Company climate claims in court: Pending cases will shape future of 'net zero' pledges

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Greenpeace France and Others v. TotalEnergies

• Filing date: 2022        
• Jurisdiction: France
• Legal basis: French national law implementing the European Union Unfair Commercial Practices Directive
• Status: pending

Case summary: In Europe’s first case to challenge a fossil fuel major’s net zero marketing, the NGOs Greenpeace France, Friends of the Earth France, and Notre Affaire a Tous (supported by ClientEarth) argue that TotalEnergies’s advertising campaign (accompanying its rebrand from Total to TotalEnergies) misleads consumers by falsely claiming that the company is on track for carbon neutrality by 2050, that it is ‘a major player in the energy transition’ and that biofuel and gas are environmentally friendly and important tools in the energy transition.

Because the legal basis is France’s implementation of the EU Unfair Commercial Practices Directive, the result of this case will have ramifications for companies across Europe.

What demands are being made? The NGOs demand an injunction to stop the campaign, the publication of the decision, the compensation of the moral damages suffered by the organizations and the repayment of legal fees.

Fossielvrij NL v. KLM

• Filing date: 2022        
• Jurisdiction: Netherlands
• Legal basis: European consumer law
• Status: pending

Case summary: Fossielvrij NL, Reclame Fossielvrij and ClientEarth argue that KLM is misleading its customers through its ‘Fly Responsibly’ campaign, and by selling a carbon offset product they label ‘CO2ZERO’. This product funds reforestation projects or KLM’s purchase of biofuels, which the NGOs contend do not make a meaningful contribution to reducing KLM’s climate footprint and do not compensate the emissions released by the flight purchased. KLM, the NGOs argue, is giving a false impression that air travel can be easily compensated through offsetting.

What demands are being made? That KLM stop and remove the contested misleading ads and the ‘CO2ZERO’ offsets marketing, plus any advertising and marketing in which KLM suggests flying can be done responsibly or sustainably, and not make such claims in the future. That KLM send a rectification notice correcting its statements to all customers who bought a ticket in the previous year and to the general public by publishing it online and in five Dutch national newspapers. The NGOs say the rectification notice must clarify that flying is not sustainable, and that the only way to meaningfully reduce the impact of flying on the climate and contribute to achieving the climate targets is by not flying. They also say KLM must put a clear warning on its website and on flight tickets that clarifies the impact of flying.

The Forest Litigation Collaborative complaint to UK OECD against Drax Group plc

• Filing date: 2021        
• Legal basis: OECD Guidelines for Multinational Enterprises, which are not legally binding
• Status: pending

Case summary: The Forest Litigation Collaborative (comprising The Lifescape Project and The Partnership for Policy Integrity) have made a complaint to the Organisation for Economic Co-operation and Development (OECD) alleging that the UK wood-burning electricity generator Drax misleads the public, UK government and investors by claiming to generate “carbon neutral” electricity.

According to the NGOs, the energy produced by the energy plant cannot be described as carbon neutral given that burning woody biomass produces more carbon emissions per unit of final energy than burning coal. The only reason why Drax is able to ignore these emissions is because (in accordance with UN reporting rules) the carbon loss is accounted for in America where the wood is felled rather than in the energy sector where the wood is burnt. In reality, FLC argue, the carbon released at the Drax plant is being wrongly overlooked and cannot be offset through reforestation because the next generation of trees cannot sequester carbon quickly enough. 

What demands are being made? The NGO is asking Drax to withdraw its misleading statements and issue a full public explanation of the true carbon and forest impacts of its energy. 

Environmental Action Germany (DUH) v. TotalEnergies

• Filing date: 2022        
• Jurisdiction: Düsseldorf and Hamburg Regional Courts in Germany
• Legal basis: Germany’s Unfair Competition Act, implementing the European Union Unfair Commercial Practices Directive.
• Status: pending

Case summary: DUH alleges that TotalEnergies heating oil “Thermoplus” is advertised to consumers in a way that violates consumer protection law. The oil is advertised as “climate neutral” on the basis that TotalEnergies compensates for emissions via offsetting schemes in India and Peru. There is no information in the product description to verify how compensation happens and DUH says the offsetting schemes used by TotalEnergies to make this claim are doubtful and their effects potentially destructive.

What demands are being made? That TotalEnergies stop advertising Thermoplus heating oil as “CO2-compensated” and be specific about the offsetting schemes the company is using to compensate for emissions.

[Read an interview with DUH’s executive director here.]

Environmental Action Germany (DUH) v. BP Europa SE and Shell Deutschland GmbH

• Filing date: 2022        
• Jurisdiction: Düsseldorf and Hamburg Regional Courts in Germany
• Legal basis: Germany’s Unfair Competition Act, implementing the European Union Unfair Commercial Practices Directive.
• Status: pending

Case summary: DUH is challenging these two oil companies for advertising certain products as carbon neutral or CO2 neutral. For example, they challenge the statement made by Shell about its “Helix Ultra” motor oil that “the CO2 emissions caused by this product during its life cycle are offset by Shell through voluntary compensation.” The company provides no detail to verify this claim. In a second example, BP advertises “climate neutral car dealerships” where customers are offered the opportunity “to neutralize their own CO2 emissions - for a certain mileage - as part of the sale or servicing of their vehicles.” Again, the compensation schemes are not clearly explained and DUH argues that all offsetting projects related to reforestation are seriously problematic.

What demands are being made? Enforcement of a court order prohibiting Shell from charging motorists a surcharge of 1.1 cents per litre of Shell gasoline or diesel fuel to compensate for the CO2 emissions produced while driving. DUH objects to Shell stating that the climate compensation is achieved through forest protection projects in Peru (Cordillera Azul project) and Indonesia (Katingan project) because, they argue, forest protection projects are demonstrably not suitable for offsetting CO2 emissions. Similarly, DUH demands that the court stops BP from advertising car dealerships as carbon neutral if this is achieved by car dealers reducing their emissions and then neutralizing the remaining emissions through BP Target Neutral which buys carbon credits from undisclosed carbon offset projects around the world.

[Read an interview with DUH’s executive director here.]

Environmental Action Germany (DUH) v. Beiersdorf

• Filing date: 2022        
• Jurisdiction: Düsseldorf and Hamburg Regional Courts in Germany
• Legal basis: Germany’s Unfair Competition Act, implementing the European Union Unfair Commercial Practices Directive.
• Status: pending

Case summary: As in the other cases DUH has filed, this case challenges two climate neutrality product claims by Beiersdorf. Nivea Naturally Good face care products and German Nivea shower gel range are both described as “100% climate neutralized by offsetting CO2 emissions with certified reforestation projects,” but the company does not offer sufficient information to corroborate these claims. As described above, DUH also identifies serious problems with reforestation offsetting projects.

What demands are being made? That Beiersdorf stop using the product description “100% climate-neutralized product” and phrases such as “compensation of the remaining CO2 emissions by certified climate protection projects” or “offsetting CO2 emissions with certified reforestation projects.”

[Read an interview with DUH’s executive director here.]

Australasian Centre for Corporate Responsibility v. Santos

• Jurisdiction: Australia Federal Court
• Filing date: 2021        
• Legal basis: Australian consumer protection and corporation laws
• Status: pending

Case summary: In the world’s first case to challenge a fossil fuel major’s net zero emissions target, the shareholder advocacy NGO Australasian Centre for Corporate Responsibility (ACCR) has sued the oil and gas company Santos for misleading investors and the public by representing natural gas as a ‘clean energy’ source, and by claiming to have a ‘credible and clear plan’ for reaching net zero emissions by 2040. The NGO argues that natural gas cannot be marketed as clean fuel given the release of significant quantities of CO2 and methane when it is extracted, processed and burnt. They also argue that Santos’ plan for emissions reductions relies on undisclosed qualifications and assumptions related to carbon capture and storage (CCS) and blue hydrogen. Furthermore, the company has not yet decided to proceed with the net zero plan. As of August 2022, ACCR has filed to expand its case to include alleged greenwashing in Santos’ 2020 Investor Day briefing and 2021 Climate Change Report.

What demands are being made? The court is being asked to decide whether representations made by Santos concerning its climate plans were misleading or deceptive. If the court finds that they were, ACCR will be asking the court to make an order that they be corrected.

Greenpeace Canada v. Shell Canada

• Jurisdiction: Competition Bureau of Canada
• Filing date: 2021
• Legal basis: Canadian Competition Act
• Status: pending

Case summary: Greenpeace Canada is arguing that Shell’s ‘Drive Carbon Neutral’ programme is misleading consumers because they haven’t substantiated the carbon neutral claim on their website or elsewhere, and because the forest-based offset projects that Shell supports have serious legitimacy concerns. Furthermore, the advertising campaign creates the false impression that reducing emissions and fossil fuel production isn’t required to reach net zero, according to Greenpeace.

What demands are being made? That the court decide whether Shell’s ‘Drive carbon neutral’ advertising makes false claims and violates the Competition Act. If this is established, then the court is asked to order Shell not to make such misleading claims in future advertising and promotion.

City of New York v. Exxon Mobil

• Jurisdiction: New York State
• Filing date: 2021
• Legal basis: New York City Consumer Protection Law
• Status: pending

Case summary: New York City alleges that three oil and gas companies – ExonnMobil, Shell, BP – and the American Petroleum Institute have misled consumers in New York City by advertising their products in such a way as to suggest they benefit the environment and by suggesting the companies themselves are leaders in the energy transition.

What demands are being made? Injunctive relief against this kind of misleading advertising, civil penalties ($350 for each violation or $500 for each knowing violation), and attorney fees and costs.

Important decisions by regulators

The following decisions by advertising regulators could be influential, particularly in the absence of case law in this specific area.

Advertising Code Committee in The Netherlands’s Ruling on Shell’s ‘Wij Veranderen’ Campaign

The Advertising Code Committee in The Netherlands considers it “unjustifiable” that Shell presents itself in advertisements as “driver – let alone one of the biggest drivers – of renewable energy”, according to NGO Advertising Fossil Free, which calls for a ban on fossil advertising.

Advertising Standards Authority’s Ruling on Shell UK Ltd.’s Shell Go+ Campaign

The UK’s Advertising Standard Authority concluded that a Shell “drive carbon neutral” advertisement was misleading, as consumers were likely to infer that the company’s “Go+” scheme was a new, carbon-neutral fuel rather than a carbon offsetting loyalty scheme.

Lawyers for Climate Action Complaint to the Advertising Standards Board

The campaign group Lawyers for Climate Action NZ filed a complaint against Energy company Firstgas over an ad campaign concerning "zero carbon gas." The Complaints Board said the advertisement was misleading because the claims that Firstgas would soon produce zero carbon gas were unsubstantiated environmental statements.

ASA Ruling on Ryanair Ltd t/a Ryanair Ltd

The UK’s Advertising Standards Authority (ASA) concluded that claims by Irish airline Ryanair about “low CO2 emissions” and of being the "lowest emissions airline" were misleading. ASA also found that consumers would find insufficient information in the ads to substantiate that they would reduce their personal CO2 emissions compared to flying with another carrier.

Complaint against BP in respect of violations of the OECD Guidelines

British environmental group ClientEarth filed a complaint against BP, alleging that the energy company's advertising misleads the public in the way it presents BP's low-carbon energy activities. The complaint alleged that the campaign runs afoul of the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, which require clear, honest, accurate and informative communications between enterprises and the public. The case was discontinued after BP withdrew the advertising campaign in question.