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The European Commission takes action against Greenwashing.

The European Commission’s quest to battle companies using greenwashing techniques has started years ago and since then, the Commission attempted to screen and filter out such companies in many industries. Earlier this year, Zalando, a fashion retailer was pursued by the Commission’s investigation that proved that the company was misleading customers with its environmental marketing strategies. Now, the airline industry is under the radar of the institution where it plans to take serious actions against violators.

A study of the Commission from 2020 examined that more than 50% of environmental claims were misleading and too vague to inform consumers at an acceptable level. Despite the implementation of the 2005 “Unfair Commercial Practices Directive”, the market practices seems to exploit customers and manipulate them with strategies violating the Directive. Since then, the European Union worked on introducing new legislation to better battle greenwashing and environmental impact misleading.

In January 2024, the European Parliament gave its support to a new Greenwashing Directive, formally called as the Directive Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and Better Information. This Directive will serve as lex specialis and is expected to specify the provisions of the Unfair Commercial Practices Directive. The Directive introduces new terms such as ’environmental claims’ that is purposefully defined quite broadly.

The definition of environmental claim is as follows:

“any message or representation which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication; if it states or implies that a product, product category, brand or trader has: a positive impact on the environment; no impact on the environment; is less damaging to the environment than other products, brands or traders, respectively; or has improved its impact over time.”

This broad definition leaves several questions unanswered which is expected to be more detailed in the implemented national regulatory frameworks and is about to be more worked out during the future judgments of the European Court of Justice over time.

Similarly to the Unfair Commercial Practices Directive, it defines misleading as publishing false information or correct information in a deceiving manner to the average customer base.

Since March of 2023, the Green Claims Directive was under discussion in the ordinary legislative procedure of the European Union. The Directive was already proposed at the end of 2023, and the -Parliament voted 467-65 in favour of the new regulation in March 2024. The Green Claims Directive serves as a sister law to the previously mentioned two directives (the Unfair Commercial Practices and the Greenwashing Directives) and also to the Consumer Rights Directive. The novelty of this directive is to require a minimum level of penalty in case of a breach of obligation arising from the directive. The penalties shall amount to at least 4% of the annual revenue of the company in case of a violation.

The issue of greenwashing within the flying industry could be considered common practice as airlines tend to offer “guilt-free” flights to passengers that are environmentally cautious. Currently, airlines account for about 3% of CO2 emission worldwide and is constantly rising. The European Union decided to tackle the issue by implementing regulation requiring transition to the use of sustainable aviation fuels that are more expensive. Airlines also tend to use other marketing techniques such as promising reforestation after a purchase of a flight ticket.

In the current events, the European Consumer Organisation alerted the Commission regarding these unfair market practices involving greenwashing in the industry. The Commission then sent letters to 20 airlines, giving them a notice to make changes within the next 30 days on 8 May 2024. The Commission published an exemplificative list of obligations violated by the airlines. However, publishing the name of these companies will not happen until the investigation moves forward.

Despite the Commission’s decision of keeping the names of the violating companies private, the Lufthansa Group came forward and admitted to receiving a letter of warning from the Commission. The Group includes airlines such as Eurowings and Austrian Airlines as well. The Group accepted the complaint and promised compatibility with climate policies. They highlighted the Group’s intention to halve the net CO2 emissions by 2030 in comparison to the 2019 levels.

With the Greenwashing and the Green Claims Directives still not in place, the Commission relies on Article 5, 6 and 7 of the Unfair Commercial Practices Directive. Furthermore, the Dutch court’s decision to rule against KLM Royal Dutch Airlines regarding misleading consumers with greenwashing is expected to set a benchmark for commercial practices in the industry and also future judicial decisions as well until the Commission of the European Court of Justice does not work out a benchmark itself.

There are two questions arising from the current events regarding greenwashing techniques. The first is whether the implementation of the Greenwashing and Green Claims Directives will have a great impact on industry practices and will be enforced efficiently. The second concerns the current dispute regarding the complaints from the Commission. It is still being questioned how the Commission will act after the period of 30 days expires, how it will decide on whether the airlines’ efforts were satisfactory or not and how it will react to potential incompliance after the expiration of the notice.

Dorina BOSITS is a law student at the Széchenyi István University of Győr, Hungary, and an international finance and accounting graduate of the University of Applied Sciences of Wiener Neustadt, Austria. The main area of her research includes freedom of speech, digitalization, data protection, and financial law. She is a student at the Law School of MCC and a member of ELSA Győr.

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