Paint the town green: Competition Bureau moves to address new law on environmental claims and greenwashing

Launch of public consultation on Competition Act’s new greenwashing provisions

On July 22, the Competition Bureau officially opened its public consultation¹ to inform its enforcement guidelines for the new greenwashing provisions under the Competition Act (Act) that came into force on June 20, 2024, with the passing of Bill C-59². 

The consultation process is intended to provide the Competition Bureau (Bureau) with input from the public regarding enforcement of the Act’s two new greenwashing provisions: 

• The first applies to product-specific environmental representations (i.e., representations about a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change), which must be based on an adequate and proper test, the proof of which lies on the person making the representation:  

The Bureau is specifically seeking submissions on compliance hurdles faced by businesses, common environmental claims, claims prone to inadequate testing, relevant considerations for evaluating claims, and any other information that may be pertinent to the Bureau’s future enforcement activities under this provision. 

• The second applies to  business-wide environmental representations (i.e., representations regarding the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change), which must be based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which also lies on the person making the representation: 

The Bureau has asked for feedback regarding commonly made claims and those claims that are less likely to be adequately substantiated. The Bureau is also seeking input from stakeholders as to what “internationally recognized methodologies” the Bureau should consider when evaluating whether claims about the environmental benefits of a business or business activities have been “adequately and properly substantiated.” The request for this input from industry confirms there is no obvious consensus as to what substantiation in accordance with “internationally recognized methodology” actually means and confirms that the frustration and concerns industry expressed over ambiguity in the new law were warranted. 

The Bureau will consider the feedback it receives as it develops enforcement guidance on environmental claims. 

The consultation period ends September 27, 2024. If you are interested in submitting comments to the Bureau, we encourage you to reach out to a member of our competition and antitrust team listed below. 

The Deceptive Marketing Practices Digest – Volume 7  

In addition to opening a public consultation on the Act’s new greenwashing provisions, the Bureau also released the new Deceptive Marketing Practices Digest – Volume 7³ (the Digest) on July 22, 2024. 

The Commissioner acknowledged in the Digest that the Act’s new greenwashing provisions “have attracted considerable attention” and “consumers and businesses want to understand how and when the Bureau will take action under these new provisions.” 

Below are some highlights from the Digest:

• The Bureau’s position is that “greenwashing” is broad and includes the following categories of claims:
  • Composition of products (ex: claiming a product is made from 100% recycled paper)
  • Production process of products (ex: claiming a product was made with renewable energy)
  • Product disposal (ex: claiming a product is 100% compostable)
  • Comparisons (ex: claiming a product uses 25% less water than its previous version)
  • Vagueness (ex: claiming a product is eco-friendly)
  • Future promises (ex: claiming a business will be carbon neutral by a certain date)
• The Digest provides six high-level tips for businesses considering making environmental claims, many of which simply reiterate the Bureau’s current enforcement approach. For example, one of the tips is to “Be truthful, and not false or misleading,” which is a cornerstone principle, but does little to clarify in practice how companies can ensure their claims are substantiated in accordance with the vague standards set out in Bill C-59. 
• Despite being largely common sense, the Digest provides some concrete recommendations that may assist businesses in assessing their environmental claims while they await more formal enforcement guidance, including:
  • Be mindful of comparative claims. In the context of an environmental claim, this could mean specifying years when comparing the environmental impacts of a business or business activity. For example, saying, “We reduced emissions from our operations by 10% in 2024, as compared to our emissions in 2023” rather than simply saying, “In 2024, we reduced our emissions by 10%.” 
  • Refrain from exaggerating environmental benefits. While even small changes can add up when it comes to the environment, according to the Bureau, businesses should avoid marketing small changes as big ones. 
  • Do not rely on a disclaimer or fine print to cure an otherwise misleading environmental claim. While disclaimers can add context and additional information in certain advertising formats, disclaimers need to be consistent with the overall messaging in the representation and not contradict it. 
  • Avoid making vague and buzzworthy claims – such as generally labeling a product as “eco-friendly,” “green,” or “sustainable” – in favour of clear and concrete statements that lend themselves more easily to substantiation. 
  • Resist publishing aspirational claims about the future. While publicly setting goals is not inherently negative, the Bureau warns that such claims may be considered greenwashing if they lack a concrete, realistic and verifiable plan. Instead, businesses should be factual and, in addition to having a concrete plan, should be sure there are meaningful steps underway to accomplish the plan.

Takeaways

The Bureau is in the process of developing its enforcement approach for evaluating and enforcing environmental claims. While the Bureau has offered some feedback to stakeholders through the Digest, it is clear companies must wait for more formal guidance from the Bureau to assist them in understanding how best to comply with the new greenwashing provisions. Companies and industry associations should use this opportunity to shape the Bureau’s approach by making their views heard and participating in the public consultations.

The authors would like to thank Julia Dyke, summer student, for her contribution to preparing this legal update.