Addressing greenwashing in the airline industry: The impact of the "green claims" directive

On 30 April 2024, the European Commission and EU consumer authorities took action by writing to 20 airlines, expressing concerns about their potential greenwashing practices.

This move has come just one month after the European Parliament adopted its position on the proposed "Green Claims Directive" (Directive). Under this Directive, EU Member States have 24 months from its implementation to incorporate its provisions into national law. Businesses (including airlines) failing to rectify their non-compliant practices within this timeframe risk breaching the Directive and facing associated penalties.

The Directive aims to enhance transparency for consumers regarding green claims made by companies in their business-to-consumer (B2C) communications. It achieves this by establishing conditions for the substantiation and communication of such claims, along with detailed requirements for the use and approval of environmental labels and third-party verification of claims. When substantiating voluntary environmental claims, companies must provide accurate information about their products and services, thereby safeguarding consumers from deceptive practices – particularly greenwashing. Greenwashing occurs when a product, service, or company is falsely portrayed as sustainable or environmentally friendly.

In its letters, the European Commission identified several potential misleading practices by airlines:

• Misleading carbon offset fees: some airlines create an incorrect impression that consumers can offset their flight’s CO2 emissions by paying an additional fee for climate projects or alternative fuels. The Directive could deem this an "unfair practice".
• Unclear use of green terms: airlines use of terms such as “sustainable aviation fuels” without clearly justifying their environmental impact, and “green,” “sustainable,” and “responsible” in an absolute way could be considered ‘misleading’ by the Directive if not supported by recognised excellent environmental performance.
• Net zero emissions claims: airlines claiming to move toward net zero emissions must provide clear, verifiable commitments, independent monitoring, and endorsement by third parties to avoid being at risk of violating the Directive.
• Inadequate CO2 emission calculators: presenting consumers with CO2 emission calculators without scientific proof or transparent information on calculation methods is considered misleading.
• Flawed flight comparison information: airlines comparing flights based on CO2 emissions must provide accurate and comprehensive information. Omitting details about the comparison method could breach the Directive.

While the UK is not an EU Member State and thus not subject to the Directive, the Competition and Markets Authority (CMA) has imposed a Green Claims Code. Under UK consumer protection law, businesses making environmental claims must adhere to this code. The CMA provided an accompanying “green claims checklist” which outlines 13 statements which businesses should be able to respond “yes” to when making green claims.

The impact of the Green Claims Code on UK regulators in relation to the airline industry was demonstrated in December 2023, when the Advertising Standards Authority (ASA) banned advertisements from Air France and Etihad due to overstated environmental credentials. The ASA’s inability to find evidence supporting the airlines’ claims mirrors the Directive’s stance on misleading practices.

Both EU and UK airlines, as well as other businesses, should take steps now to critically evaluate any environmental claims they may be making to ensure that they are not misleading. This includes considering the entire life cycle of a product or service, not just a portion of it. Failure to comply and a finding of greenwashing by regulators may result in substantial penalties. Under the Directive, fines of up to 4% of the offending business’ annual turnover may be imposed, while in the UK the CMA’s powers have recently extended, enabling them to levy fines of up to 10% of global turnover. These financial penalties come in addition to risks of reputational damage and loss of brand loyalty among consumers.