Greenwashing isn’t just a buzzword anymore—it’s a real risk for businesses making environmental claims. With growing consumer awareness and stricter enforcement, Canada’s Competition Bureau is cracking down on misleading green marketing practices. Recent changes to the Competition Act, introduced through Bill C-59, include new anti-greenwashing rules that apply to both products and business-related claims. The stakes are high: non-compliance could mean fines of up to $10 million or 3% of worldwide revenue.
To help businesses navigate these new waters, the Competition Bureau has released draft guidelines to clarify how to create truthful and substantiated environmental claims. These guidelines expand on six key principles described in a recent bulletin, offering practical advice to ensure transparency, accuracy, and compliance in your sustainability messaging.
Here are some key aspects provided in the draft guidelines:
Adequate and Proper Testing of Product Claims
Under the new anti-greenwashing provision 74.01(1)(b.1), product claims must be based on adequate and proper testing. In the draft guidelines, adequate and proper is defined as “fit, apt, suitable or required by the circumstances”. Testing is a procedure intended to establish the “quality, performance and reliability” of the product and must be conducted before the claim is made.
Example
A fashion apparel business claims that its sweaters do not release microplastic fibres when washed in a washing machine, thereby helping to protect Canada’s waterways. The yarn was tested before the claim was made to consumers, but the testing did not replicate washing in a washing machine. In this scenario, the Bureau would consider the environmental benefit of the product to not be based on adequate and proper testing.
Substantiation of Business or Business Activity Claims:
Under the new anti-greenwashing provision 74.01(1)(b.2), environmental representations made with respect to a business or business activity must adhere to adequate and proper substantiation using internationally recognized methodologies. The draft guidelines indicate that internationally recognized methodologies are methodologies recognized in two or more countries, but not necessarily those recognized by the governments of two or more countries. The methodology should be suitable, reputable and robust and appropriate in the Canadian context. Third party verification should be included if required by the methodology.
Example
A Canadian business claims in its marketing materials that it aspires to be net zero by 2050. However, it failed to take steps to substantiate its claim in accordance with internationally recognized methodology and did not develop a concrete plan to identify and mitigate its greenhouse gas emissions. In this scenario, the Bureau would likely consider this claim to not be based on adequate and proper substantiation in accordance with internationally recognized methodology.
Prohibition of Misleading General Impressions
The guidelines emphasize that even if an environmental claim is literally true, it must not create a misleading general impression about the environmental benefit. Businesses are also advised not to rely on disclaimers or fine print to correct misleading claims.
Substantiation Without Public Disclosure
While businesses must substantiate claims if challenged, they are not required to make this information publicly available. Transparency, however, is encouraged to build consumer trust and reduce litigation risks.
Due Diligence Defense
Businesses can invoke a due diligence defense if they can demonstrate that they have taken proactive measures to prevent deceptive marketing.
Takeaways for Businesses
The new draft guidelines emphasize the importance of substantiating environmental claims with credible evidence, avoiding vague or exaggerated representations, and ensuring compliance with new anti-greenwashing provisions.
Adequate and proper substantiation is required by businesses of all sizes, including small businesses.
Businesses should review and/or amend their communications considering these new draft guidelines and have them reviewed by legal counsel as appropriate.
The Bureau is accepting public comments on the draft guidelines until February 28, 2025, with finalized guidance to follow.
How Achieve Sustainability Can Help
Need assistance in reviewing your communications or disclosures or a decarbonization plan to support your net zero commitments? Reach out to Achieve Sustainability today to set up a complimentary consultation - calendly.com/achievesustainability/intro
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