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The Rising Regulatory Tide on Environmental Claims – Shell Found in Breach of the Advertising Standards Authority’s Rules, Again!
Friday, July 21, 2023

Last month, oil giant, Shell, was caught out again by UK regulator – the Advertising Standards Authority (“ASA“) – for breaching its rules against making misleading environmental claims.

Previous ASA ruling against Shell

This latest ruling is reminiscent of a 2020 ASA ruling against Shell for a radio ad, where it used the claim “Drive carbon-neutral by filling up and using Shell Go+ today. Make the change. Drive carbon-neutral“. There were multiple complaints about the ad, challenging whether it was sufficiently clear that Shell Go+ is a loyalty scheme. The scheme permits subscribers to purchase fuel and Shell then offset the associated carbon emissions by obtaining carbon credits e.g. with tree re-forestation projects. The ASA held that the public would not understand that Shell Go+ was actually a loyalty scheme, and instead would assume that it was a carbon neutral fuel.

The regulator therefore found the ad to be in breach of advertising rules, holding that:

  • The ad was misleading (breach of BCAP Code Rule 3.1)
  • The environmental claim in the ad was unclear (breach of BCAP Code Rule 9.2)
  • The meaning of all terms used in the ad was not clear to consumers (breach of BCAP Rule 9.3)

The ASA banned Shell from publishing the ad again. In any future ads, Shell was required to make clear that the offsetting was dependent on membership of its loyalty scheme.

Updated ASA guidance on environmental claims

Earlier this year, the ASA updated its guidance on environmental claims in advertising. The new rules include advice on the use of “carbon-neutral”, “net zero” and similar claimsfollowing its research findings that such terms were “the most commonly encountered claims, but there was little consensus as to their meaning“.

In light of this, the ASA has reflected on the 2020 Shell ruling in its online advice, saying that it was possible a “stricter approach to the use of such terms might be taken in future”.

Latest ASA ruling against Shell

Shell has come under scrutiny from the ASA again. The oil company ran advertising promoting its renewable energy operations claiming:

  1.  In a poster: “BRISTOL is READY for Cleaner Energy” and “In the South West 78,000 homes use 100% renewable electricity from Shell Energy“;
  2.  On TV “..the UK is ready for Cleaner energy” and “In the UK, 1.4 million households use 100% renewable electricity from Shell.“; and
  3.  On YouTube: similar claims to the TV ads.A campaign group challenged whether: (i) the ads omitted material information on the overall environmental impact of all of Shell’s operations and were therefore misleading; and (ii) the numbers of homes using Shell renewable energy/electricity could be substantiated.

The TV ads had been pre-cleared by Clearcast, which said the ads were not misleading, because it was clear that they did not intend to provide a view of Shell’s environmental impact as a whole. Further, Shell argued that it was not necessary to consider the overall impact of all its global operations when making green claims, and to do so would place an unworkable burden on business.

Nonetheless, the ASA ruled that the ads were misleading – holding that consumers would interpret the claims as referring to the whole of Shell’s activities, with the specific examples mentioned being considered only illustrative. The ASA thought that consumers would get the impression that Shell’s low-carbon energy products make up a significant proportion of the energy Shell invested in and sold in the UK, and therefore information about Shell’s overall business activity was material information.

It reasoned that consumers are increasingly concerned with the effect that high carbon products have on the environment and therefore would seek out business providers that were reducing their environmental impact. So that its ads are not misleading, the regulator said that Shell must not misrepresent the effect of its lower carbon initiatives as part of the whole of the company’s activities. The ASA did not think consumers would distinguish between Shell and “Shell Energy” as two different businesses. Therefore, Shell’s ads were again held to have breached various CAP and BCAP Code rules.

However, the ASA rejected the substantiation complaint. It held that Shell was able to substantiate that 1.4 million households used “100% renewable electricity” from Shell based on Ofgem’s Renewable Energy Guarantees of Origin and relevant customer data.

Concluding Comments

Whilst the ASA has twice found Shell in breach of its rules on misleading environmental claims in ads, it is interesting to consider the approach the ASA has taken given the lapse of time between the two rulings.

In line with regulators around the world, the ASA is now taking a stricter approach. With the Green Claims Directive being proposed at an EU level and the proposed amendment to the Unfair Commercial Practice Directive to include an increased focus on accurate and substantiated green claims, the trend towards tighter rules and increased scrutiny of environmental claims continues on the world stage. These changes come in parallel with voters/consumers’ increased interest in the impact of products on the environment.

Notably, there have been a flurry of rulings in June by the ASA for misleading environmental claims, including against, a water company, PETRONAS and Respol SA. Notably, the ASA state in the PETRONAS case that the ruling “forms part of a wider piece of work on environmental claims in the Energy sector“. We can therefore expect further consideration of ads by the ASA in this area.

This serves as an important reminder of the importance of carefully considering environmental claims in ads, prior to publication, to ensure their compliance with the UK regulatory landscape. This is particularly key when the ad promotes the environmental credits of a business typically known for having a high carbon footprint. The Shell cases serve as a warning of the high-level of scrutiny to which the regulator will subject any environmental claim.

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