The Greys in Green: Ottawa Moves on Greenwashing

By: Miriam Mathew

Vague language and undefined methodology have induced chaos in the business community as a federal government attempt to define ‘green’ has instead created multiple shades of legal grey. On June 20, 2024, the government enacted Bill C-59, an omnibus legislative package that, among other provisions, amended the Competition Act, allowing the Competition Bureau (“Bureau”) to pursue “unsubstantiated” environmental claims under new anti-greenwashing provisions.

At its core, the legislation amends Canada’s deceptive marketing provisions to capture products, services, business, or business activity that advertises the protection or restoration of the environment, or the mitigation of climate change effects. The broad nature of the legislative language also breeds uncertainty into activities like social media statements, ESG reports, product warranties, investor reports, public speeches, or even website quotes.

The legislation also introduces a “reverse onus” on claims filed, leaving businesses with the burden of proof to showcase that claims are substantiated. To comply with the Bureau, businesses are required to align with “internationally recognized methodology” – a test currently left legally undefined even though these anti-greenwashing provisions are already in effect.

While the oil and gas sector has grabbed the most headlines, make no mistake, these new provisions are not exclusive to any one sector. The broad language of these amendments scope in sectors across the economy- from healthcare to environment to consumer retail and everything in between

So, how will businesses know if their environmental claims are the ‘right shade of green?’

At present, no one can say for sure. The Competition Bureau has launched a public consultation to inform the development of the “methodology” for evaluating environmental claims made by businesses. Interested stakeholders have until September 27, 2024, to provide feedback.

The Bureau has also released a new edition of the Deceptive Marketing Practices Digest with general guidance on environmental claims to address stakeholder queries in the interim. The document stresses that the agency does not “tell businesses what they can and cannot say.” And yet, in its effort to ease concern, the document teases rigidity and oversteps in a manner the Bureau may not have intended to. Ironically, the Digest advises against “vague environmental claims” and to instead adhere to ambiguous metrics, ie: vague. Specific examples even single out and critique the usage of carbon credits, inputting Bureau opinion into a policy space well beyond their jurisdiction. Conversations on what counts as ‘decarbonization’ and the ‘correct’ steps to net-zero goals have been ongoing across various departments like Natural Resources Canada, Environment and Climate Change Canada, and Finance Canada. Undoubtedly, businesses, regulators, and provinces will scrutinize the Bureau’s methodology as it is unveiled to ensure its metrics do not impose more stringent and restrictive definitions of green activity than those already established by the government.

There are a few other items that the Bureau will have to consider when drafting the guidance if it is to indeed be an “internationally recognized methodology.” Of note are voluntary and mandatory reporting guidelines, both established and incoming. This includes federal, provincial and territorial ESG reporting, the proposed Canadian Sustainability Disclosure Standards directed by the International Sustainability Standards Board, and the inbound green taxonomy committed to in Budget 2024. More recent, even, is the package of anti-greenwashing directives advanced by the European Union.

However, if the Bureau takes too long to release a clear methodology, the legal grey areas it creates will restrict key sectors like automotives, manufacturing, and clean technology from driving Canadian performance at home and abroad. Businesses cannot be expected to release “clear, specific” environmental claims until the Bureau releases “clear, specific” metrics. Until then, the uncertainty these greenwashing provisions create will chip away at Canada’s environmental and economic legacy.

Please note that the contents of this article do not constitute legal advice.