Making environmental claims in the UK is a tricky business, and now the ASA has poured fuel on the fire with another three rulings involving energy companies.
With several more environmental rulings and more CAP guidance in the 'pipeline', anyone involved with sustainability and environmental claims will need to keep a very close eye on developments.
To give you a head start, feel free to join us next week for our free webinar, Getting the Green Light for Green Claims, when we will be taking a closer look at these and the latest high profile rulings involving the red hot topic of green claims.
In the meantime, here is a brief summary of the three rulings:
A poster, a TV ad, and a YouTube ad for Shell:
a. A poster featured large text that stated, “BRISTOL is READY for Cleaner Energy” superimposed over a cityscape shot of Bristol. The Shell logo (a red and yellow coloured shell) appeared in the top right-hand corner of the poster. Further text at the bottom of the poster stated, “In the South West 78,000 homes use 100% renewable electricity from Shell Energy” above smaller text that stated, “Shell Energy’s renewable electricity is supplied by the National Grid and certified by Renewable Energy Guarantees of Origin, matching electricity bought with the equivalent amount from 100% renewable sources”.
b. A TV ad opened with a man stating, “In the UK, 1.4 million households use 100% renewable electricity from Shell” as he helped a young child to cycle down the street. The scene that followed depicted two offshore engineers working on-site at a beach. The one facing the camera stated “Shell experts are working on a wind project that could power six million homes” as animated design plans for wind turbines popped up on the horizon. The ad then depicted an electric car driving into a rural town before its driver stated, “Nearly one in five new cars now plug in” as he plugged his car into a charging point. A woman out walking her dog then stated, “These chargers are popping up on our streets” before a man fitting an EV charging point added, “Shell aims to fit 50,000 chargers nationwide by 2025”. An employee at a Shell petrol and electric vehicle charging station then stated, “And with more electric car charge points coming to Shell forecourts near you, the UK is ready for Cleaner energy.” Throughout the ad, large individual letters appeared in the background of successive scenes to spell the word “READY”. The video ended with large on-screen text “The UK is READY for Cleaner Energy” followed by the Shell logo and the hashtag “#PoweringProgress”.
Superimposed text that appeared on-screen during the ad’s opening shots stated “Shell Energy’s renewable electricity is supplied by the National Grid and certified by Renewable Energy Guarantees of Origin, matching electricity bought with the equivalent amount from 100% renewable sources”.
c. A YouTube video, posted on Shell’s YouTube channel on 9 June 2022, was titled “The UK is READY For Cleaner Energy” and included text in its caption that stated, “From electric vehicle charging to renewable electricity for your home, Shell is giving customers more low-carbon choices and helping drive the UK’s energy transition. The UK is ready for cleaner energy. Learn more: https://go.shell.com/399dfw2. #PoweringProgress”. The video was identical to ad (b).
Adfree Cities, who understood that Shell’s business activities included substantial, ongoing and expanding fossil fuel production, challenged whether:
1. the ads were misleading, because they omitted significant information about the overall environmental impact of Shell’s business activities in 2022; and
2. the claim “In the South West 78,000 homes use 100% renewable electricity from Shell Energy” in ad (a) and the claim “In the UK, 1.4 million households use 100% renewable electricity from Shell” in ads (b) and (c) were misleading and could be substantiated.
Shell mounted a detailed defence, which I will not set out in detail here. But in a nutshell, in defence of the campaign Shell argued believed that the ads accurately represented their products and services and did not omit material information about their more environmentally detrimental energy products, such as petrol. Consumers, they argued, would already be well-informed regarding that aspect of their operations and, in fact, would primarily associate their brand with the sale of petrol. Recent market research conducted by an independent third-party company supported that 83% of consumers did so, and also suggested that a much smaller proportion were familiar with Shell’s lower-carbon energy products and services, including renewable electricity and electric vehicle (EV) charging.
In relation to the second limb of the complaint - the specific claim around 78,000 households in the South West/1.4m households in the UK - Shell argued it was true, substantiated and not misleading.
The second limb of the complaint was not upheld because Shell was able to substantiate this claim.
Somewhat controversially, despite Shell's detailed arguments and data showing consumer understanding of their offering, the ASA upheld the first limb.
The ASA acknowledged that Shell said they were taking steps towards net zero and promoting sustainable energy. However, they said that "according to Shell’s 2021 Sustainability Report, Shell’s operations gave rise to greenhouse gas emissions in 2021 that were estimated as equivalent to 1375 million tonnes of carbon dioxide. While that estimate did not capture Shell’s absolute emissions in 2021, given that it included deductions linked to carbon offsets and did not cover certain commercial contracts, it nonetheless represented a large contribution to greenhouse gas emissions. We understood that large-scale oil and gas investment and extraction comprised the vast majority of the company’s business model in 2022 and would continue to do so in the near future. We therefore considered that, because ads (a), (b) and (c) gave the overall impression that a significant proportion of Shell’s business comprised lower-carbon energy products, further information about the proportion of Shell’s overall business model that comprised lower-carbon energy products was material information that should have been included. Because the ads did not include such information, we concluded that they omitted material information and were likely to mislead."
It's not clear how the ASA would expect this to be remedied, or whether a disclaimer such as "We are still heavily involved in fossil fuel extraction and supply" would be adequate... Shell's position would be that this is stating the blindingly obvious.
You can read the full Shell ruling, here. And we will be publishing more analysis of these decisions soon!
Petroliam Nasional Berhad
A TV ad for Petronas, seen in September 2022, began with a voice-over, spoken by a child, which said, “Our story began with a dream, to see if we could take on an industry. It wasn't easy, but slowly, good began to happen.” Scenes of traffic moving, a port full of shipping containers, broken ice floating on the sea, litter in a river and a forest fire were shown. The voice-over continued, “But as the world produced more energy it became nature's problem, and we were part of it. An answer was needed so we started connecting the dots, to become a progressive energy and solutions partner, enriching lives for a sustainable future.” Solar panels, children in classrooms, a well being built and recycling in a factory were shown. The voice-over said, “To reduce emissions, grow renewable energy, bring education to more, champion social impact and promote a circular economy, as well as achieve net zero carbon emissions by 2050” and text stating “Net Zero 2050” was shown on screen. The voice-over continued, “Let's connect the dots together and create a more sustainable future for all so that our next generation will always have something to look forward to” and a child was shown looking out into the distance.
Having received no complaints, the ASA challenged whether the ad exaggerated the total environmental benefit of the advertiser's products and services and therefore was misleading.
As a TV ad, it had to be pre-cleared by Clearcast. In giving approval for it to be aired, Clearcast said that they did not consider that the ad exaggerated the total environmental benefits of Petronas’ products and services. They were given substantiation by Petronas which demonstrated that they had taken practical steps outlined in the ad and had a credible and tangible zero carbon target, which was a genuine aspiration.
Clearcast explained that the language of the ad made clear that Petronas had been part of the problem and was on a journey to improve. The ad was about ambition and planned change. It did not exaggerate or imply environmental benefits that did not exist, it acknowledged their impact on nature and demonstrated the steps they were taking to limit that in the future. They therefore said the ad was not misleading and had been substantiated.
They provided substantiation from Petronas that showed their commitment to net zero in 2050 and steps taken to be sustainable.
The ASA upheld its own complaint.
In reaching its decision the ASA said "We acknowledged that the ad stated, “… as the world produced more energy it became nature's problem, and we were part of it”, which Petronas believed made clear that the ad did not exaggerate the environmental benefits of the company. However, this claim was about their past contribution to the impact of energy production on the environment. It did not therefore counteract the claims in the ad about Petronas’s current activities and future plans, which suggested they were now primarily focused on positive environmental activities which were already having a positive overall impact today and would lead to net zero by 2050.
We further acknowledged that Petronas said they were taking steps towards net zero and promoting sustainable energy, and these were reflected in the ad. The other claims in the ad were intended to be aspirational rather than targets that had already been achieved. However, despite that, in 2021 Petronas’ operations produced 45.2 million tons of carbon dioxide and other greenhouse gases (GHGs). While we considered that viewers would recognise that companies in the oil industry were likely to be higher emitters of greenhouse gases than many other industries, we did not consider they would understand the extent of Petronas’ continuing significant contribution to greenhouse gas emissions given the presentation and claims in the ad - that Petronas were already taking steps that had a positive impact on the environment, which went beyond aspirational claims. We therefore considered information about the balance of Petronas’ current activities, its emissions and the pathway to reducing them in line with the claims made in the ad, was material information likely to affect consumers’ understanding of the ad’s overall message and so should have been made clear. We therefore concluded that the ad omitted material information and was misleading."
You can read the full ruling here.
A paid-for online display ad for Repsol, a global energy company, seen on a newspaper website. It featured several images of leaves with text that stated, “At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions”. After which a car was shown parked in a wooded area, surrounded by leaves, with text that stated, “Renewable fuels for more sustainable mobility”. In the top left-hand corner of the ad was a stylised outline of a petrol pump within which was a leaf.
Adfree Cities, who understood that Repsol’s business activities included substantial, ongoing and expanding fossil fuel production, challenged whether the ad was misleading because it omitted significant information about the overall impact of Repsol’s business activities.
And the ASA challenged whether the basis of the claim “At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions” was clear.
Repsol said that by adding the message “Find out more about this and other projects”, accompanied by a button with the message “More information” at the end of the ad, the reader was invited to click and access Repsol’s website. Once accessed, the website provided further information and news related to the company’s global activity. They believed that it was impossible to maintain the attractiveness of the ad and place more information within it.
Repsol explained that the ad was mainly designed for inclusion in the Financial Times (FT) digital energy newsletter sponsored by Repsol, aimed at an informed audience of users who subscribe to it and are interested in issues and news related to the energy sector. They acknowledged that the ad was also published elsewhere on the FT’s website.
Repsol added that they have reduced energy consumption in their industrial centres by 20% in the period 2011-2022 and reduced emissions by more than 20% in all their facilities.
In response to the second limb of the complaint, raised by the ASA, Repsol said they were aware that there is no single solution for sustainability. They explained that renewable fuels are one of the main elements in the company’s strategy to reach net zero by 2050. They aimed to reduce 55% of emissions from operated assets and 30% of net emissions by 2030. They also stated that they set a target for reducing their methane emissions intensity to 0.20% in 2025, which would be a reduction of 85%.
Repsol said that they will allocate more than €5 billion in organic investment and that 35% of these investments will be allocated to low-carbon technologies and projects. The company has implemented a methodology to determine whether a new investment is in line with its decarbonisation targets, and any investment proposed to the Executive Committee and the Board of Directors must include a report prepared by their Sustainability Department. In the second half of 2023 they are introducing a new biofuels facility that will supply 250,000 tons per year of advanced biofuels. The use of these fuels will make it possible to avoid emissions of 900,000 tons of carbon dioxide per year. They also are preparing to build synthetic fuels and urban waste recovery plants and have partnered with Enerkem to develop a plant which will process around 400,000 tons of non-recyclable municipal solid waste to produce around 240,000 tons of renewable methanol (biomethanol).
Repsol explained that renewable fuels make up 10% of their fuel sales in Spain and they expect to grow this aggressively. They have existing pilot projects in three cities which involve 100% biofuel pumps for fleet vehicles and have also launched a recent initiative to pay customers for their used cooking oil for incorporation into the processing of fatty residues. Repsol said they are committed to acting ethically and would remove the ad immediately.
Despite the claim being quite clear in terms of its parameters, the ASA considered that both consumers and business readers were likely to interpret the claim, “At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions”, in addition to the imagery of nature and the natural environment, as meaning that Repsol’s development of biofuels and synthetic fuels formed a significant element of their current activities that were making meaningful progress towards achieving net zero emissions.
The ASA understood that a number of Repsol’s new biofuel and synthetic fuel initiatives were not yet in operation. Furthermore, Repsol’s carbon emissions stood at 171 million tonnes of CO2e in 2021 (50% of the emissions of the United Kingdom in 2021, 346.7 Mt CO2e). They produced approximately 600,000 barrels of oil per day. We also understood that Repsol had a substantial oil and gas exploration strategy, owning an interest in 40,660 acres (gross) of oil and gas development and exploration across Europe, Latin America, North America, Africa, and Asia and Oceania.
The ASA said it understood that consumers could access information about Repsol’s general business activities and plans on their website. However, further information to contextualise how and when Repsol would achieve net zero emissions, and the role that the development of biofuels would play in that plan, was material to consumers’ understanding of the ad’s overall message, and should have appeared in the ad itself.
It therefore concluded that the ad omitted material information and was misleading.
On the second limb of the complaint, the ASA acknowledged Repsol’s comment that there is no single solution for sustainability, and that renewable fuels are one element in the company’s strategy to reach net zero by 2050. However, while the ASA said it agreed that synthetic fuels and biofuels could contribute towards Repsol’s goal of achieving net zero emissions, they would not as a single measure ‘achieve’ net zero emissions. The ASA also considered that in the context of an ad making a claim based on initiatives to achieve net zero, the timeframe of 2050 to achieve that goal was material information that needed to be made clear to consumers.
In the absence of any contextual information explaining that the initiative was part of a wider plan to achieve net zero by 2050, we concluded that the basis of the claim “At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions” was not clear and it was likely to mislead as a result.
You can read the full ruling here.
Keeping it slick
Further analysis will follow, but it seems the ASA is determined to set an incredibly high bar, and one might argue does not give consumers much credit to know that energy companies will continue to invest in fossil fuels during the longer term transition to clean energy.
The key theme in all of the ads was the misleading overall impression (even when making quite specific claims), and the omission of 'context' (aka 'confession') to explain the overall harm being done to the environment by these companies, as the ASA might see it.
The solution seems to be to use disclaimers, but often disclaimers are not enough to counteract a misleading overall impression, so a very careful approach is needed by any company that has less than perfect sustainability credentials... especially companies in high-polluting sectors.