂ compensation service, it is also possible for you to reduce your co₂ footprint by contributing to reforestation.”

“the flight itself does not necessarily become “greener” of the reforestation program, but with your contribution you will help. How? You invest in a reforestation project that reduces CO₂ emissions. At the bottom of the line, you reduce the footprint of your flight.”

How will the court assess KLM’s claims?

It is obvious that the court still qualifies the use of the “CO2ZERO programme” as absolute, because it refers to zero emissions. Even though the claim may be less absolute in the context by applying nuance, the claim “CO2ZERO” is in itself.

As mentioned above, it is required that environmental claims must be demonstrably correct. KLM must therefore be able to demonstrate that co2 emissions are reduced by contributing to reforestation. Strictly speaking, it is possible to prove that there will be less CO emissions ‘at the bottom of the line’ by contributing to reforestation.

However, it is also clear from the ACM’s guidance and the RCC’s rulings on this subject that a claim may not suggest a greater benefit than the product actually has. The fact that KLM does not provide concrete information when making its claim about the degree of ‘reduction’ could play a role in assessing whether KLM’s adjusted claims are still considered misleading. By considering the well-being of that information, it is up to the consumer to judge for himself the extent to which their CO2 footprint will decrease. It is particularly important that these claims are still made in combination with the name “CO2ZERO”, which seems to put KLM on the wrong track of consumers. In the light of ACM’s view on absolute claims and the RCC’s previous rulings, it is quite possible that the court will also qualify klm’s claims as absolute and misleading.

Another question is whether we as a society should still find it desirable that polluting products or services are advertised. In France, they don’t think so. There, last year, the French Parliament passed a law banning the advertising of coal, oil, gas and petrol cars by 2022. Not a bad idea, because why would we want to encourage the use of these types of products and services? A disadvantage of a total ban on advertising for certain polluting products or services is that with such a ban we may also remove a motive for making the industries concerned more sustainable.

It is obvious that the Dutch law and regulations for sustainability claims will be further crystallized, and I would not be surprised if that flight shame can no longer be compensated and reduced in the long run. From then on the plane shy so .. or just nice by train.

By Hocker, Netherlands, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact netherlands@transatlanticlaw.com

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