‘Greenwashing by omission? Comparing Repsol Cases in Spain and the UK’ – Climate Law Blog

Introduction

There has been a common question emerging in recent greenwashing cases across Europe: to what extent must companies provide a holistic impression of their business in their advertisements? Companies that highlight only the sustainable or ‘green’ parts of their businesses have come under fire from consumers, NGOs and rival companies, accused of creating a misleading picture of their operations. This has been considered in a number of recent cases decided in the EU and the UK, including the Repsol and Shell cases brought before the Advertising Standards Authority (ASA) in the UK, and the KLM case in the Netherlands. It will also be a central focus of the foreshadowed cases against EU airlines, which will be brought by the European Commission and consumer protection authorities.

Importantly, there is a contrast between the way cases of this nature are handled in different jurisdictions. A clear example of this is that advertisements by Repsol, a Spanish fossil fuel company, have been viewed differently by review bodies in Spain and the UK. The primary aim of this blog post is to analyse the cases brought against Repsol in connection with their advertisement of “renewable fuels”. The post also analyzes the legal background in the EU, Spain, and the UK, and delves into what may be expected in future greenwashing cases given developing regulations and case law in those jurisdictions.

This post comes at a time where there is growing understanding of greenwashing as a legal issue, both within the legal profession and broader society. The findings against Repsol could send an important signal about the importance of robust, scientifically supported sustainability claims. However, the differences between jurisdictions may mean it is difficult for businesses and consumers alike to understand how ‘green’ products and investments are, and should be, represented, thereby potentially missing an opportunity to create accountability for large emitters.

Repsol findings in the UK

Repsol has come under scrutiny in the UK, with the independent ASA requiring the energy company to remove two of its adverts in 2023 due to breaches of the Committee of Advertising Practice (CAP) Code. A central part of the ASA’s findings about Repsol related to a provision of the CAP Code which states that unqualified claims can be misleading if material information is omitted, as well as other provisions of the CAP Code.

As the UK’s independent advertising regulator, the ASA responds to complaints from consumers and NGOs, and also itself monitors ads to ensure they are following the CAP Code. The ASA has the capacity to ban ads which are misleading, harmful, offensive or irresponsible. If an advertiser does not comply with the ASA’s direction, the matter will ordinarily be referred to Trading Standards, a government-funded consumer protection body, and potentially subject to more serious sanctions such as fines and prison sentences.

June 2023 case before the UK Advertising Standards Authority

The first Repsol case before the ASA was investigated in June 2023, and related to an online advertisement which stated, ‘At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions,’ against an image of leaves. Then a car was shown surrounded by trees and leaves, featuring text that read: ‘Renewable fuels for more sustainable mobility’, and in the corner was a stylised petrol pump with a leaf inside it.

AdFree Cities, a UK-based network of campaigners against corporate advertising brought a complaint to the ASA, alleging that the ad was misleading because it omitted information about Repsol’s overall business activities, including the fact that Repsol’s oil and gas activities are substantial and expanding. As an additional enquiry, the ASA also challenged whether the evidentiary basis of the claim ‘At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions’ was clear.

Repsol agreed to remove the ad, but contended that a ‘More information’ link on the online ad was designed to provide context about the full scope of its activities. Repsol also claimed that the advert was targeted primarily at the audience for a Financial Times newsletter focused on energy, which they argued would be educated about energy issues and would understand the context for the claims.

The ASA acknowledged a range of evidence put forward by Repsol about its investment in renewable fuels and commitment to sustainability. However it found that, because the advert was shown elsewhere on the Financial Times website as well as in the energy-focused newsletter, consumers were unlikely to possess the specific understanding required to scrutinise and seek more information about Repsol’s claims, and gain a full and accurate picture of Repsol’s business activities.

The ASA also found that both consumers and business readers were likely to take the claim ‘At Repsol, we are developing biofuels and synthetic fuels to achieve net zero emissions’ in combination with nature imagery to indicate that Repsol’s development of biofuels and progress towards net zero was more significant than is actually the case. At the time of the ASA’s findings, Repsol’s biofuel and synthetic fuel operations had not yet commenced, and the company had a plan to continue to expand oil and gas exploration across multiple regions of the globe. The ASA stated that further information about Repsol’s planned strategies and timelines for reaching net zero was critical to create a clear understanding of the ad’s overall message, and should have been included in the ad itself.

This finding indicates that, from the perspective of the ASA, companies should be striving to convey a clear and accurate representation of the entirety of their business operations, the scientific underpinning of their sustainability claims, and the progress of their sustainability ‘journey’ in terms of developing new processes and products. The ASA’s reasoning suggests that the accuracy of the representation will be assessed on the basis of the content of the ad itself, primarily the text and images, and that links to additional information, may be useful but not necessarily sufficient to balance an otherwise misleading or incomplete depiction.   

October 2023 case before the UK Advertising Standards Authority

The second complaint against Repsol related to an advertisement shown on the Financial Times’ website and in one of its digital newsletters. Again, the complaint was brought by AdFree Cities, which alleged that the ad left out significant information about the overall environmental impact of Repsol’s energy production activities. The advert featured an image of a droplet falling into a pool of water, and stated: ‘Renewable hydrogen, another alternative to reduce emissions. At Repsol, we are committed to renewable hydrogen as an energy source that offers up different uses such as zero net emissions synthetic fuel production’.

Repsol claimed that the Financial Times ads were targeted at investors, as it is a Spanish company with no consumer presence in the UK market, and like the June 2023 ad discussed above, was aimed at an informed audience. The company set out a range of ambitions and targets seemingly intended to support its green credentials, including its plan to achieve net zero emissions across its business by 2050. Repsol claimed that its investments in low carbon energy made up one third of its total spending, but that new technologies such as renewable hydrogen required significant investment before production could begin, so the company’s work could not always be represented in terms of existing production. Repsol also argued that the format and medium of the ad made it impossible to add more information about its business activities, but clicking the ad would take a reader to Repsol’s website, where they could find further information. Repsol claimed there was no obligation upon them to describe the totality of their business activities in an ad.

The ASA found that this advert was likely to mislead consumers as it would give the impression that hydrogen and other low-carbon energies already form a significant part of Repsol’s business. In fact, Repsol’s business activities are primarily oil and gas; in 2021, the company produced around 600,000 barrels of oil per day, and generated the equivalent of half the total carbon footprint of the UK. Additionally, at the time of the advertisement, Repsol was not yet producing green hydrogen. Repsol agreed to remove the advertisement.

A key part of the ASA’s finding that the ad must be removed was the provision in the CAP Code which states that marketing communications must not mislead the consumer by omitting material information. While the ASA did not rebut Repsol’s claim that it was not obliged to convey the totality of their business operations in the advert, the ASA did ultimately find that relevant information was left out to the extent that it rendered the ad misleading. The ASA specified that including further information to contextualise Repsol’s path to net zero and the role of biofuels within that plan was material to creating a clear and accurate message to consumers.

Repsol cases in Spain

The primary ‘greenwashing’ case against Repsol in Spain was brought via the Association for Self-Regulatory Commercial Communications, or ‘Autocontrol’. Similar to the ASA in the UK, the role of Autocontrol is to ensure that commercial communications and advertisements comply with Autocontrol’s Code of Conduct (CoC), in particular with the principles of responsible, truthful, legal, honesty and loyalty in advertisement.

Notably, unlike the ASA, companies voluntarily submit to the jurisdiction of Autocontrol by becoming members, and thereby agree to comply with the associated rules and regulations. Autocontrol is a prominent self-regulatory association in Spain, which has resolved more than 5,000 cases regarding responsible advertising. Any finding of Autocontrol in a dispute resolution is binding exclusively inter-partes, i.e. only between the companies which have agreed to be members of Autocontrol. However, Autocontrol is also a member of the European Advertising Standards Alliance and the International Council For Ad Self-Regulation. This indicates that Autocontrol has broad influence in establishing advertising standards in Spain, and also that its regulations are influenced by and may be harmonised with standards established in other European jurisdictions.

The Autocontrol matter is the primary Spanish case considered in this article, as it is the only complaint against Repsol which has been decided to date. However, Iberdrola is also suing Repsol in Commercial Court (Juzgados de lo Mercantil) alleging it had carried out a greenwashing strategy by advertising “100% renewable fuels”, on the grounds of unfair commercial practices and misleading advertisement, pursuant to Spanish Unfair Commercial Practices Law and the Spanish Advertisement Law.

Environmental groups and consumer protection associations have also initiated legal actions against Repsol. These complaints are on the same grounds as the case brought by Iberdrola, but have been filed with the National Commission for Markets and Competition (the Spanish equivalent to the UK ASA) and the Spanish Consumer Authority. Decisions in both of these matters are pending.

The Spanish cases comes in the months of legislative developments on greenwashing and green claims, especially with the approval of EU Directive on Greenwashing, which has not been transposed into Spanish Law, and in the midst of the approval of the  Proposal for a Directive on Green Claims. Both of these Directives aim to regulate “green” products and “green” business activities, including advertisement, that can be misleading to consumers.

January 2024 case before the Spanish Association for Self-Regulatory Commercial Communications

In January 2024, Iberdrola Clientes, S.L. (Iberdrola), the distribution subsidiary of Iberdrola S.A., submitted a complaint against Repsol to the Autocontrol. Iberdrola complained about advertisements shown on the internet, in written press, and on television in which Repsol promoted its new “renewable fuels”. The advertisements said:

“The quality of Repsol, now 100% renewable. From organic waste. Available in more than 50 gas stations and in more than 600 by the end of the year”; “New fuels 100% renewable from Repsol”.

Iberdrola brought the complaint under section 14 of the Autocontrol Code of Conduct, which states that advertising shall not be misleading. An ad is misleading when it portrays in any way aspects related to “the main characteristics of the good or service, such as its availability, its benefits, its risks, its performance, its composition, its accessories, the process and date of its manufacture or supply, its delivery, its appropriateness, its use, its quantity, its specifications, its geographical or commercial origin or the results to be expected from its use, or the results and essential characteristics of the tests or checks carried out on the good or service” that induce error or is likely to induce error in the persons to whom it is addressed and, as a result, is likely to alter their economic behaviour.

Also pursuant to section 14, advertising is considered misleading by omission if it omits necessary information for the persons addressed to be able to make informed decisions on their economic behaviour, and may significantly distort their economic behaviour.

Iberdrola submitted that the Repsol’s ad was misleading insofar as it created the impression that all of Repsol’s activities and products were 100% renewable, when in fact most of Repsol’s fuel products are of fossil origin and therefore not renewable. Iberdrola argued that the misleading information was likely to alter consumer behaviour when purchasing Repsol products, as it constitutes a relevant variable in the consumer’s perception of the company as “green” or “sustainable”.

Moreover, according to Iberdrola, the statement that a fuel is 100% renewable or that can be misleading for consumers, as no information is given about , pursuant to the Directive on Renewable Energy. For Iberdrola, the fact that the ads did not include relevant information on such criteria for the consumers to verify or even consider if Repsol’s fuels are really “100% renewable” is misleading by omission and thus constitutes a breach of section 14 of the CoC.

The Jury of Autocontrol issued a resolution in April 2024, dismissing the complaint of Iberdrola and finding that the Repsol ads were not misleading and complied with the CoC. Specifically:

• Regarding the statement “the quality of Repsol, now 100% renewable”, which appears next to the statement “available in more than 50 gas stations and 600 by the end of the year”, the Jury found that the combination of the two statements conveyed that it was not referring to the company as a whole, but only to the fuels promoted. The Jury assessed that an average consumer would understand that the claim of ‘100% renewable’ only referred to the specific fuels promoted.
• The Jury found that the evidence submitted by Repsol about the production process for the advertised fuels met the requirements of the Directive on Renewable Energy. Further, the Jury found that, although Repsol is obliged to certify that the fuels in question are indeed ‘100% renewable’, it is not required to include the certification criteria in their advertisements unless their omission would create a false impression. In these circumstances, the Jury found no false impression was created.

While the finding of Autocontrol is only binding between the parties involved, it is a key precedent for the resolution of cases that may be brought on the same grounds, where advertisements are not considered to be misleading on the grounds that their claim can be supported by scientific evidence, even if this scientific evidence is not clear on the ad.

Comparison of findings in UK and Spain

The Repsol advertisements in the UK and Spain shared a very similar layout: the advertisement of a new fuel “low in carbon” or “renewable”, accompanied by natural imagery and net zero claims, as well as a website link to learn more about the advertised products. Importantly, these claims in the advertisements were, on their face, supported by scientific evidence. Despite the similarities, the ads were viewed very differently by the UK ASA and Spain’s Autocontrol.

While the UK ASA found that the Repsol ads were misleading as they portrayed an incomplete or exaggerated image of the company’s business, Spain’s Autocontrol narrowed the question down to the factual content of the advertisement alone, failing to frame the ad within the broader activities of the company. The contrast between these findings, relating to very similar ads for the same company, demonstrates how nuanced questions are emerging around greenwashing and accountability for green claims, even in the limited context of Europe.

Conclusion  

Autocontrol’s resolution to permit the Spanish Repsol advertisement comes at a time when carbon intensive companies are under the greenwashing spotlight across Europe. Overall, the tide seems to be turning towards increased scrutiny and accountability; authorities and NGOs in multiple jurisdictions are initiating proceedings or investigations against big emitters, and seeking to ensure that ‘green’ and sustainability claims are clearly represented and scientifically supported.

When it comes to the Repsol rulings, Spain’s Autocontrol may have missed the opportunity to align with this trend. Now, attention will turn to the Spanish Courts, the Spanish National Markets and Competition Commission and the Spanish Consumer Authority. Will they join the UK’s ASA and other watchdogs in requiring a more holistic view of the company’s operations, or will they interpret the standard narrowly, and reaffirm Autocontrol’s findings? The answer remains to be seen.