Airlines

OPINION: Navigating the legal risks of greenwashing in aviation

OPINION: Navigating the legal risks of greenwashing in aviation
Aviation is at a critical juncture, where the push for sustainability must be balanced with the imperative to avoid greenwashing (Image credit: @scharfsinn86/Adobe Stock)

Greenwashing, the practice of making misleading claims about the environmental benefits of a product or service, has become a significant legal risk in the aviation sector.

Airlines, airports, aircraft lessors and manufacturers are under scrutiny for potentially making misleading claims about sustainability, which could lead to litigation and enforcement action.

The aviation sector is particularly high-risk for greenwashing due to the perception of its environmental impact, challenges in scaling sustainable alternatives and the intense public and regulatory scrutiny it faces.

Focusing on the legal and regulatory landscapes in the UK, EU and US, how can companies in the aviation sector best approach risk mitigation?

Regulatory framework

Despite the lack of a single legal definition for “greenwashing” in the EU, UK or US, it is generally understood as marketing a product or service by highlighting environmental attributes or benefits that are vague, exaggerated, deceiving, result in misinterpretations, and/or cannot be substantiated.

Historically, greenwashing was primarily regulated under general consumer protection and advertising regulations, but new regulations are being adopted with robust enforcement regimes to specifically address greenwashing.

For instance, the EU’s new Empowering Consumers for the Green Transition Directive prohibits businesses from making misleading or unclear green (environmental) claims.

It sets definitions for green claims and imposes significant rules to prevent misleading business practices, specifically targeting environmental and sustainability characteristics.

Additionally, the proposed Green Claims Directive would introduce comprehensive requirements on substantiation, verification and communication of explicit environmental claims using proven scientific evidence.

The UK’s Competition and Markets Authority (CMA)’s Green Claims Code introduced similar requirements. While adherence is voluntary, if an advertiser is found to have contravened consumer protection law or advertising codes in the UK, the CMA and other bodies such as the UK Trading Standards Service or the Advertising Standards Authority (ASA) may bring proceedings requiring changes to be made or seeking other sanctions.

In the US, the Securities and Exchange Commission (SEC) has introduced new greenwashing requirements that apply to publicly traded companies, including those in the aviation sector.

Airlines must provide accurate and verifiable information about their sustainability practices to ensure investors and consumers are not misled by exaggerated or false claims.

As a general trend, these new EU, UK and US rules focus on:

  1. Environmental claims backed by data: Companies must ensure their environmental claims align with the actual environmental impact of their products or services. Estimates are no longer accepted. Claims must be substantiated with detailed records of energy use, waste production and greenhouse gas emissions.
  2. Full transparency and evidence: Companies must disclose details and define the terms of their environmental impact. For example, a claim of “100 per cent sustainable materials” must be backed by clear evidence, including definitions of “sustainable,” material sources and proof of sustainability such as certificates from recognised bodies or lifecycle analyses.
  3. Auditing and assurance: Environmental claims must be audited by an independent third party to verify their accuracy. This may involve hiring an external environmental consultancy or independent auditor to review data collection methods and verify claims.
  4. Real reduction targets: Companies must set concrete, measurable targets to reduce their environmental impact and demonstrate progress. Targets must be tracked and reported, focusing on actual emissions reductions rather than carbon offsets.

Litigation and enforcement

Recent cases highlight the legal risks associated with greenwashing in the aviation sector, which can increasingly lead to litigation and enforcement actions.

One area of focus has been claims relating to sustainable aviation fuel (SAF). Whilst we are seeing a growth in the development on SAF from different sources across the world, demand remains significantly higher than supply, and so remains a more limited and expensive.

As consumers and businesses become more conscious of their carbon footprint when booking flights, airlines that exaggerate their sustainability practices to attract eco-conscious passengers have been targeted by regulatory investigations.

For example, in the US, a leading airline has been under investigation by the SEC for its claims of becoming the first carbon-neutral airline globally by investing in carbon offsets and sustainable aviation fuels.

The SEC’s scrutiny revealed that many of these claims lacked the rigorous scientific backing required for such assertions. Similarly, in the EU, one of the largest airlines was investigated by the European Consumer Organisation for its claims about reducing emissions through the use of SAF.

The investigation found that the airline’s promotional materials were not sufficiently transparent about the limitations and availability of SAF, leading to potentially misleading impressions about the airline’s environmental impact.

As a result, the airline had to alter its advertising and provide more detailed disclosures. Further, on the UK side, in December, Air France, Lufthansa and Etihad were recently ruled against by the ASA for misleading green claims in paid-for Google adverts, with each airline being told that the adverts must not appear again in their current form in the UK.

The aviation sector is particularly high-risk for claims of greenwashing due to the perception of its relatively high environmental impact, which has led to pressure groups placing it in the public spotlight.

The industry’s reliance on fossil fuels in the short to medium-term and new obligations in certain jurisdictions like the EU to increase SAF usage, the significant carbon footprint of flights and the challenges in scaling SAF make it a focal point for future enforcement action.

This is also a rapidly developing area, and practices and claims that were acceptable five years ago may not be acceptable in the current environment. This environment creates a higher potential for regulatory bodies to investigate allegations of greenwashing.

More recently, some EU airlines have announced additional charges on flight prices to cover increased carbon offset costs under the EU emissions trading system and carbon reduction measures. There may be scrutiny to ensure that such additional cost is properly applied, and the key will be transparent reporting.

As a general trend, regulatory bodies are moving towards stringent enforcement, focusing particularly on scientific validation to ensure all environmental claims are backed by robust scientific evidence.

This involves third-party audits and certifications to verify the effectiveness of sustainability initiatives. Additionally, there is an increase in collaboration between regulatory bodies across different jurisdictions to create a more cohesive and enforceable framework which, combined with enhanced EU, UK and SEC disclosure obligations, increase enforcement risk.

Risk mitigation measures

To navigate the complex regulatory landscape and mitigate greenwashing allegation risks, aviation companies should consider adopting the following measures:

  1. Robust verification processes: Implement rigorous internal processes to verify environmental claims and ensure that robust substantiation data to support any claim is held before any claim goes live. This includes scientific validation of the benefits of SAF, carbon offset programmes and other sustainability initiatives, including through the use of independent third-party carbon accounting and verification or audit service providers.
  2. Transparent reporting: Ensure transparency in environmental reporting. This involves providing clear, accurate and detailed information about the environmental impact of operations and sustainability initiatives.
  3. Compliance with regulations: Stay updated with regulatory developments in key jurisdictions. Understanding relevant obligations under new regulations such as the EU’s Green Claims Directive.
  4. Stakeholder engagement: Engage with stakeholders, including environmental groups, regulatory bodies and consumers, to ensure that sustainability claims are credible and well-supported.
  5. Internal policies and training: Adopt company policies and educate employees about greenwashing risks and the importance of accurate environmental reporting. This can help prevent inadvertent misleading claims and promote a culture of transparency and accountability.

The aviation industry is at a critical juncture, where the push for sustainability must be balanced with the imperative to avoid greenwashing. Due to the sector’s large carbon footprint and challenges in implementing sustainable alternatives, regulators are particularly focused on ensuring transparency and accuracy in environmental claims.

This heightened scrutiny makes the aviation industry a prime target for future enforcement action. With regulatory bodies across the EU, UK and US tightening their oversight, aviation companies must take proactive steps to ensure that their environmental claims are substantiated, transparent and compliant with legal standards.

By implementing robust verification processes, ensuring transparent reporting and engaging with stakeholders, the industry can navigate these challenges and contribute to a genuinely sustainable future.

Gavin Watson, Steven Farmer and Victoria Judd also contributed to this article.

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