Dutch court finds KLM ads were misleading in 'greenwashing' case

By Toby Sterling and Joanna Plucinska

AMSTERDAM (Reuters) -A Dutch court ruled on Wednesday that KLM had misled customers with an advertising campaign aimed at improving the company's environmental image, in a case of so-called "greenwashing".

The decision, which comes at a time when regulators are more closely scrutinising environmental claims, will serve as a benchmark for airlines on what they can say publicly about their efforts to reduce greenhouse gas emissions.

"A number of advertisements made by KLM in the past were misleading and therefore illegal," the court said in a summary of judges' written decision, adding that some company claims about sustainability had been too vague.

In others, "KLM paints a too-rosy picture" about measures it is taking to reduce its emissions, such as using more biofuel or planting trees, it said.

"Those measures only marginally lessen environmental impacts and give the wrong impression that flying with KLM is sustainable," the court said.

KLM, the Dutch arm of Air France-KLM (LON:0LN7), said it was satisfied with the decision, which gave it "clarity" and did not impose any punishment. Environmental groups said it was a landmark decision.

Claims such as those made by KLM "are common across the (aviation) industry and we think this is being very closely watched," said lawyer Johnny White of ClientEarth, which advised Fossil Free, the Dutch group which led the case against KLM.

He noted that Europe's main consumer group, BEUC, had brought a complaint at the European Commission against 17 European airlines for similar claims.

Air France-KLM CEO Benjamin Smith said that the company was taking steps to reduce its emissions by purchasing more efficient planes and mixing more biofuel into the kerosene that fuels its fleet.

"I don't consider that greenwashing," he said at a press conference in Brussels.

"It's very concrete. It's a concrete example of what we're doing to improve the sustainability of airlines. ... It's not a fair assessment."

KLM said it was considering a more substantive response to the ruling.

Activists for Fossil Free had argued that KLM's "Fly Responsibly" campaign was misleading given that all flights today contributed significant amounts of greenhouse gas emissions.

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"The court could not have been clearer: companies are not allowed to claim they are tackling dangerous climate change when in reality they are fuelling the crisis," said campaign leader Hiske Arts.

KLM noted that the ruling does not oblige it to issue any rectification, and may continue to advertise to customers despite calls for a blanket ban. In the future, it must be "honest and concrete" about environmental claims, the court said.