The new greenwashing provisions in the Competition Act are attracting significant attention from Canadian businesses, especially for those focused on proactively discussing their efforts regarding emissions and the environment. The Competition Bureau has launched a public consultation regarding the provisions, and has released initial guidance regarding its enforcement approach to greenwashing. While the public consultation and initial guidance are a good start, it will be important for the Competition Bureau to clarify its views on interpreting the phrase “internationally recognized methodology” and the degree of deference it intends to adopt when assessing the responsible business judgment of Canadian businesses who are substantiating their environmental claims in good faith.

As the Competition Bureau prepares to enforce these provisions, businesses should continue to ensure their environmental claims are specific, accurate and substantiated. We expect that further guidance following the public consultation will provide much-needed clarity on compliance and enforcement priorities.

Greenwashing Provisions

The new greenwashing provisions of the Competition Act came into force on June 20, 2024 and received significant attention from a number of Canadian businesses. The new provisions require companies promoting the environmental benefits of a product or service to base their claims on adequate and proper testing, and representations about the environmental benefits of a business or its activities must now be based on adequate and proper substantiation in accordance with “internationally recognized methodologies”.

Almost one month after the new provisions came into effect, the Competition Bureau launched its public consultation and released initial guidance via its Deceptive Marketing Practices Digest Volume 7 to lay the groundwork for understanding the Competition Bureau’s enforcement approach to greenwashing.

The public consultation questions and initial guidance signal that the Competition Bureau may be assessing whether to take on a more interventionist role in assessing compliance, particularly regarding whether a claim can be substantiated according to “internationally recognized methodologies”. However, we expect that once the Competition Bureau has reviewed the feedback from the public consultation, the Competition Bureau will incorporate an appropriate amount of deference in its enforcement approach to claims made by responsible businesses that should help reduce uncertainty going forward.

While the Competition Bureau’s guidance is not binding on the Competition Tribunal, we also expect that the Competition Tribunal will appropriately exercise its gatekeeping function for private leave applications when they come into force in June 2025 to weed out frivolous claims.

Key Guidance for Businesses

The Deceptive Marketing Practices Digest Volume 7 reinforces previous Competition Bureau guidance regarding deceptive marketing and performance claims, including key guidance as follows:

Prioritize the General Impression. An environmental claim is assessed based on both its literal meaning and the general impression conveyed to consumers. The general impression conveyed by an environmental claim will take into account the words, imagery, colours, graphic elements as well as their layout. Businesses should expect that the Competition Bureau will assess environmental representations from the perspective of a credulous and inexperienced consumer; a consumer who doesn’t have the scientific background to critically evaluate claims and instead accepts them at face value. This means that even if a claim is literally true, it may still be misleading if it creates a false impression.

Be Specific. Higher risk claims include claims that are overly broad, exaggerated and vague since they are inherently difficult to substantiate and measure. For example, claims that use green colours, nature-related imagery, or terms and phrases like “eco-friendly” or “better for the environment” without clear, specific evidence may create a misleading impression of significant environmental benefits. Disclaimers or fine print may not help cure a representation that is otherwise false or misleading.

Substantiate Forward-Looking Claims. Businesses making claims regarding their future environmental goals should ensure that they are factual rather than aspirational. There is a significant risk of greenwashing claims being made regarding representations about environmental goals that are not supported by concrete, realistic and verifiable plans to achieve them. Canadian businesses looking to make such claims should also ensure that they have undertaken meaningful steps to accomplish those goals prior to making the claim.

We expect that forward-looking claims are more likely to be enforced under the provision requiring environmental representations to be substantiated in accordance with “internationally recognized methodologies”. In assessing whether claims are credible and adequately supported, the Competition Bureau will most likely consider established standards and certifications from a wide range of industry association, standard setting, and governmental bodies, including, non-exhaustively, the Environmental Product Declaration, Science Based Targets initiative, the Canadian Energy Partnership for Environmental Innovation, ISO standards and the Greenhouse Gas Protocol. When making forward-looking claims, Canadian businesses should be mindful about the following:

• Determine if the methodologies and standards used as support are appropriate for the claims being made. This includes evaluating any potential limitations or challenges associated with them that could impact the general impression conveyed by the claims as a result.
• Ensure environmental claims about goals are factually verifiable and are based on a well-informed, concrete, realistic plan with measurable interim targets and meaningful steps. More aggressive goals and timelines about environmental performance will be at risk of being considered greenwashing if they are not realistic and adequately supported.
• Claims about environmental goals that are well planned must be accurate and not convey a general impression that is misleading about the real environmental impact of a company’s activities. For example, if a company claims that it will eliminate plastic packaging to reduce waste, this could be problematic if the company continues to use more or the same amount of plastic but plans to offset this by its recycling efforts.
• Regularly review and update claims based on the latest progress and adjust claims if interim targets are not met or if plans change.

Road Ahead

As the Competition Bureau begins enforcing the new greenwashing provisions, businesses must support their environmental claims with testing or substantiation and stay vigilant in aligning their environmental claims with established standards and accurate, transparent representations. 

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