In our November 9, 2023, blog, we discussed how Environmental, Social, and Governance (ESG), sustainability, etc… are affecting companies. We also discussed Canada’s Competition Bureau’s investigation into sustainability claims by Keurig Canada regarding the recyclability of its single-use coffee pods calling them “false or misleading…” This led to a $3 million dollar fine.
Proclamations about sustainability efforts are commonplace. However, these proclamations increasingly carry a risk of being labeled as “greenwashing,” especially with the recent changes to Bill C-59.
Importantly, the new rules outlined in Bill C-59 apply to companies in Canada as well as companies who are doing business in Canada.
Bill C-59 and Greenwashing
On June 20, 2024, Bill C-59, Canada’s, Fall Economic Statement Implementation Act, 2023, received Royal Assent. This law makes substantial changes to the Canadian Competition Act, including statements regarding greenwashing. According to the Government of Canada:
The changes…tackle unsupported environmental claims, commonly known as greenwashing, by:
- Requiring that claims about the environmental benefits of a product be supported by adequate and proper testing.
- Requiring that claims about the environmental benefits of a business or business activity be based on adequate and proper substantiation in accordance with an internationally recognized methodology.
Commenting on the amendments to Bill C-59, Forbes wrote, “On page 429 of the 546-page Bill C-59, a two-paragraph amendment to the Competition Act drastically increased regulation in this area (greenwashing) by classifying environmental claims as within the scope of deceptive marketing practices.”
The new law poses a risk for those who have made “green” commitments and some law firms are cautioning companies to carefully consider statements about sustainability efforts (Image by Iván Tamás from Pixabay Ecology).
Forbes also points out that bringing a complaint under the Act is relatively easy. “…any six residents of Canada over the age of 18 may file for an inquiry with the Competition Bureau.”
Substantial Penalties
The penalties for making statements ruled to be “greenwashing” are severe. This includes an administrative monetary penalty that is the greater of:
- $10 million ($15 million for repeat conduct), or
- Three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of worldwide gross revenues.
Scrubbing Claims
In what may be a precursor of how companies might respond, The Pathways Alliance, a group of Canada’s biggest oil sands producers, has removed all content about environmental goals from its website and social media pages, citing “significant uncertainty” over the federal government’s anti-greenwashing legislation (Source: Reuters).
Retreating from Commitments
Whether concerns about litigation, shareholder displeasure, or other reasons, there are companies that are walking away from green and other social commitments.
On June 27, 2024, US-based Tractor Supply Company (TSC) issued a statement stating among other things that TSC will among other changes, “Withdraw our carbon emission goals and focus on our land and water conservation efforts.”
Earlier this year, JPMorgan Chase’s and State Street’s investment arms both quit a global investor coalition pushing companies to rein in climate-damaging emissions, while BlackRock said it has transferred its membership to its international arm, limiting its involvement (Reuters).
In January, the Wall Street Journal reported, “Climate-conscious companies worldwide are retreating from publicizing green goals, amid heightened scrutiny from authorities and investors over inflated claims…” In the same article, they quote South Pole a consultant that focuses on decarbonization. “Corporate greenwashing has always been a challenge, but the pendulum has swung so far that now even the greenest companies are green hushing.”
Green hushing is the underreporting of sustainability efforts. Some activists believe this is as bad as greenwashing and that companies must not be silent about sustainability.
The Forbes article states that many companies are not paying attention to the increased liability and are “allowing their marketing team to operate without oversight.”
Law Firms Offer Insight
The new law poses a risk for those who have made “green” commitments and some law firms are cautioning companies to carefully consider statements about sustainability efforts.
DLA Piper recently wrote, “It is critical that any business that makes public statements about environmental matters related to their products or practices, including their sustainability, ‘net-zero’, carbon neutrality, eco-friendliness or recyclability, must review and adapt all existing and future statements to take into account these new provisions which are now in force. That includes statements made by third parties on behalf of or acting in connection with the business.”
From Blakes, “In the past, the onus has been on the Bureau to prove that claims are misleading. Under the new greenwashing provisions, however, companies now bear the onus of proving that representations are not misleading, either by showing that they are based on an adequate and proper test (for Product Benefit claims) or by showing that they have been properly substantiated (for Business Activity claims). This appears to place the onus on companies to prove that claims about their organization’s goals or achievements regarding carbon neutrality, emissions and emissions intensity are not misleading.”
From BD&P Law firm, “The use of words and phrases, particularly by oil and gas companies, such as ‘clean’, ‘sustainable’, ‘green’, ‘low-carbon’, ‘climate leader’, ‘carbon neutral’, ‘climate friendly’ and ‘net-zero’ are particularly problematic given that they are fairly broad and vague terms that can mean different things to different people. These words will invite greater scrutiny as the meaning they imply or portray will be difficult to substantiate” (their emphasis).
Focus on Environmental Compliance and Seek Counsel
Perhaps the best approach for companies is to focus on those areas where the definitions are clear. These local, provincial, and federal requirements are often numeric-based limits (discharges, remediation, environmental compliance, etc…). As for “green” commitments, if the law does not require them – there are increasingly more disincentives to make statements or commitments. If you have not done so already, it may be prudent to discuss the changes in Bill C-59 with your legal counsel.
If you need assistance with an environmental issue (compliance, assessments, remediation, excess soil, litigation support, etc…), contact Christopher Pare’, P.Geo. Q.P. at 519-948-7300, Ext. 114.
Dragun Corporation does not use artificial intelligence in drafting our blogs or any other material.
Alan Hahn drafted this blog. Alan has an undergraduate degree in Environmental Studies and completed a graduate program in Environmental Management. He has worked in environmental management for more than 45 years. He has written hundreds of blogs and articles. His published work includes HazMat Magazine, BizX Magazine, Michigan Lawyers Weekly, GreenStone Partners, Manure Manager Magazine, and Progressive Dairy.
Christopher Paré, P.Geo, reviewed this blog. Chris is a senior geoscientist and manager of Dragun’s Windsor, Ontario, office. Chris has more than 30 years of experience on projects ranging from environmental site assessments (Phase One/Two ESA), excess soils, remedial investigations, soil and groundwater remediation, Permits to Take Water, Records of Site Conditions, vapour intrusion, and site decommissioning. Chris is a frequent speaker, author, and expert witness. See Chris’ bio. Follow Dragun Corporation on LinkedIn, X, or Facebook.
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